Update on what is going on with my life

[Singuy]

congrats on the new home. Why are you waiting to retire? Why not pull the trigger now after the RSU vest? $1.2m year and you are netting $600k and can pay off the mortgage. That would mean the portfolio will be $1M plus $45k pension. That's a solid $80k without a mortgage. And you only need $56k to retire/annually, almost covered by the pension. That would mean to my calculations you are set this year. Pull the trigger. Even at 3% withdrawal you are set. That's $75k with a tiny bit of flex. the pension is equivalent to $1.1M and $1M saved means $2.1M. You are box checked done.

Right now we are sitting DH and I at around $1.5 not including home I believe. But we have 10 more years to pay for and 2 kids for college. So our needs will likely need to be greater. I've been contemplating but the more we talk the more my DH is digging in his heels that he won't retire until DK2 is done with college. I think he's a nervous nelly and won't pull the trigger until our kiddos are secure.

I don't know, I'll probably work a tad longer with that kind of income. You can make this wealth last generations. I mean how many people are given the opportunity to make half a mil a year? It isn't your typical grinding 60k/year kind of job.

I'm just saying this from experience. My wife and I can technically retire today but that's squandering way too big of an opportunity away.

[LivingAlmostLarge]

It's easy to get burned out. It's easy to just get into the OMY mentality. I'm working on my DH to stop working and relax and enjoy and consider quitting. Unlike Corn though our kids are not out of the house yet. So that will never happen as long as we have kids at home. The year off he loved in some ways but he told me he can't stand being at home with the kids. They get to be a bit wild. Granted they were younger and home not at school so that might have been it. And if he "retired" now he wouldn't have them as much. But I don't think he's cut out for being at home with kids and running around with them. It exhausts him. So he'll easily work until the youngest launches in 12 more years. Then I suspect he'll consider but if I had to guess another 16. Dk2 has to finish college then he'll quit happily.

Corn is it just money that makes you work until 56? What's stopping you from doing it now?

[corn18]

Corn is it just money that makes you work until 56? What's stopping you from doing it now?

That's a great question. Actually, it is THE question. Let me think on that one a bit and get back to you.

[scfr]

It's easy to get burned out. It's easy to just get into the OMY mentality. I'm working on my DH to stop working and relax and enjoy and consider quitting. Unlike Corn though our kids are not out of the house yet. So that will never happen as long as we have kids at home. The year off he loved in some ways but he told me he can't stand being at home with the kids. They get to be a bit wild. Granted they were younger and home not at school so that might have been it. And if he "retired" now he wouldn't have them as much. But I don't think he's cut out for being at home with kids and running around with them. It exhausts him. So he'll easily work until the youngest launches in 12 more years. Then I suspect he'll consider but if I had to guess another 16. Dk2 has to finish college then he'll quit happily.

Corn is it just money that makes you work until 56? What's stopping you from doing it now?

LAL - Have you priced ACA plans for 60 year olds in your state, just to give you a very rough ballpark idea of what you might be looking at down the road in terms of medical expenses if you retire early?

[corn18]

So, what is stopping me from retiring now? If I take now = today, then nothing but money. I definitely want to stay through the merger (next June) to get my salary, bonus and all my RSU's. That is about $900k of income through June. Also adds $18k of match to my 401k. So, I definitely want to stick around at least until June 2019. So, can I retire next June? That's the million dollar question.

Here are our planned expenses for retirement. This is what we are using for a budget right now, but we overrun it by about $500/mo. I think it is very generous and we could trim it if we wanted to. That's the big issue right now. Do we want to cut the budget in order to retire early?



Let's just assume this is the budget. Now let's look at what we have available for truly discretionary spending each year. This would be for vacations, theatre tickets, whatever doesn't fit in the budget.

Retirement year (age) / annual blow that dough amount

2019 (53): $11,000
2021 (55): $27,500
2023 (57): $48,000

For now, I like the $48,000 amount, so that is why we are targeting retirement @ age 57.

So, I guess the answer to the question is money. But I think we could retire @ 53 and be perfectly happy. 55 would be perfect. 57 would be fantastic.

[Jluke]

Food, dining and the all-time favorite “Misc” stand out.

[LivingAlmostLarge]

I have priced it out and if we work till 60 no matter what it costs we can afford it. Right now I'm budgeting about $80k/year and that includes medical. Very generous I would say for us to afford medical. But I could be wrong. It would be very overly generous budget for us.

I can see that working 4 more years it would generate basically an extra $1 million. That could be worth it. I don't know what I would do in that situation. I have to say until I'm there I won't know the OMY situation hits us. Until then I would like to think we would pull the trigger. But in that situation we might also continue working.

[Singuy]

How are your taxes only 7k/year on 100k/year take home/

[corn18]

How are your taxes only 7k/year on 100k/year take home/

Age 55-70

$45k pension
-$24k std deduction
=$21k taxable

I can take long term cap gains @ 0% up to $38k, so I can take $17k cap gains and still only pay tax on $21k. I only have $30k of cap gains in my taxable account right now, so this will be easy.

So from age 55-70, I will only pay $2142 in taxes / year if I just use my pension and taxable account. But I plan to do Roth conversions of my 401k from 55 to 70 up to the top of the 12% tax bracket. That changes things a bit:

$45k pension
$56,400 Roth conversion
$101,400 total income
-$24,000
$77,400 (top of 12% bracket for MFJ)

Resulting tax will be $8,913

Once I start SS @ 70, all my 401k will have been converted, so now my taxes are:

$45k pension
$54k SS
$XX cap gains, interest, dividends

$99k total income
-$26,500 MFJ deduction
-$8,100 (15% of SS not taxable)

$64,400 taxable which results in $7,494 in taxes.

So I put in an average of $7,000.

[Singuy]

Ah, roth conversion is what you are suing vs a 401k.

[corn18]

Ah, roth conversion is what you are suing vs a 401k.

I hadn't even thought about RMD's @ 72 until I started reading the Bogleheads forum. If I don't do Roth conversions from 55-70, I would end up paying a lot more taxes when RMDs start.

I guess I should take a look at what happens when the Trump tax brackets expire in 2025.

[Like2Plan]

I hadn't even thought about RMD's @ 72 until I started reading the Bogleheads forum. If I don't do Roth conversions from 55-70, I would end up paying a lot more taxes when RMDs start.

I guess I should take a look at what happens when the Trump tax brackets expire in 2025.

Is that a typo? I believe RMD's start at age 70.5 unless you are still working --in which case you can sometimes put off 401K RMD's from your current employer (if plan rules allow it).

What is amazing to me is that you will be able to convert everything by the time you plan to take SS at age 70. Have you accounted for growth on the 401K funds? (The way you have everything else figured I suppose you have. )

[LivingAlmostLarge]

Depends on how much conversion is needed. How much are in your 401ks?

[corn18]

Like2Plan, you are correct: it is 70.5 for RMD's.

If I retire @ age 55, I have 15 years to get the conversions done. I should have $640k in my 401k @ age 55, so I will need to convert about $50k/year including growth. I should have about $56k of room in the 12% (or 15%) tax bracket to get the conversions done. I will have enough in my taxable savings to cover the taxes and live off of during those 15 years. I should arrive @ age 70.5 with all remaining savings in taxable and Roth accounts. And my pension and SS starting at age 70 will cover all my base expenses. So any money left at age 70 can be spent on blow that dough kind of stuff or left to grow for my heirs.

That's the plan, anyway.

[Like2Plan]

The Bogleheads have a lot of discussions about whether you should convert everything to Roth. Some reasons: charitable donations coming from RMDs don't get taxed. Also, tax diversity (for future tax law changes, I assume) And, finally health care/long term care receives tax favorable treatment coming from pretax (I'm not sure how this works TBH). Have you considered keeping a small reserve in pretax?