The Intersection of FIRE and Disney

[hlhlaw07]

Keep in mind, a pension might not start until age 65 or so, or be greatly reduced if you start earlier.

Similarly, people are of many minds on Social Security--when to start it, what will actually be there for you, personally, how much might it be taxed.

What's another BIG part of the equation is health care costs. If you retire early, you're generally on the hook for these. If early retirement is your goal, it makes sense to at least look to see what the cost might look like--employer-provided health care doesn't usually give an accurate picture of the costs (even if your plan contribution seems high).

Right now, we're FI, but have no plans to RE. Our reasons (YMMV):

(1) 2 minor children (who also need health care coverage), youngest is 14
(2) Health care costs
(3) DH loves his job
(4) We like travel. Nice travel. And we're a family of 6, so this is an expensive hobby.

We're 57/56, so we can see the end, and we're just coasting to get there. We're interested in FAT FIRE (living high in retirement). And actually, we're in a position now that we can afford to travel as a family, except not this year (we had plans...).

It’s a military retirement pension so it kicks in right away and it is 50% base pay for rest of our life. My husband and I are both military so we will have two of them. Healthcare is generally covered as well, although I believe there are a few costs that we don’t have now as our cost are absolutely zero while we are active duty. I can retire in 8 years and will be 47 and the husband can retire in 5 and will be 45. The kids’ (3 & 6) college is taken care of with our transferred GI Bills.

It’s hard to come up with a number to shoot for with the retirement nest egg because it seems that our pensions will be more than enough. But I’m like you, and think that I’m more of a live it up in retirement (especially after a dual military career) so it’s just trying to figure out what number to shoot for that will allow us to live carefree. And we are also pretty sure that while we can retire pretty soon, we are likely to either stay on active duty past 20 years or get some other job to keep us busy (but on our own terms).

 

[QueenIsabella]

I don't know if there's a specific term for partial retirement, but it sounds like that might work for you guys. Working at something meaningful to you, or part time, or whatever--more to keep busy versus money to live off of. It sounds like you've got the big bases covered (pension, college, health care).

Everyone's "number" is a little different. It's kind of funny--DH has been discussing things with his brother, who'd like to retire early, but really can't, due to health care costs. He's got 5 years to go to hit 65 and Medicare, so he's coasting at his job (not mentally--he's putting effort into his work. He just knows he's running out the clock). He and his wife both smoke, their health care costs would be astronomical, that's the big hindrance on retiring early. They don't have the huge travel budget that DH and I do.

FTR, DH and I mentally have $1M earmarked for health care in the future--long term care, dementia, cancer treatments, whatever. We both have family histories that include cancer and dementia (yay!). If the money's not needed, it'll go to the kids. Even if you have good health care coverage, there are a lot of uncovered expenses for this type of care.

 

[BridgetBordeaux]

It’s a military retirement pension so it kicks in right away and it is 50% base pay for rest of our life. My husband and I are both military so we will have two of them. Healthcare is generally covered as well, although I believe there are a few costs that we don’t have now as our cost are absolutely zero while we are active duty. I can retire in 8 years and will be 47 and the husband can retire in 5 and will be 45. The kids’ (3 & 6) college is taken care of with our transferred GI Bills.

It’s hard to come up with a number to shoot for with the retirement nest egg because it seems that our pensions will be more than enough. But I’m like you, and think that I’m more of a live it up in retirement (especially after a dual military career) so it’s just trying to figure out what number to shoot for that will allow us to live carefree. And we are also pretty sure that while we can retire pretty soon, we are likely to either stay on active duty past 20 years or get some other job to keep us busy (but on our own terms).

Are you a member of USAA?

They can provide a very detailed analysis for free.

They ran a "Monte Carlo Analysis" based on all our financial data (USN family here- retired in 2001).

The inputs included every single asset/income/pension/expense that we had or expected to have and even accounted for the fact that eventually the mortgage would be paid off.

It was the USAA analysis that showed us that we were on a trajectory to hit "our number"........but more importantly, it showed that we were a little too aggressive (for our age) in relation to stocks vs bonds in our mutual fund holdings.

 

[roadtripper]

Hi! I haven't been on here in a long time and didn't read all 70 pages(!), but wanted to report that we are now FIRE'd at the not-so-young ages of 55 and 56. Our savings rate was about 35% for the past 11 years. I found the FIREcalc website helpful for running numbers that include a pension or two plus Social Security. I input numbers below our actual investment total and overestimated our yearly spending. Once the calculations gave us 100% chance of success, I put together our plan and we got off the treadmill. Over the last three years it was so comforting to have a plan. Now it's on to the next adventure!

 

[bernina]

A little FIRE Friday fun.

For those that have a target in mind when they are FI and/or able to RE, how did you calculate your target portfolio number and/or age?

Did you use:

• yearly spend x 25 or 30 or ??
• yearly spend / target portfolio <= 4%
• Some other method like running through a calculator like FIRECalc or ???
• Magic eightball

Bonus questions:

• Are you including social security income in your projections
• What annual number are you using for health insurance/health care costs both pre and post Medicare age
• Any other major items you're taking into consideration

-------------------------------------

For us I started with anticipated yearly spend x 25. Conveniently our current portfolio plus the expected lump sums for both of our pensions (9 more years for me, 11 for DH) take us slightly over that target and cover the $250k or so I anticipate for DD 9's college.

I then ran our current portfolio through FIRECalc, both with and without social security, adding in the pensions in the appropriate years and subtracting college costs. Played around with different settings (75/25 and 50/50 portfolios among other things) and felt comfortable with my target portfolio size when I hit 100% success. I won't rely on any one calculator or method but seeing several different methods indicate a good likelihood of success helped me to feel comfortable with our portfolio and annual spending targets.

For healthcare we'll be well covered if DH works 11 more years (he works for a Blue Cross subsidiary), I struggle with what to estimate if he chooses to retire earlier since we've been spoiled by his great company coverage. We can actually probably retire in about 5 years but the unknown of future healthcare costs really worries me.

 

[BridgetBordeaux]

@bernina That FIREcalc hyperlink was awesome.

Thanks for building it into your post.

 

[bernina]

@bernina That FIREcalc hyperlink was awesome.

Thanks for building it into your post.

You're welcome. @roadtripper above clued me into it. It's a really cool tool. Lots of other scenarios I want to try running through it.

 

[BridgetBordeaux]

You're welcome. @roadtripper above clued me into it. It's a really cool tool. Lots of other scenarios I want to try running through it.

Just for the record.......and to pass on information to those following these type of discussions...............we used a professional financial planner about 10 years ago and they ran a Monte Carlo Analysis on our holdings and it looks exactly like the results of FIREcalc.

In our case, we had to make some adjustments in order to raise our chances of success from about 90 percent to about 99 percent.

Once we made those adjustments........and followed our progress for the next 10 years (making sure we were on track).......we were able plan our exit from the workforce with confidence.

We still drive our 1998 F150 to and from the local lake when we tow our 20 foot boat.
No second vehicle payment for us for about 19 years (we paid it off early) and we paid cash for the boat because boat loans are much more expensive than car loans.

 

[ski_mom]

DH and I aren't going to be RE, but I like reading these posts anyway. When I research what we need for retirement, it seems to me that a lot of the spreadsheets include for one person. I ended up morphing a couple together to try to get something that works for DH and me. We both have a pension when we retire (we work at the same place). It's a monthly defined benefit and I also had a problem finding something that included pensions.

Anyway, I'll share my basic spreadsheet incase it helps anyone else. I'm not great with spreadsheets, so it's definitely not fancy, but it is working for me to be able to play around with at this point.



These are not actual figures, but they are our actual ages lol. DH and I are 6 years apart. If I retire when he's 65 and could get a medicare supplement, it would help to keep our insurance costs down. I have even thought if insurance is too high at that point, I would be willing to get a part time job of some sort to pay my premiums without having to keep a full-time semi-stressful position.

 

[alryan]

A little FIRE Friday fun.

For those that have a target in mind when they are FI and/or able to RE, how did you calculate your target portfolio number and/or age?

Did you use:

• yearly spend x 25 or 30 or ??
• yearly spend / target portfolio <= 4%
• Some other method like running through a calculator like FIRECalc or ???
• Magic eightball

Bonus questions:

• Are you including social security income in your projections
• What annual number are you using for health insurance/health care costs both pre and post Medicare age
• Any other major items you're taking into consideration

-------------------------------------

For us I started with anticipated yearly spend x 25. Conveniently our current portfolio plus the expected lump sums for both of our pensions (9 more years for me, 11 for DH) take us slightly over that target and cover the $250k or so I anticipate for DD 9's college.

I then ran our current portfolio through FIRECalc, both with and without social security, adding in the pensions in the appropriate years and subtracting college costs. Played around with different settings (75/25 and 50/50 portfolios among other things) and felt comfortable with my target portfolio size when I hit 100% success. I won't rely on any one calculator or method but seeing several different methods indicate a good likelihood of success helped me to feel comfortable with our portfolio and annual spending targets.

For healthcare we'll be well covered if DH works 11 more years (he works for a Blue Cross subsidiary), I struggle with what to estimate if he chooses to retire earlier since we've been spoiled by his great company coverage. We can actually probably retire in about 5 years but the unknown of future healthcare costs really worries me.

Thank you for that link again. I had done it before, but just realized after your post that you could change things by clicking the top. We are not in the retire early camp so when I put in what I had in my head for a target portfolio number, and had SS start at 67 for DH and 62 for myself, we were at 100% success rate. I was then even more surprised when the success rate continued to be 100% with that number cut in half. That just didn't seem right, that only 500K would give us a 100% success rate. And I even overestimated our spend by doing what we currently spend now, but that includes a house payment that will be paid off and all retirement savings. I know my financial advisor is always telling us we are on track, but sometimes I don't believe it. I don't consider health care costs at all. When we get closer to actually retiring we'll look at the cost, and if it makes sense I will work part time to get benefits. As an RN I could work 20 hours/week for full benefits at my current employer. I hope it doesn't come to that.

In other good news, I can finally join some of you with your crazy high savings percentages. I work very part time, about 12 hours/week so I don't make a ton of money, but when my hours were cut in April and May due to Covid we did just fine, partly because we weren't spending any money. Then when my hours went back to normal there was always quite a bit extra in the checking account. So starting in August I started putting all my paycheck into a savings account, and so far so good. So my rough calculation puts our savings rate for the past two months at over 30%. Feels pretty good. Unfortunately it will need to go to a new vehicle at some point as our vehicles are 2002 and 2005, but still running good, so hopefully I have a few more years.

 

[Starport Seven-Five]

A little FIRE Friday fun.

For those that have a target in mind when they are FI and/or able to RE, how did you calculate your target portfolio number and/or age?

Did you use:

• yearly spend x 25 or 30 or ??
• yearly spend / target portfolio <= 4%
• Some other method like running through a calculator like FIRECalc or ???
• Magic eightball

We kept this very simple due to where we were financially and our ages (early 30s at that time). Basically we multiplied our joint expenses by 25, saw it was significantly more than we had saved, and then decided on that as our initial target. Our plan is to reassess plans and targets when we get to that number... we know it will be higher than our current "target" but didn't want to get into the weeds due to how much life changes in 5+ years.

I know my financial advisor is always telling us we are on track,

Most financial advisors are very conservative as they don't want to be the reason people fail. My uncle had something laughable like 4 million in investments with a middle class lifestyle and his advisor was finally telling him he could consider retiring early.

 

[ski_mom]

In other good news, I can finally join some of you with your crazy high savings percentages. I work very part time, about 12 hours/week so I don't make a ton of money, but when my hours were cut in April and May due to Covid we did just fine, partly because we weren't spending any money. Then when my hours went back to normal there was always quite a bit extra in the checking account. So starting in August I started putting all my paycheck into a savings account, and so far so good. So my rough calculation puts our savings rate for the past two months at over 30%. Feels pretty good. Unfortunately it will need to go to a new vehicle at some point as our vehicles are 2002 and 2005, but still running good, so hopefully I have a few more years.

Bolded by me - what kind of savings account do you use for this? I currently have a few high interest checking accounts, but I'd like to ramp up our savings as well, and those accounts are all maxing out. I really don't want to keep opening those accounts, because the multiple debits get tiresome lol! At the same time though, I like that the money is easily accessible.

 

[bernina]

Thank you for that link again. I had done it before, but just realized after your post that you could change things by clicking the top. We are not in the retire early camp so when I put in what I had in my head for a target portfolio number, and had SS start at 67 for DH and 62 for myself, we were at 100% success rate. I was then even more surprised when the success rate continued to be 100% with that number cut in half. That just didn't seem right, that only 500K would give us a 100% success rate. And I even overestimated our spend by doing what we currently spend now, but that includes a house payment that will be paid off and all retirement savings. I know my financial advisor is always telling us we are on track, but sometimes I don't believe it. I don't consider health care costs at all. When we get closer to actually retiring we'll look at the cost, and if it makes sense I will work part time to get benefits. As an RN I could work 20 hours/week for full benefits at my current employer. I hope it doesn't come to that.

In other good news, I can finally join some of you with your crazy high savings percentages. I work very part time, about 12 hours/week so I don't make a ton of money, but when my hours were cut in April and May due to Covid we did just fine, partly because we weren't spending any money. Then when my hours went back to normal there was always quite a bit extra in the checking account. So starting in August I started putting all my paycheck into a savings account, and so far so good. So my rough calculation puts our savings rate for the past two months at over 30%. Feels pretty good. Unfortunately it will need to go to a new vehicle at some point as our vehicles are 2002 and 2005, but still running good, so hopefully I have a few more years.

Congratulations on your increased savings rate, that's wonderful!!

I like your take on healthcare as well, that's a great option you have (if needed) to be able to work part time. I need to research what's available in my field (IT/Finance hybrid) that could offer the same.

I was also really surprised to see high or even 100% success for almost all of the scenarios I've input. Of course all the tool can do is use past periods to simulate but planning for something that hasn't happened in the past 100+ years at the expense of fewer years to enjoy retirement just isn't for me. I've padded our spending and also reduced social security estimates by 20% so that's my way of building in a buffer. Plus we can be very flexible with our spending in future years if need be to provide additional cushion.

Our next challenge is deciding if we throw $30k of excess emergency funds into our 4% mortgage (7 years left on 15 yr, balance around $138k) or dollar cost average that into VTSAX in our taxable account (maxing out all the tax advantaged stuff already).

 

[mgarbowski]

Can someone please recommend some guidelines or resources for determining your desired annual spend in retirement? My obstacles are: (1) I don't have a very good handle on what we spend now. We're fortunate to save a ton, but because we make enough to do that without really tracking our spending, I haven't been doing that. I used to use Quicken until about 10 years ago and could itemize almost everything with a very small Miscellaneous percentage, but right now I'm blind. (2) My desired retirement date coincides with Daughter 1 graduating college and Daughter 2 entering college. I have the college costs figured out separate from my retirement savings, so when D1 is (hopefully) on her own, and D2 is being paid for from college funds (except for 2-3 months every year), some current spend should reduce.

Apart from that, I have trouble determining what costs will go up, besides probably medical insurance (I get it thru work but pay for most of it already), and what will go down. Plus we're paying mad crazy taxes based on what we earn now but I have no clue what taxes will be on our lower retirement income.

I'm hoping to find

1. a good, secure and trustworthy tool to track current spend automatically if I provide my bank and credit card info
2. some good guides of how to adjust for lifestyle changes that come with retiring and kids moving out, etc.

Thanks!

 

[CastAStone]

Can someone please recommend some guidelines or resources for determining your desired annual spend in retirement? My obstacles are: (1) I don't have a very good handle on what we spend now. We're fortunate to save a ton, but because we make enough to do that without really tracking our spending, I haven't been doing that. I used to use Quicken until about 10 years ago and could itemize almost everything with a very small Miscellaneous percentage, but right now I'm blind. (2) My desired retirement date coincides with Daughter 1 graduating college and Daughter 2 entering college. I have the college costs figured out separate from my retirement savings, so when D1 is (hopefully) on her own, and D2 is being paid for from college funds (except for 2-3 months every year), some current spend should reduce.

Apart from that, I have trouble determining what costs will go up, besides probably medical insurance (I get it thru work but pay for most of it already), and what will go down. Plus we're paying mad crazy taxes based on what we earn now but I have no clue what taxes will be on our lower retirement income.

I'm hoping to find

1. a good, secure and trustworthy tool to track current spend automatically if I provide my bank and credit card info
2. some good guides of how to adjust for lifestyle changes that come with retiring and kids moving out, etc.

Thanks!

This is the hardest for me as well. Right now about 2/3rds of our budget goes to Daycare, Student Loans, and Mortgage. By retirement we will have none of those costs. Should I really be planning for “70%-85%“ of our inflation adjusted expenses? I also think there’s a very good chance that my income will increase 50-100% as I move up the corporate ladder (in real dollars). It’s hard for me to really make good predictions of my lifestyle in the early 2040s.

 

[alryan]

Bolded by me - what kind of savings account do you use for this? I currently have a few high interest checking accounts, but I'd like to ramp up our savings as well, and those accounts are all maxing out. I really don't want to keep opening those accounts, because the multiple debits get tiresome lol! At the same time though, I like that the money is easily accessible.

I don't think in this environment there is a good answer for a savings account. I still use my Capital One 360, which changed from ING. Hardly gets anything. Since I started working bank account bonuses again and needed a direct deposit I just changed it to that. I figured $500 for 90 days is more than I'd make anywhere else. I know what you mean about the debits, that can get tiresome. But last year I was able to find bank account bonuses and I'd just keep moving my savings from one to another.

 

[alryan]

Most financial advisors are very conservative as they don't want to be the reason people fail. My uncle had something laughable like 4 million in investments with a middle class lifestyle and his advisor was finally telling him he could consider retiring early.

Reminds me of when I used to watch Suze Orman. I swear you could never have enough money for her.

 

[SouthFayetteFan]

Reminds me of when I used to watch Suze Orman. I swear you could never have enough money for her.

I enjoyed watching Suze for some reason. Didn’t agree with much of what she said, but we enjoyed it.

There used to be a show called “Til debt do us part” after suze that we REALLY enjoyed though! My wife and I always used to root for people to be insanely in debt and then get yelled at.

 

[alryan]

I enjoyed watching Suze for some reason. Didn’t agree with much of what she said, but we enjoyed it.

There used to be a show called “Til debt do us part” after suze that we REALLY enjoyed though! My wife and I always used to root for people to be insanely in debt and then get yelled at.

I'm pretty sure I watched that one too. It was my Saturday night routine after work. Was Til debt do us part filmed in Canada?

 

[SouthFayetteFan]

I'm pretty sure I watched that one too. It was my Saturday night routine after work. Was Til debt do us part filmed in Canada?

Yep! With some lady named Gale VadOxlaide or something like that who I believe had a British accent. The people on that show were such a train wreck!