The Intersection of FIRE and Disney

[Sjm9911]

Pretty much yes to everything. Lol. Monthly expences, are what the are. No real idea. Say 300 gas and electric a month. Takes into consideration heat and ac. Ballpark. Sewer bill 150 a quarter. Food , well, is in flux, changes everyday, but nothing out of the ordanary. Health insurance is partly subsidized from former employer. 100k is before taxes and a pension. SS is never, though I will get the medicare part at 65, reducing my health insurance, but it will probably be the same cost by then. The other money is a 457b, i can draw on it immediately, but dont need to. Car insurance maybe 1200 a year.

 

[dvcgirl67]

Pretty much yes to everything. Lol. Monthly expences, are what the are. No real idea. Say 300 gas and electric a month. Takes into consideration heat and ac. Ballpark. Sewer bill 150 a quarter. Food , well, is in flux, changes everyday, but nothing out of the ordanary. Health insurance is partly subsidized from former employer. 100k is before taxes and a pension. SS is never, though I will get the medicare part at 65, reducing my health insurance, but it will probably be the same cost by then. The other money is a 457b, i can draw on it immediately, but dont need to. Car insurance maybe 1200 a year.

Ok, well I'm sure others would say if they chime in.....you need a much clearer/concrete idea of your monthly expenses. I'm five years or less out from retiring and my DH and I could tell you exactly what we save/spend to the penny.

I also live in NJ, in a 1,600 sq ft house and I will tell you that my monthly expenses, less property taxes and homeowners (I'm assuming that's included in your 3,000 mortgage payment)....are $1,322 a month. We have no mortgage. I do have one car lease, but didn't include that in this number....just to give you an idea what it costs to run/maintain this house in NJ. It does not include groceries or any discretionary spending. That's utilities (natural gas, electricity, water/sewer), auto insurance on one car (a bit less than you're paying), umbrella liability policy, pest control contract payment, FIOS internet, two person cell phone plan, and YouTube TV (not including any streaming fees....that's discretionary). I would also say to deduct about $125 a month from that....because we have an EV....which is bumping up our electricity bill, and we have a two cell phone family plan. So, let's round it down to $1,200 a month...pretty rough, but that far off.

So, if we take include the extra $600 you're paying towards principal....we're at *roughly* $4,200 for the house, utilities, a cell phone, internet, auto insurance, additional liability insurance. Add in the health insurance and we're at $4,800. That's not including any transportation/fuel, groceries or any discretionary spending.

The good news...other than your mortgage, you have no debt, which is great. A really quick look at a paycheck calculator has your take home pay on 100K at $2,950 month. However, you have one child, so you may have a benefit there....regarding withholding. No kids here, so no idea. Also, you mentioned that you aren't going to qualify for SS, does that mean SS (meaning FICA) is not deducted from your pension? If that's the case, your take-home would obviously be a bit higher.

On the generous side, we can say your net pay is $6,500-$7,000 a month....so that leaves you $1,700-$2,200 a month left for transportation, food, clothing and all discretionary spending. You have that extra $600 built into your mortgage payment which can act as a buffer....something that I'd encourage that you continue to do....but in a pinch you can rely on that. So those are the numbers that I'd consider if I was in your position.

The other big question....is what are you earning now? Because that tells us a lot as well. And I'm not sure what calculations you're using to determine that your 403B will be 700K in 10 years. That's another question to consider....sorry, more questions come up as I think about this.

 

[Sjm9911]

Yes, no SS taken out. The car insurance is for 2 new vehicals and a camper. So, ill take the 1200 a month you did and up it to 2k a month for expenses, food, cell, internet etc. So, thats about 5500 k a month for house, car, food, fuel, etc. So still a little head room.

The 457b , was calculated using what I have in there and just getting my 4 percent compounded quarterly. So, its guaranteed to be that.
I make way more then the 100k , but after you take out like 3500 a month for pension and 457 contributions, I feel the amount I take home will be within 5 percent of what I would with my pension. Right now im living on 3359 a pay. So 6700 a month. Thats take home. Out of that I pay the 600 extra to the mortgage. Or 3000 a month total. So, 3700 a month left over.

 

[Sjm9911]

Ok , ty for the calculator from gross to net. So I should be almost exactly the same. No ,SS, medicare, etc taken out. As I'm retired. So, should be almost 80k net off 100k gross. Good for now, and maybe 10 years. After that the extra 2k a month should cover me for a bit?

 

[dvcgirl67]

Yes, no SS taken out. The car insurance is for 2 new vehicals and a camper. So, ill take the 1200 a month you did and up it to 2k a month for expenses, food, cell, internet etc. So, thats about 5500 k a month for house, car, food, fuel, etc. So still a little head room.

The 457b , was calculated using what I have in there and just getting my 4 percent compounded quarterly. So, its guaranteed to be that.
I make way more then the 100k , but after you take out like 3500 a month for pension and 457 contributions, I feel the amount I take home will be within 5 percent of what I would with my pension. Right now im living on 3359 a pay. So 6700 a month. Thats take home. Out of that I pay the 600 extra to the mortgage. Or 3000 a month total. So, 3700 a month left over.

Ok...so that's all positive....that you're able to live comfortably now on $6700. The benefits of having so much taken out all these years from your paycheck (i.e.....being a good saver!) is you have learned to live on less. So, if you're no longer making those 457 contributions, pension deductions...and just having that $600 taken for health insurance, it sounds very much like your net income will be very close to where you are right now, if not a bit higher.

The good news there...is that you haven't wandered into consumer debt with your current situation....you *shouldn't* if you decide to pull the plug on work. However, you mentioned two new cars and a camper....so unless you have a "new vehicle fairy"....sounds like they were recent purchases. And that's fine, but your new budget won't allow for big expenditures like that unless you have a pile of money you haven't disclosed. If we use your $5,500 estimate for everything except discretionary expenditures....you should have $1,000-$1,500 left over for that bucket.

But...in my experience, that's the the "fun" bucket...for all of the extras. Travel, dining out, extra-cirriculars/sports for the kiddo...etc. And you're going to have a lot more time on your hands. Still, I'd say you're really in a solid position. I'm *guessing* that your pension has cost of living increases going forward? If that's the case...unless you wander into consumer debt....you should be fine. Essentially, what that 100K pension represents...using a standard 4% withdrawal drawdown strategy....is 2.5 million dollars....not including what you've put away in your 457. . That's how those of us without pensions figure out when we can pull the plug....figure out our expenses....and multiply by 25....giving us the 4% rule.

The only other advice I'd give is....what about some part-time work? It can be something completely different than what you're doing now...or consulting in the line of work you're currently in. That's something you can think about for a few months if you do in fact retire...take a bit of time off....and see if there's something else you'd like to do, even if you just pull in an extra 10-20 grand a year...that could be a vacation, a savings account you create for your next car...or one thing we didn't discuss...a fund for your kids to go to college. Those are the thoughts I have. Good luck to you in whatever you decide. Hopefully others will jump in with additional thoughts.

 

[Sjm9911]

Yea, no colas for me. They ended that one. Unfortunately, its not me set or retiring. Its the job, and a meger. I can still be employed, but at much less money. And less pay. I would need to work say 10 more years to get the same retirement pension that I have now. For me , it dosen't make scense. I can maybe get a part time, or full time job, but my skill are are in a limited area. I am thinking about that, as I really dont want to and didn't plan on this. Its forced fire, lol. The camper also helps with cheaper vacations, and travel. Next step, if I do this is to reconsider moving. I have done that allready, but tbh, I like where I am, and the school. Maybe in 15 years when my kido is out of collage? Good thing is the home I bought, like everyones elses in NJ is worth a lot more then when I bough it. And even if the housing market falls, will be up there. I somehow got lucky and bought it under market value 5 years ago. And have a bit of equity in it. Still have a large morgage, but at 2.5 interest its not really a factor.

 

[dvcgirl67]

Yea, no colas for me. They ended that one. Unfortunately, its not me set or retiring. Its the job, and a meger. I can still be employed, but at much less money. And less pay. I would need to work say 10 more years to get the same retirement pension that I have now. For me , it dosen't make scense. I can maybe get a part time, or full time job, but my skill are are in a limited area. I am thinking about that, as I really dont want to and didn't plan on this. Its forced fire, lol. The camper also helps with cheaper vacations, and travel. Next step, if I do this is to reconsider moving. I have done that allready, but tbh, I like where I am, and the school. Maybe in 15 years when my kido is out of collage? Good thing is the home I bought, like everyones elses in NJ is worth a lot more then when I bough it. And even if the housing market falls, will be up there. I somehow got lucky and bought it under market value 5 years ago. And have a bit of equity in it. Still have a large morgage, but at 2.5 interest its not really a factor.

You may see it as "forced FIRE", and I understand that. You have a really solid base for sure. The only queasiness I have with your plan is that there are no COLAs, especially in our current inflationary environment. We've had a very low inflation environment, for essentially your entire working life. We may be in a bit of a different situation for the next several years or more....it's hard to know at this point. Any retirement planning we've done over the years always includes factoring in inflation. We've always used 4% as our number....which is above where inflation has been running for the last decade. We like to be cautious in our planning. Lately, we're using 5-6% to see how much it eats into our numbers, and it surely does.

As far as another job...I'm not advocating for a new full-time career or anything like that....just a side hustle to build up some additional savings/investments to ensure you're good to go. I'm a pretty cautious person by nature. We'd be fine if we both lost our job/business today, but our plan is to retire and travel through our sixties. We have obligations that will keep us in NJ for the next several years at least, and so we're just continuing to work/save/invest. I'd like a slightly bigger nest...with extra eggs . I follow some of these younger FIRE people who retire at 30 with 500K and travel the world on 20K a year. They seem to be actually pulling it off in most ways, but I don't want to sleep in a tent on the beach....even if that beach is in Tahiti .

 

[piccolopat]

Honestly, at that age I would look for work where I can earn enough SS credits to qualify for some SS benefits later on in life. You might earn less than you do now, but any money is better than nothing especially if it means getting at least the minimum SS benefit in the future. Subsidized health care can be dropped at any time and your costs can skyrocket. A pension without a COLA will be worth much less over time. What if you have large unexpected expenses? Cars don't last forever and those are getting more expensive every year. Your son will eventually be a driver needing his own car especially if you are in a part of NJ without great public transit. I agree with others here. Before I retired, I detailed my expenses over more than a year. I estimated what expenses might go up in retirement (travel) and what might go down (commuting costs). I used on line tools (mostly Fidelity) to see the probability of success for my retirement plan and expected expenses. I think you have a lot more work to do to make sure you are looking at a secure future for you and your son. Good luck!

 

[Sjm9911]

I can never get SS benifits. Even if I have rhe credits. Just the way it is.

 

[dvcgirl67]

I can never get SS benifits. Even if I have rhe credits. Just the way it is.

I have an aunt who married an Amtrak engineer....and when he retired, like 10 years ago at 57, I remember he mentioned that he won't get SS. It's a special "railroad retirement" that was created years and years ago. He retired in his late 50s, so didn't hit the "max" pension that he could have gotten had he worked to age 65....at the time, he was getting $5,000 a month, and my aunt was due to get $1,000 when she turned 60, which was four years ago. For them...it hasn't gone so well....they were always tapping their home equity and refinancing their mortgage for another 30 years...keeping that payment. They spent down his 401K, which was only about 120K when he retired....down to $0....buying cars and frivolous things that were unnecessary. They'll never starve or need to eat cat food, and they can always sell their home and buy something cheaper in an older retirement 55+ neighborhood to the south of them. But they're completely house poor at this point...never travel anywhere or dine out. My aunt is unhappy in her marriage now as her husband has become so "tight" as she calls it...with money, that he scrutinizes every penny she spends.

I don't know....I only mention this as a kind of cautionary tale....of how to *not* end up in retirement. When he retired ten years ago he definitely let everyone know that they were "set".....and now, it doesn't appear that's the case.

 

[Sjm9911]

I definitely see that, and a lot. Thats why the extra money saved is there. Years ago people didnt save much and relied entirety on the pension. Its good for now. But , in 10 years time , who knows? 20 , not so good. And so on. Thats where the extra 2k a month from the retirement savings comes in. Should get me through 20 years. First 10 years on pension alone, next 10 the extra 24k a year without spending down the principal. After that it may be cut back some stuff, but by then the house would be paid off. So, figure 25/30 years before I have to start taking out the principal. Or downsize the house. By then i will be dead. Lol. I will still save a bit for fixing up stuff. Plus , i am pretty handy. Not much I cant fix myself. We will see how age effects that. Worse case senerio, I can take money out of the account for big repaires , if needed. You have to protect your property intrest.

 

[newski_mom]

Essentially, what that 100K pension represents...using a standard 4% withdrawal drawdown strategy....is 2.5 million dollars....not including what you've put away in your 457. . That's how those of us without pensions figure out when we can pull the plug....figure out our expenses....and multiply by 25....giving us the 4% rule.

Question on the pension estimate - how do you calculate what the pension represents. DH and I will both have pensions when we retire. They do not have a COLA adjustment, so when we retire, they are what they are. Just wondering how you calculate what they are worth when looking at your 4% rule?

 

[dvcgirl67]

Question on the pension estimate - how do you calculate what the pension represents. DH and I will both have pensions when we retire. They do not have a COLA adjustment, so when we retire, they are what they are. Just wondering how you calculate what they are worth when looking at your 4% rule?

$40,000 in withdrawals represents $1,000,000 in investments using the 4% rule. So, if you calculate that you need say…130k per year in retirement….you’ll need roughly 160k (because we have to pay taxes…which will net you That 130k. You’d need 4 million dollars to achieve that. Not factoring in social security or Medicare…just raw figures for you.

 

[newski_mom]

$40,000 in withdrawals represents $1,000,000 in investments using the 4% rule. So, if you calculate that you need say…130k per year in retirement….you’ll need roughly 160k (because we have to pay taxes…which will net you That 130k. You’d need 4 million dollars to achieve that. Not factoring in social security or Medicare…just raw figures for you.

Thanks - that makes sense. How do you tell the amount to figure that your pension is worth to add to your portfolio value? For example, DH's pension should be around $85,000 per year if he retires in 4 years. How do I figure what to could that toward my 4 million example that we need above?

 

[Starport Seven-Five]

Thanks - that makes sense. How do you tell the amount to figure that your pension is worth to add to your portfolio value? For example, DH's pension should be around $85,000 per year if he retires in 4 years. How do I figure what to could that toward my 4 million example that we need above?

I don't know much about pensions (too young, every company got rid of them before I joined) but I treat income in retirement as a 1:1 reduction of expenses. For example, if we spend 100k per year but have 85k per year coming in, you only need investments to cover 15k per year. 15k*25 years would be 375k in investments. Obviously need to check tax impacts and other things but that is the basic logic I apply.

One thing I have heard is to check if your pension has an inflation adjustment. If it does not, your buying power will erode over time (you'll need more investments to cover expenses).

 

[newski_mom]

I don't know much about pensions (too young, every company got rid of them before I joined) but I treat income in retirement as a 1:1 reduction of expenses. For example, if we spend 100k per year but have 85k per year coming in, you only need investments to cover 15k per year. 15k*25 years would be 375k in investments. Obviously need to check tax impacts and other things but that is the basic logic I apply.

One thing I have heard is to check if your pension has an inflation adjustment. If it does not, your buying power will erode over time (you'll need more investments to cover expenses).

Thanks! Our pensions do not have an inflation adjustment. When you retire, it is what it is. We feel very fortunate that our company still offers pensions and we do not have to contribute to them at all. We basically do not have a 401k match (they put in 50% of our contributions up to $300/year), but considering we have a fully funded pension, I'm good with that.

 

[QueenIsabella]

Keep the pension in mind when you're balancing your portfolio, too. Treat it like an annuity--you could (potentially) have a greater mix of stocks and other, more volatile things, because the pension is a fixed income source. Of course, this depends on your level of risk. If you're more comfortable with lower risk, invest that way.

 

[newski_mom]

Keep the pension in mind when you're balancing your portfolio, too. Treat it like an annuity--you could (potentially) have a greater mix of stocks and other, more volatile things, because the pension is a fixed income source. Of course, this depends on your level of risk. If you're more comfortable with lower risk, invest that way.

Thank you - that is a very good point. According to my spreadsheet, we shouldn't need to access the funds in our 401k until we are about 12 years into our retirement which will allow even more time for our investments to grow (hopefully). I'm wanting to read up more about how to set our funds up with the bucket method to distribute our investments. That makes the most sense to me from what I've seen on it.

Odd thing is that I'm the controller of a medium sized company (about $100M annual sales), but I feel unsure about financial planning. Overall, I'm good with numbers, but I'm more used to putting everything together after the fact (producing the financials for our company, etc) than I am with the planning and forecasting aspect of retirement planning. DH and I have always lived below our means, but have also always known that we have our pensions, so I probably didn't focus as much on the actual numbers as I should have over the years. We're not ones that will RE, but definitely want the FI without having to worry during retirement. DH is 6 years older than I am and we are hoping to retire when he's 62 and I'm 56. I will probably work very part-time somewhere, but we want the freedom to do more traveling than we can when we both work full time.

 

[dvcgirl67]

Thank you - that is a very good point. According to my spreadsheet, we shouldn't need to access the funds in our 401k until we are about 12 years into our retirement which will allow even more time for our investments to grow (hopefully). I'm wanting to read up more about how to set our funds up with the bucket method to distribute our investments. That makes the most sense to me from what I've seen on it.

Odd thing is that I'm the controller of a medium sized company (about $100M annual sales), but I feel unsure about financial planning. Overall, I'm good with numbers, but I'm more used to putting everything together after the fact (producing the financials for our company, etc) than I am with the planning and forecasting aspect of retirement planning. DH and I have always lived below our means, but have also always known that we have our pensions, so I probably didn't focus as much on the actual numbers as I should have over the years. We're not ones that will RE, but definitely want the FI without having to worry during retirement. DH is 6 years older than I am and we are hoping to retire when he's 62 and I'm 56. I will probably work very part-time somewhere, but we want the freedom to do more traveling than we can when we both work full time.

All good advice you're getting....and you're a financial person, you'll be fine. I'm very glad to read you have that 401K though, because a quick look at any inflation calculator tells us that our spending power today will be greatly reduced in the future....and that's factoring in "historic inflation levels"...or 2.4%, certainly not what we have right now. If we take a trip back in time, had you retired 30 years ago, in 1992, with a pension of 100K per year, today you'd need $206,065 to maintain your purchasing power. Inflation eats into retirement savings, and high inflation is a retirement killer. But, you guys have all three legs of the retirement stool in play....a pension, 401K, and social security. For those of us without pensions, we have to build up pretty big 401K/Retirement Savings accounts in order to maintain our desired standard of living in retirement. The silver lining for us is that it's made us huge savers, so we rely on less than 1/2 of our income, and we've trained ourselves to live on that. In fact, we had to plan on giving ourselves a bit of a raise in our retirement planning because we intend to travel more when we retire, especially in the early years.

Anyway...sounds like you're well on your way!

 

[newski_mom]

All good advice you're getting....and you're a financial person, you'll be fine. I'm very glad to read you have that 401K though, because a quick look at any inflation calculator tells us that our spending power today will be greatly reduced in the future....and that's factoring in "historic inflation levels"...or 2.4%, certainly not what we have right now. If we take a trip back in time, had you retired 30 years ago, in 1992, with a pension of 100K per year, today you'd need $206,065 to maintain your purchasing power. Inflation eats into retirement savings, and high inflation is a retirement killer. But, you guys have all three legs of the retirement stool in play....a pension, 401K, and social security. For those of us without pensions, we have to build up pretty big 401K/Retirement Savings accounts in order to maintain our desired standard of living in retirement. The silver lining for us is that it's made us huge savers, so we rely on less than 1/2 of our income, and we've trained ourselves to live on that. In fact, we had to plan on giving ourselves a bit of a raise in our retirement planning because we intend to travel more when we retire, especially in the early years.

Anyway...sounds like you're well on your way!

Thanks for the vote of confidence! We are fortunate to have our pensions for sure!