My wife retired in April 2024 after thirty years as an ER nurse; I'm still working part-time (one or two days a week) as a physician assistant (PA).
Two children - younger one is a college freshman; older one graduated from college several years ago, now doing prerequisites for an associate's degree in another field.
We have 529 plans for each of them, which should completely cover the costs of their educations (not included in the assets below.)
Age: Him 59, Her 57.
State of Residence: Texas.
Tax Filing Status: Married Filing Jointly.
Tax Rate: 22% Federal. No state income tax.
Health Insurance:
ACA marketplace plan for both of us + younger child, with a monthly premium of $803.18 after premium tax credit.
Life Insurance:
Him: $1 million level term life for 20 years (ends in 2032). Premium of $258.31 per month, fixed for the term.
Her: $100,000 annual renewable term life. 2024 annual premium was $439, increases yearly. Previously had more life insurance through employer.
Other Insurance:
We have homeowner's, auto, flood and umbrella insurance ($2 million umbrella).
Estimated Social Security Benefits:
His: $4016 per month starting at age 70 (in 2035). PIA at FRA of 67 is $3238/month.
Hers: $2000 per month starting at age 62 (in 2029). PIA at FRA of 67 is $2841/month.
Both sets of numbers are based on zero future estimated annual earnings.
Emergency Funds: No separate emergency fund.
Debt: No mortgage (paid off in 2013). No auto or other loans. Credit cards are paid off every month.
Annual Expenses: $120,000 (includes taxes and ACA healthcare plan, does not include educational expenses covered by 529 plans.)
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Desired Asset Allocation: 80% stocks / 20% bonds (including MMF). Considering 70/30 to reduce stock risk.
Desired international allocation: 0-20% of stocks, I don't have an international allocation at present.
Total portfolio: $2.6 million
Each fund or holding is shown as a percentage of the total portfolio.
Current Retirement Assets
His Taxable
01% Vanguard Tax-Managed Small-Cap Admiral (VTMSX), ER 0.09%. Estimated long-term capital gains $20,500
03% Lockheed Martin Corp (LMT), inherited in 2011. Estimated long-term capital gain $71,300
Also have $12,000 in I Bonds held in electronic form at Treasury Direct, not included in percentage calculations.
Her Taxable
01% Fidelity Government Money Market Fund (SPAXX), current SEC 7-day yield 4.46%
His Traditional IRA at Vanguard
01% Vanguard Federal Money Market Fund (VMFXX), current SEC 7-day yield 4.75%
06% Vanguard Inflation-Protected Securities Admiral (VAIPX), ER 0.1%
04% Vanguard Short-Term Inflation-Protected Securities ETF (VTIP), ER 0.04%
14% Vanguard Growth Index Admiral (VIGAX), ER 0.05%
13% Vanguard Value Index Admiral (VVIAX), ER 0.05%
Her Traditional IRA at Fidelity
28% Fidelity 500 Index Fund (FXAIX), ER 0.015%
08% Vanguard Short-Term Inflation-Protected Securities ETF (VTIP), ER 0.04%
His Roth at Vanguard
04% Vanguard 500 Index Admiral (VFIAX), ER 0.04%
Her Roth at Fidelity
09% Fidelity 500 Index Fund (FXAIX), ER 0.015%
His 401k
08% State Street Equity 500 Index - Class K (SSSYX), ER 0.02%. See below for company match.
Her 401(k)
N/A - Rolled over earlier this year to Fidelity Traditional and Roth IRAs
100% total
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New Annual Contributions
$2000 - His 401(k), working 1-2 days per week. Company match is 100% of salary deferral up to 4%, then 50% of deferral on the next 2%. Current contribution is set at 6% to get the match.
$8000 - His Roth IRA.
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Questions:
1. In which order should we draw down our accounts? Per the Bogleheads Wiki page (https://www.bogleheads.org/wiki/Retirem ... n_priority), in our situation it would be:
2. For what it's worth, I ran these numbers through FIRECalc (https://www.firecalc.com/), which gives a 100% success rate for 40 years.
It also calculated a 95.6% success rate with a spending level of $142,467 (5.76% of the starting portfolio), but this obviously doesn't take into account fluctuations in the total portfolio value.
Using Total Portfolio Allocation and Withdrawal (TPAW) Planner (https://tpawplanner.com/) for a retirement duration of 40 years currently gives a monthly spending amount of $10,272, with a floor of $7903 if the sequence of returns risk is not favorable. These numbers will vary with portfolio performance.
Using the Rich, Broke or Dead? calculator (https://engaging-data.com/will-money-last-retire-early/), gives us a "Broke" percentage of 0.1% starting when I turn 91, but a "Dead" probability of 86.2%, so there's a greater than 8 out of 10 chance that I won't give a hoot at that point.
Your thoughts on these estimates as starting points for planning? I understand that "It is difficult to make predictions, especially about the future."
3. Any other items I haven't covered?
Thanks for reading.
Two children - younger one is a college freshman; older one graduated from college several years ago, now doing prerequisites for an associate's degree in another field.
We have 529 plans for each of them, which should completely cover the costs of their educations (not included in the assets below.)
Age: Him 59, Her 57.
State of Residence: Texas.
Tax Filing Status: Married Filing Jointly.
Tax Rate: 22% Federal. No state income tax.
Health Insurance:
ACA marketplace plan for both of us + younger child, with a monthly premium of $803.18 after premium tax credit.
Life Insurance:
Him: $1 million level term life for 20 years (ends in 2032). Premium of $258.31 per month, fixed for the term.
Her: $100,000 annual renewable term life. 2024 annual premium was $439, increases yearly. Previously had more life insurance through employer.
Other Insurance:
We have homeowner's, auto, flood and umbrella insurance ($2 million umbrella).
Estimated Social Security Benefits:
His: $4016 per month starting at age 70 (in 2035). PIA at FRA of 67 is $3238/month.
Hers: $2000 per month starting at age 62 (in 2029). PIA at FRA of 67 is $2841/month.
Both sets of numbers are based on zero future estimated annual earnings.
Emergency Funds: No separate emergency fund.
Debt: No mortgage (paid off in 2013). No auto or other loans. Credit cards are paid off every month.
Annual Expenses: $120,000 (includes taxes and ACA healthcare plan, does not include educational expenses covered by 529 plans.)
-----
Desired Asset Allocation: 80% stocks / 20% bonds (including MMF). Considering 70/30 to reduce stock risk.
Desired international allocation: 0-20% of stocks, I don't have an international allocation at present.
Total portfolio: $2.6 million
Each fund or holding is shown as a percentage of the total portfolio.
Current Retirement Assets
His Taxable
01% Vanguard Tax-Managed Small-Cap Admiral (VTMSX), ER 0.09%. Estimated long-term capital gains $20,500
03% Lockheed Martin Corp (LMT), inherited in 2011. Estimated long-term capital gain $71,300
Also have $12,000 in I Bonds held in electronic form at Treasury Direct, not included in percentage calculations.
Her Taxable
01% Fidelity Government Money Market Fund (SPAXX), current SEC 7-day yield 4.46%
His Traditional IRA at Vanguard
01% Vanguard Federal Money Market Fund (VMFXX), current SEC 7-day yield 4.75%
06% Vanguard Inflation-Protected Securities Admiral (VAIPX), ER 0.1%
04% Vanguard Short-Term Inflation-Protected Securities ETF (VTIP), ER 0.04%
14% Vanguard Growth Index Admiral (VIGAX), ER 0.05%
13% Vanguard Value Index Admiral (VVIAX), ER 0.05%
Her Traditional IRA at Fidelity
28% Fidelity 500 Index Fund (FXAIX), ER 0.015%
08% Vanguard Short-Term Inflation-Protected Securities ETF (VTIP), ER 0.04%
His Roth at Vanguard
04% Vanguard 500 Index Admiral (VFIAX), ER 0.04%
Her Roth at Fidelity
09% Fidelity 500 Index Fund (FXAIX), ER 0.015%
His 401k
08% State Street Equity 500 Index - Class K (SSSYX), ER 0.02%. See below for company match.
Her 401(k)
N/A - Rolled over earlier this year to Fidelity Traditional and Roth IRAs
100% total
-----
New Annual Contributions
$2000 - His 401(k), working 1-2 days per week. Company match is 100% of salary deferral up to 4%, then 50% of deferral on the next 2%. Current contribution is set at 6% to get the match.
$8000 - His Roth IRA.
-----
Questions:
1. In which order should we draw down our accounts? Per the Bogleheads Wiki page (https://www.bogleheads.org/wiki/Retirem ... n_priority), in our situation it would be:
- Regular income.
- Investment income.
- Taxable investments with small gains.
- Pre-tax retirement accounts up to a specific marginal tax rate (top of the 22% bracket for us.)
- Taxable investments with large gains.
- Roth retirement accounts.
- Home equity.
2. For what it's worth, I ran these numbers through FIRECalc (https://www.firecalc.com/), which gives a 100% success rate for 40 years.
It also calculated a 95.6% success rate with a spending level of $142,467 (5.76% of the starting portfolio), but this obviously doesn't take into account fluctuations in the total portfolio value.
Using Total Portfolio Allocation and Withdrawal (TPAW) Planner (https://tpawplanner.com/) for a retirement duration of 40 years currently gives a monthly spending amount of $10,272, with a floor of $7903 if the sequence of returns risk is not favorable. These numbers will vary with portfolio performance.
Using the Rich, Broke or Dead? calculator (https://engaging-data.com/will-money-last-retire-early/), gives us a "Broke" percentage of 0.1% starting when I turn 91, but a "Dead" probability of 86.2%, so there's a greater than 8 out of 10 chance that I won't give a hoot at that point.
Your thoughts on these estimates as starting points for planning? I understand that "It is difficult to make predictions, especially about the future."
3. Any other items I haven't covered?
Thanks for reading.
Statistics: Posted by Raymond — Sun Nov 03, 2024 5:48 pm — Replies 2 — Views 406