Go Curry Cracker > Early Retirement

Should I FIRE or Continue

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SamChav:
I am a huge fan of GCC, been following his blogs for several yrs. Thank you for helping us out of this rat race!

I am 50, my spouse 47, both on full time jobs. kids: 18 & 12. State: VA

Retirement Accounts -  1500k (100% stocks, index funds. Our contribution + ER match = 60k/yr)
Brokerage Account - 300k (VTI, SPY)
My 457, deferred comp - 330K (on separation can begin distribution or can delay it to any future date,
                                          can spread it: 5, 10 or 15 yrs. Historic rate of return: 7%)
529 - 100k (NV 529, SP500 index fund. Need 100k more to support kids thru college over next 10 years)
Home Equity: 300k
Cash: 75K
Total: 2600k

Loans:
 Mortage bal: 320K @ 2% (just refinanced to 30 years)
 Auto Loan: 20K @ 1.5% (5 years left)
 No other debt.

Spouse, brings 100k annually, likes her job, can continue for at least 3 more years. But I would like to call it ASAP:)
Need:
  72 - 84k per year
  100k kids college expense; over 10 years)

Currently on my Health Insurance, can switch to spouse's, it's decent coverage with HSA ( I don't have HSA).

Questions:
1. Unable to decide if I should quit my high paying and very stable job or continue 4 more years, then use age 55 rule? I am not a huge fan of my job, should I quit and do a freelance IT job, Part time/Full Time for a few months in a year?
2. If we both quit within the next 3 years, what is the best way to pull 72 to 84k + 100k for kids college over next 10 years?

Thanks so much for the help.

gocurrycracker:
"Should" is a tough question to answer

Could is a little easier...

Do you have sufficient assets with 4% rule?
Maybe...

remove home equity because you don't want a scenario where you are forced to sell, add $100k to "debt" as a way to think of college assistance for kids, and you have a liquid net worth of ~$1.8 million. 4% of that is ~$70k/year, a bit less than your 72k to 84k/year target.

Social security will close that gap in 15 years +/-

Spousal income could cover for next <3 years...

But probably you want a little more...



Between 457 and deferred comp and cash you have ~6 years of expenses (be sure to include taxes and health insurance (if spouse quits working) in your budget)

Add that to a few years of work and you are at age 59.5

SamChav:
Thank you very much. It makes sense.
I appreciate your time into this!

SamChav:
Here is the blueprint. Any thoughts, comments are appreciated!

- flexible to go back to work, full or part time if things don't go well. Market Crash etc.

First 3 years
   Income
       - 100k/yr (SP Job)
       -  45/yr   ( 457 distrib. over 10 yrs @ 7% RR, St. Bal=330k)
    ---------------------
   Total: 145

   ~Deductions
       -  ~7k   (FICA)
       - 23k (Fed & State taxes)
       - 10K (Hlth Ins + HSA, 7k)
     ----------------------------
     Total: 40k

    Net Income: 104 k /yr      
 
    Marginal Tax Rate: 22%

  Next 6 years

     Income
        - 45k/yr   ( 457 distrib. over 10 yrs @ 7% RR, Starting Bal=330k)
        - 20k /yr  (Taxable account, expected to be tax free)
        - 20k /yr   (Freelance work)
        - 35k /yr  (IRA St. Bal= ~1700k, 15k collg tution, no penalty | 20k w/  penalty )
     -------------------
     Total: 120k

     Deductions
         - <1k (FICA)
         -  <11k (Fed, State taxes, 10% EW penalty)
         -  ~ 12k (ACA prem. + HSA contrib. (7k) )
     ---------------------------
      Total: 24k

    Marginal tax : 12%

    Net Income : 96k

 59.5 and beyond
     - Kids out of college
     - Scale down. Expenses relatively much lower
     - Pay off Mtg & other loans if possible
     - Re-retire and revise withdrawal rate.

     Income
        -  80k (~ IRA St. Bal = 2000k  @ 4% SWR)
        -  Explore Roth conversions etc.
        -  Begin social security @ 62 (low life expectancy in the family)

gocurrycracker:
Have you experimented with cfiresim?
https://cfiresim.com/

You can enter all of your data into it and get a confidence number / success rate. What is that number?

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