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May 12th, 2023 at 11:07 pm
So as you know, I have decided I want to retire to the place both of my kids are now living. Exactly when has been up in the air. Lately, I have been thinking that at 56.25, I am not so very far away from 59.5, that magic age where carefully following 72t rules will no longer be required. So, why not try to plan my retirement date around that? Can I make it work? I have been crunching numbers, and I think that I can.
If I work from now until age 59.5, I calculate that my monthly CalPers pension will be $946 per month. Of course, it won't begin until I have reached 62, so that is 2.5 years of living on savings only.
I have a spreadsheet (I have shared it before) that calculates my tax-deferred balance as I begin taking withdrawals. My goal is to still have money at age 100. Of course, I have to assume some rate of return, which may prove to be inaccurate. I use 5%, which I think is very reasonable. But still, as there is no guarantee, I like to build in some buffer. For example, I have built in a 3% annual COLA. If we hit some years of very bad market returns, I can reduce it or forego it completely for a year or two, which certainly helps prolong the life of my portfolio. When I calculate, I use the "rounddown" function, which also builds in some buffer. So if I begin at age 59.5 with a 2k per month withdrawal, increase it at 3% annually, decrease it at age 62 by the amount of my pension (which also has an annual COLA), and project out to age 100, I still have 274k at the end. I feel pretty safe with that. I am not calculating in any SS benefits, even though I do expect to receive a small amount. I intend to enroll when I reach age 65, so that I can have my Medicare premium deducted from it.
So 2k per month is not a fortune to live on, but I feel I can make it work. And, work well enough to lead a very happy life in the same area where my kids are. I have some time yet to investigate various costs and play around with that 2k per month budget.
One thing that would absolutely need to happen is my car loan would need to be paid in full by age 59.5. So, I have played around with those numbers. If I continue paying $250 per paycheck for now, then bump it up to $268 per paycheck after I receive my Step raise in September, then bump it up to $296 per paycheck after I receive my Step raise in September 2024, I will pay the loan in full on 7/30/26, exactly 2 weeks before I turn 59.5. That is a very doable plan and does not represent a hardship of any kind. So that piece of the plan is ironed out.
Now there is the small matter of a house. I want to be realistic about how much I can save. Things always seem to come up, like needing a crown. However, if I take the balance I have right now and add $225 to it each and every paycheck between now and the end of July 2026, I will have over 21k. I think that I can average more than $225 per paycheck. In fact, I think I can easily break 30k . However, I do not think I can have 50k saved up in only 3.25 years. Frankly, I am not too sure that you can buy a 50k house and take a 20k mortgage. Maybe you can? I would think that a lender wouldn't want to bother. Or maybe a HELOC for the 20k would be an option. Or, I could pull 20k out of my Roth. My Roth isn't huge, so I don't really like that idea. And what if the ideal house ends up being 65k? For sure I would want to look at borrowing some of that; 35k would be too much to pull from my Roth.
So it may be that if I am looking at having to carry a small mortgage, I will decide that 2k is simply not enough and I need to work a bit longer, save a bit more money, and let my pension increase a little bit more. If that is how it goes, then I will have to adjust. However, I am going to aim for 59.5 and see if I can hit it.
5 Comments »
April 23rd, 2023 at 06:38 pm
Look at this little house, isn't it cute?
Carbondale, IL Real Estate - Carbondale Homes for Sale | realtor.com®
And what do you know? It just happens to be located in the same town where my very favorite 2 people in the whole world live. What a coincidence.
Almost a year ago now, I re-named my "hobbies" sinking fund "house down payment". I have been adding small bits of money here and there. Well, I am ready to get serious about this sinking fund. Because I want to make a large down payment on my last house; 100% to be precise. The balance in the account at this moment is $857.46. While this is a lofty goal, notice that this little house is listed for sale at 49.9k. There is plenty for sale in the area in this price range.
I intend to stop making extra payments on my car loan for now. I intend to stop making Roth IRA contributions for now. I have always intended that my Roth would be long-term savings for something like a new roof or a vehicle replacement. I don't want to touch it for anything else. While 71k is not a huge sum of money, it is a fund I do not plan to tap anytime soon. I hope to need the house down payment much sooner.
I am only contributing 5% of my gross to my 457 plan. I will just keep doing that.
When will I make this move? I do not know. But I know that when the time comes, I want to be financially ready.
4 Comments »
November 14th, 2019 at 07:24 pm
For me, this was the deciding factor in how big a priority paying off the 5th wheel loan needs to be.
If I were to retire NOW, I calculate that I could draw $1,456 per month from my nest egg. Here is how that budget would look:
Everything I need, but not much fun. Without the 5th wheel loan payment, I could increase those sinking fund contributions and have more discretionary dollars. In short, my financial situation would be greatly improved.
Plus, I intend to cancel my life insurance policy once the 5th wheel loan is paid in full, freeing up a few dollars there as well. No one depends on my income any longer. However, in the event of my death, I would want SB to be able to have the 5th wheel free and clear. My children are both self-supporting and will inherit my investment and bank accounts.
So, I am happy with this plan. It makes sense to me.
5th Wheel Loan,
4 Comments »
October 4th, 2019 at 02:58 am
Originally Published 5/1/19
I have continued to refine and update my "if I retire right now" spreadsheet.
I have extended the final line to the month I turn 100. I will tweak my monthly withdrawal to maintain steady income from date of retirement to the month I turn 100. The next month, I will be flat broke.
Extending the time out several more years reduced my beginning monthly withdrawal amount. Good portfolio growth the past two months has increased it.
In addition to my nest egg, I am including the cash value of my pension plan. Because I am not yet vested, if I were to retire now, I would not receive a monthly pension payment. However, I would be entitled to a refund of all I have paid in (but not the amount my employer has paid in on my behalf). I would roll the money into my 457 plan and so it would become part of my little nest egg. Once I vest, I will forfeit the cash value so will no longer include it in this calculation. However, I will receive a monthly pension which will certainly factor in.
My new monthly beginning withdrawal amount is...$1,406.00. (I am sticking with whole dollars).
Nope, not yet. Better keep working.
0 Comments »
October 4th, 2019 at 02:33 am
Originally Published 04/30/19
I am so excited to share that this past Sunday, SB and I purchased our tow vehicle. It is a 2018 Dodge Ram 2500 4x4 with a Cummins Turbo Diesel engine. This baby is made for towing. Here she is:
She is a pricey girl. But after much discussion, we decided that we wanted a reliable workhorse. I admit I am a bit intimidated to drive her. I plan to take some RV driving lessons. You know, how to back up, hitch your trailer, make wide turns, etc.
SB and I have really been feeling the strain of living in such a tiny space. We have been irritable and short with each other. After a couple of argumentative weeks, we have decided to move ahead with purchasing our travel vehicle now. Even though we are not ready to hit the road, we will have more living space now.
We purchased the lowest trim level with no extra options. Even so, the truck is nicely equipped with back up camera, trailer brakes, a jake brake, a nice sound system, power seats doors and locks, tow mirrors, etc. We chose to purchase an extended bumper to bumper warranty which will take us to 8 years or 75k miles. We believe we will hit the 8 years before the 75k miles. The sticker price of the truck was 55k+. With tax, license (expensive on this sort of truck) and the extended warranty, we paid $53,551.85. We split the cost, and the truck is paid for.
It is some major sticker shock. We feel the odds are good that this truck will serve us well for many years to come. Frankly, I fervently hope it is the ONLY tow vehicle I will ever buy.
So now my next decision is which 5th wheel to buy. I could stick with used and pay cash. I believe I could find something which would do. However, I am leaning heavily towards financing a new 5th wheel. I have seen some BEAUTIFUL ones, but I am keeping in mind that I wish to keep the length to no more than 30 ft, and I wish to go with an "ultra lite". This will make towing easier, parking easier, gas cost a bit less, and many parks limit the length of your rig if you want to camp in the park. There are a few models which fit those specs and yet still offer a bit of elbow room.
For example, I LOVE this one:
0 Comments »
March 30th, 2019 at 06:50 pm
I love to crunch my numbers this way and that. Recently I have discovered that if I retire right now, it looks like this:
- withdraw $1,400 per month beginning 4/1/19
- give myself a 2% COLA every Jan 1st
- hold off on SS until FRA (67)
- at age 67, reduce monthly withdrawal by $750 (realistic SS benefits estimate)
- assuming 5% IRR, run out of money at age 96
Even though I cannot live my desired lifestyle on $1,400 per month, it is a very liberating feeling to know I can cover my basic needs come what may.
I have built a spreadsheet and will continue to fill in actual numbers and re-calculate each month. At some point, the monthly withdrawal is going to become enticing enough to pull the trigger on retirement.
6 Comments »
May 12th, 2016 at 09:20 pm
OK, so maybe my idea of "fun" is a bit abnormal, but I think this is super fun.
If you retired today, what are your chances of having enough resources to support yourself for the rest of your life? You can find out here:
Text is http://www.cfiresim.com/ and Link is http://www.cfiresim.com/
My success rate is 0.0%. I expected that. But I intend to check back with this site from time to time. And are you ever going to hear me "squeeee!!" when that dial moves from 0.0%.
3 Comments »
December 11th, 2015 at 09:42 pm
Looking at my income tax situation for 2015, I estimate that I will owe $446 to the federal govt and receive a refund of $88 from the state. So, not a bad job estimating withholding.
It is very possible that 2015 is the last year I will be able to file head of household and claim J as a dependent.
In 2015, I had a small amount of income taxed at 25% federal and 8% state. In 2016, it is very possible I will have much more of my income taxed at those rates.
Therefore, in 2016 I will be contributing solely to my tax-deferred accounts and skipping Roth contributions.
After I relocate to Reno, I will no longer be paying state income tax. If I am earning less (which is a distinct possibility), I may not be in the 25% bracket any longer. It will make more sense to continue Roth contributions then; at the very least I will revisit the issue.
My 2015 gross wages should come in at $55,168.95. I aim to contribute 15% of that to retirement accounts, and I do include matching. That means my target is $8,275.35.
By year end, I will have contributed 3.6k to my Simple, 2k to my Roth, and 1k to my traditional. My employer contributed another $1,623.00 to my Simple. Those contributions total $8,223.00, which is $52.35 short. I will contribute another $100 to my traditional by the end of the year and consider this goal met.
Including 2015, I have now contributed a grand total of 19.5k to my Roth. I like to keep track of this number, as Roth IRA contributions can be withdrawn at any time for any reason, no tax or penalty. The rest is earnings and must be left alone until I reach age 59.5. It's shocking how close that time is drawing!
I'm really hoping to break 200k in tax-deferred in 2016. Let's see if Mr. Market cooperates.
1 Comments »
April 18th, 2015 at 06:03 pm
I love to browse on realtor.com. I have spotted several condos in Reno which might suit me fine.
Here is one:
Text is http://www.realtor.com/realestateandhomes-detail/959-Flatcar-Ln_Sparks_NV_89431_M17037-25540?row=17 and Link is http://www.realtor.com/realestateandhomes-detail/959-Flatcar...
This place is in Sparks. Sparks is just east of Reno and the two cities have grown into each other. It is a 2 br. 2 bath with 1088 sq. ft. and has a 1 car garage. The asking price is 95k. If I were to purchase it at 95k with 20% down and took a 15 year mortgage, my PI payments would be $526 (according to the calculator on realtor.com). The HOA dues are another $195. There is still property taxes and insurance to pay. But still, total housing should be under 1k per month, with a big drop when the mortgage is paid in full.
If I can land a job paying at least $15 an hour, something like this should be doable. Not a lot of wiggle room, but worth it I think at my age to be done with the mortgage in 15 years. If I have to stop saving for retirement, the money already saved will continue to grow, and I should still end up in OK shape.
Hopefully, I will be able to earn more than that and will continue to save. I am trying to be realistic. I am approaching age 50 and will not have any business contacts in the area. I have to be prepared for the possibility of a significantly lower income.
At this point, I am planning to move with BF. If we are sharing living space, we will also share expenses. That will provide a bit of budgetary wiggle room too. However, I only want a mortgage I can afford completely on my own.
In other news, tax season is mercifully over. Between my overtime and my bonus, I cleared an extra 4k. I have sent off 1k to my traditional IRA, $500 extra to my car loan, $300 extra to emergency fund, and $200 extra to Roth. The other 2k I needed for expenses. J's car got new brakes and a major tune up (120k miles), and I paid the IRS $987. Additionally, my annual matching of $1632 was sent off to my Simple IRA. Looking forward to seeing those account balances rise a bit on 4/30. Of course, will just have to see if Mr. Market cooperates.
Mrs. M180 and I are planning a 3 day weekend in Seattle. We were able to get airfare for $156 each. We will stay one night with my childhood friend (who stayed with me last September), and two nights on Vashon Island visiting my birth mother, her sister, and the sister's new husband. On the final day, we are hoping to spend some time with my niece who lives in Tacoma. She is only 5 years younger than me, so is actually more like my baby sister.
6 Comments »
September 20th, 2014 at 04:25 pm
Lately I have been mulling over the idea of buying my final home with a reverse mortgage. Or, if I buy before age 62, buy it traditionally and plan to owe about half of the value at age 62, and take the RM at that point.
I am thinking this way because I want to retire with no mortgage payments. The best way to accomplish this is to own a home free and clear. At this point, that is looking unlikely, unless I opt for a 1 bedroom apartment style condo. Such a home is not without its benefits, but of course has some drawbacks too. If I opt instead for a small single family home with a garage, it is looking as though I will not be able to own it free and clear by age 62.
So, I am keeping this idea on the back burner.
7 Comments »
December 19th, 2013 at 05:52 am
Look at this place. It is priced at 6k less than I paid for my current house.
Text is http://www.realtor.com/realestateandhomes-detail/1120-Mazatlan-Cir_Colorado-Springs_CO_80910_M11987-95006?row=12 and Link is http://www.realtor.com/realestateandhomes-detail/1120-Mazatl...
I think if I bought something like this to live in, the rents from the other three units would pretty much cover the mortgage, property taxes, and property management company. (If I lived there, I would let the tenants assume I was a renter too). Which would mean I could live there very cheaply, maybe free. That would certainly make my modest income go further. Eventually, the mortgage would be paid in full. What a nice inheritance for my two children.
Besides, it is basically the same as living in a condo. Only better, because if one tenant was unpleasant to live near, I could instruct the property manager to not renew their lease.
Mrs M180 and I have tossed around the idea of buying such a place together. That is a thought, too.
8 Comments »
September 27th, 2013 at 07:56 pm
I've been daydreaming lately, looking at nice little condos in various locations online. I've been calculating the size of my nest egg under different scenarios. The more I contemplate my situation, the more I think that the biggest obstacle to my dreams is my negative home equity.
I've decided to increase my Simple IRA contributions to $250 per month, which is 3k per year. My employer's contribution will be another 1.5k. Together, that is approximately 9% of my annual gross (my gross including overtime and bonus).
I will continue my automatic monthly Roth contribution of $150 per month (1.8k per year), which is a bit more than 3% of my annual gross.
If I were to continue along at that rate until age 65, and assuming I enjoy 5% annual growth, I would end up with enough to live comfortably (though frugally) in my little condo, even with a small mortgage. If I enjoy a return greater than 5%, the picture only gets brighter.
So for now, that is all I will contribute. When I receive my annual overtime, tax season bonus, and Christmas bonus, none of it will go to retirement savings. Instead, I will focus on cash savings and my mortgage. I want to be in a position where I can sell my house whenever I decide the time seems right (without touching retirement savings). I have a long, long way to go to be in that position. So, wish me luck.
I have also recently decided to trim my cash allowance from $60 per pay period to $20. Too much of that money was being spent grabbing a sandwich or a latte. It wasn't good for my bottom line or my waistline. So, I have gotten back in the habit of keeping lunch foods at work.
I received $1.50 from Hausernet yesterday, and have already turned it into a mortgage chip.
3 Comments »
March 23rd, 2013 at 06:03 pm
One locale I think about from time to time is Reno, Nevada. Why Reno? Climates with dry air appeal to me, due to my mold allergies. There are other locales which interest me, but Reno has the advantage of being close enough to "home" to be driveable for visits.
So yesterday I was browsing real estate listings and saw this:
Text is http://www.realtor.com/realestateandhomes-detail/8670-Umber-Sky-Ct_Reno_NV_89506_M29669-61322 and Link is http://www.realtor.com/realestateandhomes-detail/8670-Umber-...
Now, doesn't that look like a nice little house? 81.5k. That would be very affordable. My minimum income requirement would be so much lower than now.
In budgeting news, I have decided to bump my mortgage payment up from $1081.63 to $1085. Not much, but something.
2 Comments »
August 11th, 2012 at 05:18 pm
I stumbled upon this free planning tool recently:
Text is https://www.futureadvisor.com/signin and Link is https://www.futureadvisor.com/signin
and wanted to share in case anyone here is interested in giving it a whirl.
You link to your retirement account(s), kind of like Mint, or you can manually enter your holdings. You enter how old you are, how much you are saving annually, how much you earn, and how much income you want to have during retirement. It calculates your odds of success and makes recommendations. It is similar to Financial Engines.
I have played around with it a little. I wouldn't consider all of the recommendations, but I did consider and decide to implement some of them.
Note that Future Advisor is a fan of low-cost index ETFs (also available as funds). I am also a fan, so this is a good fit for me.
Some of its recommendations:
-Have 9% of portolio in REITs, an additional 9% in foreign REITs, for a total of 18%! I think that is too much, and I don't want to invest in foreign REITs. I did however buy some VNQ, Vanguard REIT Index. I am passing on VNQI, the foreign REIT index.
-Buy some ETFs in my Simple IRA. Um, I'm not able to buy any ETFs in my Simple IRA. I don't see anyplace where I can input this information, so I can't get any recommendations which are actually possible. If I bought the fund version, I would be paying additional fees since the amounts in each recommendation would be much less than 10k. Also, I have to pay an annual custodial fee per fund, so I prefer to have just 1 fund. I did sell Target Retirement 2030 in favor of Total Stock Market. This was a good idea. TR 2030 is composed of 3 index funds. To rebalance, I needed to know the percentage of each. By holding only 1 index fund, I have eliminated this step. I should have done it this way from the start.
-Sell my VXUS (Vanuard Total International) in favor of VEA (Vanguard Tax Managed International). A tax managed investment inside a tax advantaged account? This perplexed me for a while until I noticed that the expense ratio of VEA is slightly lower. A-ha! They are trying to save me a litte money. I haven't done it, though. VXUS has a bit of mid and small, VEA doesn't.
-Add some emerging markets. At first I rejected this idea as I know my VXUS holds some emerging markets. I examined its holdings and saw that it has only 5% in emerging markets. I had thought it was more than that. Since it has only 5%, that means about 1.25% of my entire portfolio is in emerging markets. That did seem too low, so I added some, although less than the recommendation.
-Sell small cap value in favor of small cap. Hmmm. Maybe. I haven't done this.
-Add a large value and an international large value. I did add a bit of each.
-Reduce bonds. This is probably the recommendation with the most impact. I considered for a few days, then I did it. The tipping point for me was looking at the amount of bonds in TR 2030. It is less than the amount of bonds I had.
So that is how I spent my Happy Friday afternoon this week.
4 Comments »
August 7th, 2012 at 11:33 pm
Would you consider it? If so, what countries would you consider, and why?
According to International Living, there are places where an income of $800 per month will provide a comfortable lifestyle. If the area is scenic and local infrastructure is in place, yes, I would consider it. Especially if my income is such that I could afford to travel back home to visit every few years.
So this is something to keep in mind as I plan future vacation travels. Two countries which I think I might want to investigate are Uruguay and Ecuador. A conversational Spanish class might be a good idea.
Last week, I did 3 more secret shops. These required an initial cash outlay, but I will be reimbursed plus paid $5 each. All 3 were for the same fast food chain. There are more of these shops available, but I am done eating their food for now. The free (after reimbursement) meal is part of what makes the shops worthwhile.
My daughter has repaid $260 of the $500 I lent her. As you can see on my sidebar, Mini E Fund is looking a little more healthy these days.
Beezag is in some sort of transition. There are no new videos available. I received an e-mail about this and was asked to cash in my points. I had 7,226 pts, and was able to redeem 7,000 of them for $7.00. I hope that the other 226 follow me to their new site, but who knows what will happen? The e-mail was rather vague.
My son J started his Sophomore year today. Last Thursday at orientation, I shelled out $110 for his student ID card, his yearbook, and a new set of gym clothes. Today I sent him off with a $40 check for his lunch account, and $5 in case he needed to ride the city bus home, or buy a cold drink if he decided to walk to a friend's house. (Neither of these things would cost $5, but J will only spend what he needs to spend.) His best friend from last year is going to a different high school this year. Last year they would walk to the friend's house and I would pick J up after work. In return, I would pick up the friend in the mornings and drive him to school.
6 Comments »
May 22nd, 2012 at 10:20 pm
I received my good faith estimate and some other documents. In 2-3 weeks, I should receive the loan docs in the mail. I need to sign and have them notarized (will make appt for this at the local WF branch), then send them back. I am supposed to close June 30th! They are adding on June's interest to my balance and I skip a payment in July. They will transfer my existing escrow account, so I will be short one monthly deposit (from skipping in July). They will do an analysis a month or so after closing, and I will need to send some money.
My new PITI is $1077.92.
My daughter found a house to rent in a small town about a 30 minute drive from here. Her father met with the realtor today to view it (he is a deputy, and is currently assigned nearby). He said the carpet is a bit worn, but otherwise it is a-ok. New appliances and linoleum, and clean. The realtor emailed the lease to her today, she will overnight it with the deposit, and they will hold the house for her until June 15. She should be moved in before then. Yay! They will stay with me for a day or two after they arrive from Indiana, but then will be moving into their rented house.
I did a wallet sweep today, and sent the proceeds ($4.62) off to CurveBall.
I found this blog recently, and am fascinated. This family of 4 lives on one part-time income. They paid 13k cash for their fixer-upper house in a very rural area.
Text is http://www.budgetingwiththebushmans.com/ and Link is http://www.budgetingwiththebushmans.com/
I don't think I would like living in a town of 100 people unless a much larger town was close by. However, it makes me wonder...could I save up some cash and buy an inexpensive small home for myself? Like a little 900 sq ft place with hardwood floors built in the 40s? Hmmm.