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.
Viewing the 'Retirement Dreams' Category
I have continued to refine and update my "if I retire right now" spreadsheet.
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:
This beauty is just under 28' in length, and can be had for approximately 40k. It has slide outs on both sides of the living area, so it doesn't feel so claustrophobic. I love the lay out and the decor; I really feel it makes great use of the space. And since the steps up to the bedroom and bath are immediately to your right as you enter the door, you can access both even with the slides in. This is an important feature if you want to travel. Suppose you are driving from Point A to Point B and you wish to pull in to say a Walmart parking lot and sleep. You cannot put out your slides in a Walmart parking lot. So if your floor plan does not allow access to your bed with your slides in, you are out of luck.
With the two slides in, there will be no ability to walk past the kitchen island towards the seating area. However, you would be able to access your refrigerator, stove, sink, and cabinets. So you could also prepare a meal in that Walmart parking lot, even if you do have to eat it standing up. This feature is somewhat less important to me than access to the bed and bathroom, but still very nice when one is on the road.
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.
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:
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%.
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.
I love to browse on realtor.com. I have spotted several condos in Reno which might suit me fine.
Here is one:
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.
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.
Look at this place. It is priced at 6k less than I paid for my current house.
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.
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.
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:
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.
I stumbled upon this free planning tool recently:
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.
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.
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.
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.
To recap my situation, I bought my current house in November 2007 for 231,400. I put down 20% + closing, + had to make repairs out of pocket.
I feel regret pangs when I see what my home is worth today. It isn't so much the loss in value, it is the knowledge that had I waited a few years to buy, I could do so much better today.
Look at this place, in a very nice area:
Isn't it cute? It is the same size as mine now, with a smaller lot, in a better school district, with a community pool. 97k!!! If I were buying that today and putting the same amount of dollars down, I would have a mortgage of 51k. I would take a 15 or 10 year note, have smaller payments than I currently have, and be done paying YEARS sooner.
What a huge difference that would have made in my retirement plans!
Since time travel is regrettably not possible, there is nothing I can do about that. But I ponder, what CAN I do? Is there some way I can benefit from today's low home prices + low interest rates? Is there an opportunity here for me to add to my modest nest egg?
I am toying with the idea of seeing if I can qualify for an FHA loan, buy a house for 100k or so, rent out my current home, and wait for the day I can sell for enough to get out from under. FHA has a 3.5% + closing down 30 year fixed loan. I would have to pay PMI. I would need to scrape up 7k or so, which would have to come from a retirement account.
Of course, I would have to take a 30 year loan on the new place, not a nice 10 year loan. But the payments would be half of what I pay now. That is the advantage I see. The disadvantage I see is....I don't enjoy being a landlord.
In other news...I had another $2.43 available in my Lending Club account. I transferred and chipped it. I have less than $5 still owed to me, so Lending Club chips are approaching the end.
I sold a gift card on Plastic Jungle for $20. When I receive the check, I will chip that too.
The dental appointment went very well! Since I have been a patient for a long time (decade or so), and since I was paying cash, they gave me a special rate. $75 for my cleaning and x-rays! That was slightly less expensive than paying $80 for insurance, then $36 at each bi-annual cleaning.
The dental copay for J was just $10. I'm going to mention to ex-h that J went to the dentist, but I'm not going to ask him to kick in half. I don't want him to feel nickeled and dimed, and I need him to come through without a fuss when larger expenses roll around. (We don't split everything. For example, I buy all of J's clothes. I receive child support, so we agreed that was fair. But we agreed that medical copays and extras such as summer camp would be split.)
My mammogram had no co-pay at all! Quite reasonable.
I'm on track to come in at or under budget on every category for January. The only "overage" is on the mortgage, because I chipped $5. I don't mind that at all.
Now that I plan to refi and start all over on a 30 year mortgage, I think I need to face the reality that I likely will not have my mortgage paid in full by age 65. Hopefully though, I will have a nice chunk of equity at that point. So perhaps a better plan for me is to downsize. I may have enough equity to purchase a 2 bedroom condo outright.
One of my retirement dreams is to live someplace pretty. South Lake Tahoe, California is one of my favorite spots to consider. So yesterday I was browsing, and found some nice level lots on city streets in the 30k range. If I had not bought my house, I could now pay cash for such a lot and a prefab kit, and would only lack the funds for the labor to put it together. Instead, I have a 183k mortgage. Sigh.
The next time real estate is hot, I intend to sell my house, bank the money, and rent a little place until I am ready to buy my final home. I expect that time is a decade or so away, so a studio apt should suit me fine at that time. Then I will have to wait for the market to cool, so that level lots in South Lake Tahoe are back in my price range again.
I was reading blogs this morning and saw a post about this prefab house, kit starts at under 40k:
I love this little house!
I have set some specific financial goals which I would like to reach before retirement. Reaching them is possible, though not a slam-dunk. This is another big reason I decided I had to get my over-spending in check. Here they are:
1. Have 600k in traditional IRA. This is for regular monthly income. At a 4% withdrawal rate, 600k would provide 24k annually (2k monthly) of income. Supplemented by SS benefits, this should afford me a modest yet comfortable existence.
2. Have 150k in Roth IRA. This money is for covering large irregular expenses which will come up from time to time. Home repairs, home maintenance, vehicle replacement. The point of having this fund is so I can (hopefully) avoid debt.
3. Be mortgage free. I am uncertain at this point if this will be in my current home, or if I will sell and move elsewhere. Wherever I am living, I would like to not have a mortgage.
I am single, so this nest egg is intended to support only one person.