I’m currently considering retiring in March to May of 2026, shortly before turning 65. Factors making me consider working longer, perhaps to 2028, are: in 2026, two kids will be in college and the youngest will be a high school sophomore; my work-from-home job pays well, and I can almost take off all the time I want; and my wife likely won’t retire until 2030 or so.
Reasons to retire:
Have enough saved (I think)
More time for hobbies, exercise, and home/property maintenance.
Increasingly tired of the daily grind and corporate politics.
Emergency funds: Have adequate emergency funds as part of my cash allocation (target of $70K), and from my federal pension.
Debt: $38K @ 3.5% on 1.2M home. Last payment is November 2026.
Tax Filing Status: Married Filing Jointly
Tax Rate: 24% Federal, 2.5% State
State of Residence: AZ
Age: 62/59 (him/her)
Desired Asset allocation: 65% stocks / 33% bonds / 2% cash
Desired International allocation: 36% of stocks (modeling VG Total World Stock Index)
Desired AA and actual are very close.
Approximate total portfolio: 3.9M, not counting three 529 accounts. About 56X expenses not covered by passive income, not counting social security.
Current retirement assets:
Taxable
2.1% cash (VG Federal and Municipal MM, checking, and savings)
13.6% VG Total Stock Market (VTSAX) (0.04)
13.5% VG Total International (VTIAX) (0.11)
2.2% VG Intermediate Term Tax Exempt (VWIUX) (0.09)
His 401k
18.5% Fidelity US Bond Index (FXNAX as proxy for a Northern Trust CIT) (0.0255)
Currently 13.5% traditional and 5% Roth, including after-tax
Match: 5% of base salary.
His TSP
4.1% G Fund
His Roth IRA at Vanguard
10.6% VG Total Stock Market (VTSAX) (0.04)
6.3% VG Total International (VTIAX) (0.11)
His Roth IRA at Fidelity – derived from after-tax 401k
4.9% Fidelity Total Stock Market (FSKAX) (0.015)
0.3% Fidelity International Stock Market (FSPSX) (0.035)
His Non-Qualified Deferred Compensation plans
5.9% Fidelity US Bond Index (FXNAX)
Her Roth IRA at Vanguard
12.6% VG Total Stock Market (VTSAX) (0.04)
5.2% VG Total International (VTIAX) (0.11)
Her TSP
0.2% G Fund
Total Taxable: 31%
Total Roth funds: 42%
Total deferred funds: 27%
529 Accounts
Child 1; College start 2024: $110K; college likely fully funded.
Child 2; College start 2025: $104K; college likely fully funded.
Child 3; College start 2028: $75K
New annual Contributions
$64,800 his 401k (+$11,700 match)
NQDCP: $44K (depends on bonus, if any)
$8,000 his Vanguard Roth IRA (backdoor)
$8,000 her Vanguard Roth IRA (backdoor)
Child 3 529: $4,200
Total: $129K
Available funds
CITs/Funds available in his 401(k) and NQDCPs
Fidelity Contrafund Pool CLF (0.37)
JPM Equity Income R6 (OIEJX) (0.45)
Northern Trust S&P 500 IDX NL4 (0.01)
American Century Mid-Cap Value (AMDVX) (0.63)
Wilmington Trust MFS Mid-Cap Growth CT (0.53)
Loomis Small-Cap Growth CP OPP (0.83)
Victory Small-Cap Opportunity (0.75)
Fidelity International Discovery CP A (0.07)
Northern Trust ACWI exUS IMI 4 (0.07)
Fidelity MIP II CL3 Stable Value (0.24)
Black Rock Total Return K (MPHQX) (0.38)
Northern Trust Aggregate Bond Index NL 4 (0.03)
Entire Spectrum of T-Rowe Price Targeted Retirement (0.26)
Non-Portfolio Retirement Income
His Pension/Disability (COLA): $65K already started.
Her Pension: $9.3K – estimated to start in 2030.
Trust income: $15K – already started; can vary; will increase (likely by several X)
Social Security: Estimated $68K for wife and me in 2032
Total: Likely at least $157K
Portfolio Retirement Income
His NQDCP: Should average about $40k/year between ages of 66 and 73.
Taxable Distributions: Presently about $24K; may increase.
RMDs on Taxable 401(k): about $29K at age 73.
RMDs on TSPs: About $8K and $600/year for him and her, respectively, at age 75.
Current yearly spending: $140K. Does not count mortgage (will be paid off at retirement), taxes, or charity. Does not count any college costs not covered by 529s or scholarships (may not be any).
A year-by-year projection of income and expenditures suggests more income than expenses for the rest of my life (hoping for 90). Including current spending, effective tax on income, and charity, my 2024 and 2025 salary should add about $210K to the portfolio each year; subsequent years with only DW working would each add about $30K to portfolio; when both of us are retired, years with both pensions, social security, and RMDs should see about $45K positive cash flow beyond projected empty-nest expenses including Medicare (probably about $170K due to inflation). Projections would leave Roth IRAs, taxable brokerage, and non-distributed 401(k) for a safety-net/heirs. Except for lower projected discretionary spending, my projections generally align with results obtained from Maxifi.
Questions:
1. Does one dare, in my situation, retire before kids finish college?
2. Suggestions for risk-adjusted portfolio tweaks.
3. Is 65% stocks too aggressive given that passive income probably will exceed expenses?
4. What to do with our traditional TSP accounts. I’ve considered rolling-in some of my traditional 401(k) to get more G Fund access. Or roll over both accounts to traditional IRAs, and perhaps doing Roth conversions, after we’re both finished getting earned income for the sake of simplification.
Reasons to retire:
Have enough saved (I think)
More time for hobbies, exercise, and home/property maintenance.
Increasingly tired of the daily grind and corporate politics.
Emergency funds: Have adequate emergency funds as part of my cash allocation (target of $70K), and from my federal pension.
Debt: $38K @ 3.5% on 1.2M home. Last payment is November 2026.
Tax Filing Status: Married Filing Jointly
Tax Rate: 24% Federal, 2.5% State
State of Residence: AZ
Age: 62/59 (him/her)
Desired Asset allocation: 65% stocks / 33% bonds / 2% cash
Desired International allocation: 36% of stocks (modeling VG Total World Stock Index)
Desired AA and actual are very close.
Approximate total portfolio: 3.9M, not counting three 529 accounts. About 56X expenses not covered by passive income, not counting social security.
Current retirement assets:
Taxable
2.1% cash (VG Federal and Municipal MM, checking, and savings)
13.6% VG Total Stock Market (VTSAX) (0.04)
13.5% VG Total International (VTIAX) (0.11)
2.2% VG Intermediate Term Tax Exempt (VWIUX) (0.09)
His 401k
18.5% Fidelity US Bond Index (FXNAX as proxy for a Northern Trust CIT) (0.0255)
Currently 13.5% traditional and 5% Roth, including after-tax
Match: 5% of base salary.
His TSP
4.1% G Fund
His Roth IRA at Vanguard
10.6% VG Total Stock Market (VTSAX) (0.04)
6.3% VG Total International (VTIAX) (0.11)
His Roth IRA at Fidelity – derived from after-tax 401k
4.9% Fidelity Total Stock Market (FSKAX) (0.015)
0.3% Fidelity International Stock Market (FSPSX) (0.035)
His Non-Qualified Deferred Compensation plans
5.9% Fidelity US Bond Index (FXNAX)
Her Roth IRA at Vanguard
12.6% VG Total Stock Market (VTSAX) (0.04)
5.2% VG Total International (VTIAX) (0.11)
Her TSP
0.2% G Fund
Total Taxable: 31%
Total Roth funds: 42%
Total deferred funds: 27%
529 Accounts
Child 1; College start 2024: $110K; college likely fully funded.
Child 2; College start 2025: $104K; college likely fully funded.
Child 3; College start 2028: $75K
New annual Contributions
$64,800 his 401k (+$11,700 match)
NQDCP: $44K (depends on bonus, if any)
$8,000 his Vanguard Roth IRA (backdoor)
$8,000 her Vanguard Roth IRA (backdoor)
Child 3 529: $4,200
Total: $129K
Available funds
CITs/Funds available in his 401(k) and NQDCPs
Fidelity Contrafund Pool CLF (0.37)
JPM Equity Income R6 (OIEJX) (0.45)
Northern Trust S&P 500 IDX NL4 (0.01)
American Century Mid-Cap Value (AMDVX) (0.63)
Wilmington Trust MFS Mid-Cap Growth CT (0.53)
Loomis Small-Cap Growth CP OPP (0.83)
Victory Small-Cap Opportunity (0.75)
Fidelity International Discovery CP A (0.07)
Northern Trust ACWI exUS IMI 4 (0.07)
Fidelity MIP II CL3 Stable Value (0.24)
Black Rock Total Return K (MPHQX) (0.38)
Northern Trust Aggregate Bond Index NL 4 (0.03)
Entire Spectrum of T-Rowe Price Targeted Retirement (0.26)
Non-Portfolio Retirement Income
His Pension/Disability (COLA): $65K already started.
Her Pension: $9.3K – estimated to start in 2030.
Trust income: $15K – already started; can vary; will increase (likely by several X)
Social Security: Estimated $68K for wife and me in 2032
Total: Likely at least $157K
Portfolio Retirement Income
His NQDCP: Should average about $40k/year between ages of 66 and 73.
Taxable Distributions: Presently about $24K; may increase.
RMDs on Taxable 401(k): about $29K at age 73.
RMDs on TSPs: About $8K and $600/year for him and her, respectively, at age 75.
Current yearly spending: $140K. Does not count mortgage (will be paid off at retirement), taxes, or charity. Does not count any college costs not covered by 529s or scholarships (may not be any).
A year-by-year projection of income and expenditures suggests more income than expenses for the rest of my life (hoping for 90). Including current spending, effective tax on income, and charity, my 2024 and 2025 salary should add about $210K to the portfolio each year; subsequent years with only DW working would each add about $30K to portfolio; when both of us are retired, years with both pensions, social security, and RMDs should see about $45K positive cash flow beyond projected empty-nest expenses including Medicare (probably about $170K due to inflation). Projections would leave Roth IRAs, taxable brokerage, and non-distributed 401(k) for a safety-net/heirs. Except for lower projected discretionary spending, my projections generally align with results obtained from Maxifi.
Questions:
1. Does one dare, in my situation, retire before kids finish college?
2. Suggestions for risk-adjusted portfolio tweaks.
3. Is 65% stocks too aggressive given that passive income probably will exceed expenses?
4. What to do with our traditional TSP accounts. I’ve considered rolling-in some of my traditional 401(k) to get more G Fund access. Or roll over both accounts to traditional IRAs, and perhaps doing Roth conversions, after we’re both finished getting earned income for the sake of simplification.
Statistics: Posted by TierArtz — Wed Apr 24, 2024 2:27 am — Replies 0 — Views 117