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16 Year Age Difference Influences Retirement Planning
Old 01-21-2014, 10:11 PM   #1
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16 Year Age Difference Influences Retirement Planning

I'll be 48 next month. My husband turned 64 last month, and will retire in about 6 weeks (due to layoff -- no pension, buyout, or golden parachute from this job, just a little severance). Our age difference will help me to retire early, as DH will start to collect SS when I'm 54. Most online retirement calculators aren't designed to handle our age difference, so since I've been planning ER as long as we've been together (even before), I created my own Excel spreadsheet that allows me to see the flow of money every year with my own conservative inputs. It does a better job of dealing with our age difference, letting me quickly see how SS and DH's death at different ages impacts WR's and when the money could run out. My estimate says we're OK if I retire early. FIREcalc runs market simulations, which is helpful to look at, too. It also puts us at 100% success rate, although it doesn't factor in drop off of income in the event of death of a spouse. I know that sounds awful, and I believe given DH's family longevity, that we could have a similar remaining life expectancy from this point -- but still, gotta run the numbers every which way before I take the plunge.

We began looking for the right house to retire to years ago, and found it 3 years ago when the market was down. We had planned to retire in a couple years from now, and begin remodeling the home about a year before retiring (so we wouldn't have to live in the mess this time around). However, we were both part of a mass layoff last year at MegaCorp, and this changed our plans a bit. We had been saving for the total home remodel, but reallocated that money to 2 years living expenses. We sold our primary home. We went ahead and paid off the low interest mortgage on what is now our only residence, just for my peace of mind. Although we were both given term dates, DH has had his extended several times, as they continue to need him (he's telecommuting now, we're both software developers). We expect him to finally be let go in March. I found another j*b, although after 25 years, I'm burnt out -- like many folks my age. I'm also feeling pretty stressed out about the new job, although I don't want to spend a lot of time griping about specifics. Just want to keep my eye on the prize (money for home remodeling), and realize that if I really have to, I'll leave.

I'm pretty sure I've set my date to RE a year from now, in February, around when I turn 49. For now, I'm w*rking to pay for the home improvements as we do them, without using any savings for these expenses. Down deep, I think hubby doesn't like hearing all this talk of me retiring before 50, when he's worked to 64 (but he'll get over it once he's finally retired himself). We'll begin collecting DH's SS when he turns 70, in 6 years. That should cover about half of our living expenses. He also has a very small pension, $384 per month no COLA, that begins the end of this year. I've never had a company pension, and current job is at a small company that has no retirement plan to vest in at all, so I'm on my own and free to quit when I'm ready. By April, we'll have 3 years living expenses in cash, to live on after I quit. DH is old enough to make withdrawals from his retirement savings, and so we'll have to decide if we'll take any from those, or from investments outside of retirement accounts, during the time after the cash runs out before we take SS. We'll have to study up on strategies to minimize taxes. Our retirement savings is pretty evenly distributed between the 2 of us, although he has a Roth in addition to his 401k, and I have a non-IRA brokerage account with dividend paying ETF's in addition to my 401K. With about 20% of his retirement savings in a Roth, and with a wife more than 10 years younger, I think his RMD should be less than our planned withdrawal each year once he's 70, so that works out nice.

Just wanted to introduce myself before I start posting in other threads. Looking forward to talking with you all, and learning from your insights.
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Old 01-22-2014, 12:04 AM   #2
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Welcome, Chris.
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Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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Old 01-22-2014, 12:51 AM   #3
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Hi Chris,

My DH and I are 15 years apart and I understand where you are coming from! Sounds like you have a good plan in place. We will be you in 8-10 years. I am 40, DH is 55. We have 3 kids however which complicates things (in a good way of course. They are 9, 11, and 12. Our plan is for DH to retire at 59-60. I will keep working but most likely 1/2 time. I still receive full benefits (ie health insurance) even at 20 hrs per week and my job is flexible and a work from home situation. Because one of the kids will still be in school when DH retires, DH will start SS at age 62 because of the extra benefit until youngest child graduates HS. I will wait til 70 to collect if SS is still there and the same. Iwill work til I am at least 50, maybe longer depending how our nest egg grows. We also will have extra income monthly til DH is 68 due to sale of a business and a couple of other small windfalls along the way due to stock options and volunteer fireman (DH) retirement. I understand the difficulty with trying to use the retirement calculators with the age difference! Welcome! Hopefully we can learn from each other!
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Old 01-22-2014, 05:44 AM   #4
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Hi Chris,

My DH and I are 15 years apart and I understand where you are coming from! Sounds like you have a good plan in place. We will be you in 8-10 years. I am 40, DH is 55. We have 3 kids however which complicates things (in a good way of course. They are 9, 11, and 12. Our plan is for DH to retire at 59-60. I will keep working but most likely 1/2 time. I still receive full benefits (ie health insurance) even at 20 hrs per week and my job is flexible and a work from home situation. Because one of the kids will still be in school when DH retires, DH will start SS at age 62 because of the extra benefit until youngest child graduates HS. I will wait til 70 to collect if SS is still there and the same. Iwill work til I am at least 50, maybe longer depending how our nest egg grows. We also will have extra income monthly til DH is 68 due to sale of a business and a couple of other small windfalls along the way due to stock options and volunteer fireman (DH) retirement. I understand the difficulty with trying to use the retirement calculators with the age difference! Welcome! Hopefully we can learn from each other!
Sounds like you have a good plan in place, too! The age difference has it's benefits and it's drawbacks when it comes to retirement, but it sounds like we've both found approaches that will work for us. You've got a good work situation, too. I look forward to sharing thoughts and encouragement with you.
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Old 01-22-2014, 06:40 AM   #5
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Welcome!

DW and I are 23 years apart and can relate to your situation.

I, too, have my own custom spreadsheet that I use for projections and planning. I primarily use FIRECALC to evaluate the past survivability of our 401k funds given our defined future spending plan.
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Old 01-22-2014, 07:12 AM   #6
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We're 8 years apart and I'm the (younger) working spouse. DH wishes I could quit with him so we could do more stuff together, but I'm like you, at the grindstone a few more years.
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Old 01-22-2014, 07:58 AM   #7
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chris66,

Welcome to the board!

I am 9 years younger than my DH so I can relate. I am 49 and we are both software developers. I have been working at the same place for 26 years and am burnt out and tired of all the age discrimination I am beginning to experience. I wish I could retire soon but have to try to stick it out until we get retiree medical when I am 55. (They have recently been playing some games hiring younger, cheaper programmers with fewer skills than I have and giving them work instead of me, trying to push me out. I hope I can keep this job until I am 55.)

It is very wise of you to be running different scenarios to handle the case of being widowed. In my case, my DH has some serious medical issues so this is very important to our planning. We want to spend time as soon as possible because we probably won't have many years in retirement together. Unfortunately, we will be lucky if he survives to age 75.

I have several different planners. My favorite has been Fidelity's RIP but I have used Firecalc and Quicken extensively as well. I have determined that in our case the best SS strategy is for DH to wait until 70 to take his SS with me taking mine 2 years later when I am 62. We plan to retire when he is 65 and then use the low tax brackets of the next 5 years to do Roth conversions on his tax deferred accounts. By delaying SS until he is 70, it increases the survivor benefit for me. It is not morbid to plan what-ifs on your DHs life expectancy; it is sound planning.

When evaluating the tax implications one of the key things to remember is that his RMDs will hit first and you will both be receiving SS at that time, so it may make sense to do Roth conversions on his accounts. Also, keep in mind that when you are widowed you may jump up in tax brackets as you will be filing single instead of married. This can really affect you when the RMDs kick in.

It sounds like you are being very proactive about planning and that is what we all need to do!
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Old 01-22-2014, 08:31 AM   #8
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Welcome. DW and I are 28 yrs apart. I have been retired for over 26 years so our retirement planning is mostly focused on DW. I convinced her to retire at 23 in order to start a family. That lasted about 7 years, when she got an offer to work on getting a private clinic here JIC certified. After that success, she became motivated to work and I became a "house husband". She would like to retire again at 50 to spend our last remaining years together. We plan to have another child next year and then probably move back to the USA.

I plan to start collecting SS at 62 and then suspend at 66 and start again at 70 for the larger survivor benefit. Also, by moving to the USA, we can pick up an extra 90k in family benefits that DW would not be entitled to here.

SS and a better US salary for DW will enable our family to live a comfortable lifestyle while never touching our "nest egg". We are debt free and will sell a property here to avoid having a mortgage or car payments in the USA.
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Old 01-22-2014, 09:08 AM   #9
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DH and I are 12 years apart. We have a young child though. I had no idea about being able to collect SS at 62 with a minor. The things you learn! I doubt DH knows either. This may change things for us...
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Old 01-22-2014, 09:22 AM   #10
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Hausfrau...go to the SS website and you can learn more about it. I didn't know about this either until I started reading here.
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Old 01-22-2014, 10:00 AM   #11
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DW and I are 8 years apart //she's the cradle robber ;o)//

Having a wife older has actually improved our planning a little as it tends to nullify the fact that women live longer than men and makes accounting for longevity a little easier as we can assume we'll die closer to the same time.

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Old 01-22-2014, 11:12 AM   #12
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Yes, this is a great benefit if you qualify. My dad got an extra SS benefit for me while I was a full-time college student living at home. It was enough to pay tuition and fees at a nearby state school, and I graduated without debt (worked summers at the college, too!)

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DH and I are 12 years apart. We have a young child though. I had no idea about being able to collect SS at 62 with a minor. The things you learn! I doubt DH knows either. This may change things for us...
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Old 01-22-2014, 12:50 PM   #13
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Yes, this is a great benefit if you qualify. My dad got an extra SS benefit for me while I was a full-time college student living at home. It was enough to pay tuition and fees at a nearby state school, and I graduated without debt (worked summers at the college, too!)

Amethyst
Where the law's different "back in the day"? I have always read that the benefit stops when you turn 18 or graduate HS, but never past 19. Unless, you were like Sheldon (big bang theory)and went to Uni at 13!
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Old 01-22-2014, 01:02 PM   #14
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The laws have changed. DH applied just last Friday for SS for himself and our sons.

If the kids are graduated high school SS for them ends on their 18th birthday. If they haven't graduated yet it goes till graduation OR their 19th birthday, whichever comes FIRST.

The kids' benefit was enough to make the spreadsheets swing to promote DH taking SS now, versus later.

FWIW - I'm 9 years younger than DH - so can relate to the age difference.

I think I've used every calculator out there plus have my spreadsheets. I like quicken lifetime planner the best for 'what if'ing scenarios. I also like Fidelity RIP, Firecalc, and Financial Engines.
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Old 01-22-2014, 01:09 PM   #15
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... FIREcalc runs market simulations, which is helpful to look at, too. It also puts us at 100% success rate, although it doesn't factor in drop off of income in the event of death of a spouse. ...
I think you can simulate this in FIRECalc. On the 'other income/spending' tab, use one of the 'off chart spending' entries to offset the difference in SS and pick a year for the 'simulated demise'. Yes, it's morbid, but I guess there's no getting around that except for just ignoring it, and that's probably not a good idea.

-ERD50
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Old 01-22-2014, 01:42 PM   #16
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I think you can simulate this in FIRECalc. On the 'other income/spending' tab, use one of the 'off chart spending' entries to offset the difference in SS and pick a year for the 'simulated demise'. Yes, it's morbid, but I guess there's no getting around that except for just ignoring it, and that's probably not a good idea.

-ERD50
Yes that is what I did to model my DH's pension ending.

The nice thing about the Fidelity RIP tool is that it has a detailed cash flow view that lets you double check exactly what happens each year and see how tax is affected at different times.

The thing I don't like about Quicken is that it uses an average rate of return and assumed tax rate that you cannot change. Minor tweaks in these have such a big impact on success that it makes me question the results. It also does not seem to handle Roth's correctly.

Firecalc gives results similar to Fidelity as both model using historical results. It is unfortunate that it does not handle tax issues and instead makes you add them in as expenses.
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Old 01-22-2014, 08:02 PM   #17
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I am 9 years younger than my DH so I can relate. I am 49 and we are both software developers. I have been working at the same place for 26 years and am burnt out and tired ...we get retiree medical when I am 55.
Hello fellow software developer I was at my last job 19 years before the layoff. No retirement, or retiree medical, just a small severance and one week unused vaca. Kinda sucks, but we were in a good career at a good time, so it was a good ride. Not a big fan of MegaCorp, tho...

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Unfortunately, we will be lucky if he survives to age 75.
I'm so sorry to hear this. This plus the job stress is quite a weight to bear.

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I have several different planners. My favorite has been Fidelity's RIP
This is one of my favs, too (but my Excel is my very fav).

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It sounds like you are being very proactive about planning and that is what we all need to do!
Oh, yeah, I may be a little obsessive, actually. I read articles on retirement or frugal living nearly every day! Talking about it on this site will be a nice change of pace.
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Old 01-22-2014, 08:16 PM   #18
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Welcome. DW and I are 28 yrs apart. I have been retired for over 26 years so our retirement planning is mostly focused on DW. I convinced her to retire at 23 in order to start a family. That lasted about 7 years, when she got an offer to work on getting a private clinic here JIC certified. After that success, she became motivated to work and I became a "house husband". She would like to retire again at 50 to spend our last remaining years together. We plan to have another child next year and then probably move back to the USA.

I plan to start collecting SS at 62 and then suspend at 66 and start again at 70 for the larger survivor benefit. Also, by moving to the USA, we can pick up an extra 90k in family benefits that DW would not be entitled to here.

SS and a better US salary for DW will enable our family to live a comfortable lifestyle while never touching our "nest egg". We are debt free and will sell a property here to avoid having a mortgage or car payments in the USA.
Wow! I admire your ability to figure out what's important to you, and prioritize them. Sounds like a life well lived.

Sadly, we can't take Hubby's SS as support for the 4 legged kids...so we'll just wait 'til 70
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Old 01-22-2014, 08:19 PM   #19
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I think you can simulate this in FIRECalc. On the 'other income/spending' tab, use one of the 'off chart spending' entries to offset the difference in SS and pick a year for the 'simulated demise'. Yes, it's morbid, but I guess there's no getting around that except for just ignoring it, and that's probably not a good idea.

-ERD50
Surprised I didn't think of that! Thanks for the advice.
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Old 01-23-2014, 02:26 AM   #20
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I am 55 and joined DH (62) in summer 2013 when he retired.
Although some health issues have come between us and our travel plans we both believe that retiring together was the best idea we ever had.
I had a good job but have no regrets at all.
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