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2 POSSLQ DINKs, already 7/8 retired
Old 04-28-2019, 12:21 PM   #1
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2 POSSLQ DINKs, already 7/8 retired

Hello to everyone. We are 2 POSSLQ DINKs (Persons of Opposite Sex Sharing Living Quarters/Dual Income No Kids), aged 61/59 living in Michigan. For our working lives, we lived where we had to, worked fairly hard (very hard in her case), and were pretty conservative with spending. We’ve started to travel more over the last few years as her job has spooled down and ended. We tried the snowbird thing this winter and liked it, planning to do that again in 2020.

I say we’re 7/8 retired. DGF, (59 y/o) fully retired last Fall. I am currently enjoying a unique opportunity to work very little and still earn a pretty good wage but I can see that window will slowly close over the next year or two. So that’s ½ the couple fully retired and ½ the couple ¾ retired, which makes 7/8, amirite??

It’s probably appropriate to mention how grateful I am to be able/qualified to post in an “Early Retirement” Forum. Although we have worked hard, recovered from setbacks, and delayed gratification--many others are having a lot harder time of things. We are very lucky to have the “problems” we have.

I found this forum several months ago and have gotten a lot of value from it and so decided I should become a more active participant.
I won’t ask the “can we retire?” question…as we clearly can (details below). To run the list of things I’m supposed to mention in my introduction:

Expenses/Cashflow: We will be taking more of a deep dive together as the year progresses, but I estimate we jointly spent around 65 K last year. We are generally “cheap dates”. I hope to increase the spending in our 60-75 years so we can experience things while we are physically able to. My parents were a great role model in this respect. We have No Debt.

Health Care: I have Tricare and she is currently using the ACA.

Passive Income: Mil Pension for me, I will also get a pension from my second career when I bail. Neither is huge but combined, they should come close to covering our basic expenses. She will get a widows S/Secy in a year, I will likely delay filing for many years.

Investments: We have a “7 digit” assortment that includes conventional brokerage accounts, 401 K, Roth 401 K, IRA and Roth IRA—Oh yeah and a SEP too. A lot of it is VERY conservatively allocated (we have “won the game”..). Again, we’ll be taking a deeper dive in the following months (currently we’re in two separate places), but I punched in some numbers into FIRECALC for the purpose of this intro.

I over-rode the investment allocation to only 25% equity, and used a higher spending amount than we are currently using (recall that our basic spend should already be covered with two pensions and one S/Secy, so this entire number would just be “extra” spending). Even with the conservative allocation, we have 100% success to age 100. Hmmm.

A friend of mine recently said the only reason I’m still working is because I’m greedy. While I'm not sure that's it, when I look at the figures, it seems to me that I don't need to continue with work for financial reasons.

Why I’m here, what I’m hoping to learn about:

--Tax “problems”. I’m trying to wrap my hands around the gestalt of the tax situation. We have some big capital gains, when to withdraw (and from where), there is the whole “tax torpedo” thing… and we haven’t decided where we intend to live or what we want to be when we grow up yet! I’m not suggesting that avoiding taxes will be the driving factor, but I want to understand the options and make appropriate choices. These are great problems to have BTW, and I occasionally have to remind myself of that.

--Transition from Saving to Spending. I already found my way to the “blow your dough” thread! We have both been pretty frugal but really don’t need to be.

--Social aspects of retirement. Neither of us is especially social and our careers weren’t real conducive to expanding our social circle a lot. Never connected through kids (she had no kids, I say I have “none that I am currently aware of”, just to be safe..) We’ve been getting out a bit more, and we enjoyed meeting some of the retirees on our snowbird trip.

--Location. Another “problem”—we’re in a nice place right now, so there’s no great hurry to get out of here. We have also accumulated a lot of “stuff” over the decades. We remain open to a better situation including a winter/summer setup, but to justify the hassle and expense, it has to be clearly better than our current arrangement and that’s a reasonably high bar.

The good news, as I mentioned before is that these are good problems to have and we aren’t on a timeline. I’m looking forward to figuring this out and appreciate your taking the time to read this.
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Old 04-28-2019, 12:26 PM   #2
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Welcome to the board and Thanks for sharing details about yourself.

You are correct you have lots of time and energy to figure out how you want to spend the rest of your lives. I'm here in MN and have found out snow birding can be a wonderful option and feels like the best of both worlds.

I'll look forward to your posts as you navigate ER..
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Old 04-28-2019, 01:36 PM   #3
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Welcome to the Forum.

I have found a lot of help here with the "tax problem" you are grappling with. No definitive answers, but a LOT of collective wisdom to help negotiate this issue.

As you say, these are "good problems".

Good luck.
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Old 04-28-2019, 01:45 PM   #4
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Welcome aboard from another SE Michgander (well, snowbirding has me in FL for ~ 6months).

Sure sounds like you've won the game. Now you just need to figure out what you want to do when you grow up! And that can take the rest of your lives.

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Old 04-29-2019, 07:14 PM   #5
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Welcome. Lots of useful info here and very helpful people. Your pensions are a nice base to your future.
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Old 04-30-2019, 05:27 AM   #6
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Welcome to our wonderful forum. Sounds like you are in a good place.
There are many postings here on ways to reduce the possible tax torpedo. In addition you have the sometimes conflicting aspect of managing your MAGI for the ACA tax subsidies.
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Old 04-30-2019, 05:36 AM   #7
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Nice first post. See below FWIW
Quote:
Originally Posted by Scusan View Post
Why I’m here, what I’m hoping to learn about:

--Tax “problems”. I’m trying to wrap my hands around the gestalt of the tax situation. We have some big capital gains, when to withdraw (and from where), there is the whole “tax torpedo” thing… and we haven’t decided where we intend to live or what we want to be when we grow up yet! I’m not suggesting that avoiding taxes will be the driving factor, but I want to understand the options and make appropriate choices. These are great problems to have BTW, and I occasionally have to remind myself of that.
I've found taxes (and healthcare) to be the most difficult spending categories to predict, and I've spent a lot of time trying to understand taxes better. But there's no way to predict what tax rates, cap gains, deductions, etc. will be in 5 years much less 20-30 years, though I would assume they won't decrease (inflation adjusted). Even if you could predict future taxes, to completely minimize lifetime taxes you'd have to use a tax attorney or devote quite a bit of time to learning and tracking your income and taxes - unlikely for many? So in broad terms, I've concluded keeping taxable income as close to constant (inflation adjusted) over the years will probably be pretty tax efficient. That means taking some capital gains in low spending years and avoiding spike taxable income years as much as possible. Many people here have tried to have their taxable income as close to the threshold where cap gains hit 15% (instead of 0%) year in and year out, that's almost a no brainer while some cap gains are at 0% IMO, unless your income will naturally fall below the thresholds every year. Deferring as much as possible feels good short term, but it seems likely that won't be as tax efficient. And Roth IRAs or conversions can be helpful too, but that's not automatically the best approach in all situations (it appears conversions are a wash tax wise for us, so why bother).

--Transition from Saving to Spending. I already found my way to the “blow your dough” thread! We have both been pretty frugal but really don’t need to be.

--Social aspects of retirement. Neither of us is especially social and our careers weren’t real conducive to expanding our social circle a lot. Never connected through kids (she had no kids, I say I have “none that I am currently aware of”, just to be safe..) We’ve been getting out a bit more, and we enjoyed meeting some of the retirees on our snowbird trip.
We're basically more introverts than extroverts too, but the answer has been pretty simple. We just join everything that sounds remotely interesting nowadays, where we were probably far too selective before. It's important to give new activities/people a chance, but if we don't like the activity we join, we just stop participating/quit. I volunteered for three years before I decided that volunteer work really wasn't for me. Even if the activity doesn't pan out, we meet people we may continue with, or learn about other related activities that we can join in on. There isn't much downside to trying new activities, if you like it great, if not what have you lost - it's not like you don't have time in retirement. We'd rather have 6-8 really good friends, than dozens or hundreds of sorta friends as many people seem to - those people who seem to know everyone.


--Location. Another “problem”—we’re in a nice place right now, so there’s no great hurry to get out of here. We have also accumulated a lot of “stuff” over the decades. We remain open to a better situation including a winter/summer setup, but to justify the hassle and expense, it has to be clearly better than our current arrangement and that’s a reasonably high bar.
From everything I've read, most retirees may move to a new house but they don't relocate far - it happens much less than people guess. Friends, family, familiarity, and/or inertia/resistance to change prevent most retirees from ultimately relocating even though many wish for better climate. We plan to move south 700+ miles, but we've moved around all our lives and we're used to starting over in a new location, and we're prepared for the disruption moving involves. We enjoy change, evidently most people don't at their core.

As for stuff. We accumulated lots of stuff over the years, but we got on a simplify our lives kick about 10 years ago and if anything it's made life more enjoyable. Over several years we sold off over a hundred items on eBay (made over $9K) and donated, gave away or tossed hundreds more items. We found decluttering to be surprisingly liberating, and we think twice about buying stuff any more. Often when I buy something now, I look for something to get rid of in kind. We won't buy more books than will fit in our one bookshelf (eBooks make that simple). I won't buy more clothes than will fit in my closet and dresser period. We don't miss ANYTHING we got rid of, and it will make moving that much easier (part of the reason we got rid of so much).

The good news, as I mentioned before is that these are good problems to have and we aren’t on a timeline. I’m looking forward to figuring this out and appreciate your taking the time to read this.
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