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52 and hoping to RE in 15 months- Reality check please
Old 02-21-2011, 09:15 AM   #1
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52 and hoping to RE in 15 months- Reality check please

Hi there:

Newbie to the site, I enjoy it!

My wife and I are looking at retirement in 15 months (me), 27 months (her). We will both be 53 on our retirement dates. She will recieve a 60K per year pension, with 2% inflation per year. We also have $1.8 million in investments, 40% stock, 30% bonds (not bond funds) 30% guaranteed funds, CD's. Have a child to put through college beginning in 2013, probabley a state university. We have no debt. Besides the upcoming college costs, we are comfortable that we can live on 80K per year (after taxes). We are not eligible for social security, but are for Medicare

Would appreciate a reality check on our plans?
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Old 02-21-2011, 09:35 AM   #2
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Pinejake,
Congratulations. You are in great shape. Suggest you run your numbers through FireCalk and look at lots of scenerios. But based on the input that you have stated...I'm sure the results will be positive. My question is... Why wait? It look as if pension & SS will almost cover your $80k (after tax) requirements. Certainly investments will cover needs until pension & SS activate.
Right?
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Old 02-21-2011, 09:50 AM   #3
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Thanks for the input, why wait? - good question

Note- we are not eligible for SS,
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Old 02-22-2011, 04:07 PM   #4
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Will your mortgage be paid off? Are your health care expenses covered until Medicare?
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Old 02-22-2011, 05:28 PM   #5
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Mortgage paid off, no plans to move. We live in the Colorado mountains, and love it!

Health care available through pension group plans, but we'll have to pay most of the premiums. Assume 12K per year for that, would probably get a high deductible plan, we are pretty healthy.
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Old 02-24-2011, 05:44 PM   #6
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pinejake, way to go. I have a question about the pension payout. With my company's traditional defined benefit plan, there's a 5% per year penalty for early retirement before age 62. We have a workaround for that with a magic number, but even at that, can't draw the pension before 55.

Any of that apply to you?
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Old 02-24-2011, 06:41 PM   #7
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You are all set pinejake. Enjoy your retirement.
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Old 02-24-2011, 07:00 PM   #8
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We have a workaround for that with a magic number, .

I too have this early withdrawal pension penalty. I will be 55 this year and so don't plan on taking it for a few years, but I am interested in your "workaround".
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Old 02-24-2011, 09:29 PM   #9
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Is the $1.8 in tax deferred funds that you can't access without penalty at 53?

Can your wife receive her 60k pension at 53?

You most likely have enough money but can you get to it without penalty retiring at 53?
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Old 02-25-2011, 09:21 AM   #10
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Pinejake,

I assume your wife is in Colorado PERA. I receive a PERA benefit as well. My advice is to ensure your calculations are based on taking "option 3" with provides survivor benefits. Also, related to healthcare expenses if you are choosing the HDHP the monthly cost is about $412/month. Combine this with an HSA for the tax advantages, and it will be less than your budgeted amount.
I retired one year and three months ago (but who's counting), and my wife and I are enjoying the freedom to explore life on our own terms.
Hope it all works out for you as well as it has for us.
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Old 02-25-2011, 11:22 AM   #11
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Thanks for all the responses, yes My wife,s pension is a Public Employee pension, she will have 30 years as a teacher/counselor. The $1.8 mil is in 457, 401k, 403b and non retirement accounts, so I will have $ available right away.

retiredncolorado- thanks for the health care tip.

15 months looks more doable all the time....
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Old 02-26-2011, 07:15 PM   #12
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Quote:
Originally Posted by pinejake View Post
Thanks for all the responses, yes My wife,s pension is a Public Employee pension, she will have 30 years as a teacher/counselor. The $1.8 mil is in 457, 401k, 403b and non retirement accounts, so I will have $ available right away.

retiredncolorado- thanks for the health care tip.

15 months looks more doable all the time....

60K pension at age 53. Sweet you are in great shape.

Obviously you'll want to keep a close watch on the pension plan economics. It seems like Colorado has already reduced future COLA increase to the lesser of inflation or 2%.

FYI, to replace you wife's pension with annuity would require roughly $1.65 million.
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Old 03-01-2011, 08:30 AM   #13
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SoReady, the workaround depends on the terms of your retirement plan. With mine, if age + years of service = 85, there's no penalty for early retirement. Unused sick leave is converted to an equivalent amount of a year of service, e.g., 1040 hours unused sick leave / 2080 work hours per year = 0.5000 extra year of service. Hope you have it.

pinejake, I don't know the details on 457 and 403(b), but I know with a 401(k), you have to pay an early withdrawal penalty before age 55. You can always get the money under that condition, but that didn't seem attractive to me.

Is there a provision in the CO PERA that allows penalty-free withdrawal at a number of years of service, like 30 in your response? Won't that apply only to the pension money and not the 403(b), 457 and 401(k) accounts? Aren't those all separate from the PERA money, and subject to federal tax regs?
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Old 03-01-2011, 09:24 AM   #14
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I am impressed with the amount of savings you have accumulated. How did you do that? High paying jobs?
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Old 03-01-2011, 10:20 AM   #15
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The pension, 401K, 457 and 403b are all subject to taxes , but I don't think penalties apply to the 457 or 403b (I'm checking tho), and I know there are no penalties on the pension.

How did we save $1.8 million? we have good paying jobs, probably upper middle class at best. But, we've saved money for 30 years by living well below our means, we didn't fall into the "bigger/better"- house, car, vacation, furniture, wife, husband etc.- trap.

30 years later we have a good chunk of cash and potential freedom instead.
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Old 03-01-2011, 11:12 AM   #16
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30 years later we have a good chunk of cash and potential freedom instead.
Congratulations! Enjoy it!
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Old 03-01-2011, 05:47 PM   #17
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