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52 w/special need son, considering retiring at 55 under 'Age 55 Rule'
Old 02-01-2016, 10:10 PM   #1
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52 w/special need son, considering retiring at 55 under 'Age 55 Rule'

Greetings all and thanks in advance for suggestions & opinions,

I work in corp America and have contributed heavily to my 401k for 30 yrs, investing mostly in stock index funds. I enjoy my work but the frequent travel, stress, deadlines, etc. combined with the growing demands of our 23yr-old special needs son have me considering stepping down and slowing down.

Our son is profoundly mentally retarded and attends an adult daycare. He receives approx $500/mo in SSI. We plan to place him in a group home one day but no time soon. When he is placed into a group home, the SSI will go away but the group home fees will be paid by SS...or Medicaid, but his expenses will be covered. (I could go on and on about what a joy he is but I will spare everyone...for now!) We also have an older son who is out of college and on his own. Ultimately, we will rely on this older son to 'oversee' his younger brother when we are no longer in the picture. We have a trust set up for our special need son but the older son receives all inheritence upon our deaths.

My wife is a teacher with an annual salary of approx $60K. She plans to retire in 7 yrs when she turns 60 and will have healthcare benefits which extend to me and our son...grateful. Her estimated annual retirement pension will be approx $15K/yr starting at retirement in 7 yrs.

Current investment mix (401K/IRA/Roth/Company stock) totals $1M. Based on 401K contributions and company match as well as modest gains to existing balance, my investments should total around $1.2+ at age 55.

Current $1M breakdown as follows:
-$750K 401K (80%/20% stock/bonds...maybe a bit aggressive)
-$60K Rollover IRAs
-$50K ROTH IRAs
-$150K company issued stock (after tax status)

Our home is valued at approx $750K and will be paid off this year..WOOHOO! We plan to downsize within two yrs and purchase a smaller home in the $300-400K range. I might pocket the additional $300-400K but considering a small lake home if I can pay cash for it. Regardless, I do not plan to rely on home equity to fund retirement.

Based on estimates from the Social Security website, our annual benefit at age 62 would be $38K ($23K/yr for me; $15K for my wife). Given the early retirement age, I plan to withdraw 3% annually from my retirement assets with a targeted income of $80-90K/yr. I have used the Fidelity retirement calculatator numerous times and the projections with everything I have just reviewed predict this is very doable.

So, please pick it apart. Back to my statement about enjoying work...I really do. Great boss! Great coworkers! Great company! Looking for better balance.

Peace
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Old 02-01-2016, 10:59 PM   #2
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Welcome scaubie!

If you haven't read it already - there's an excellent FAQ about how to figure out if you're good to go.

Some Important Questions to Answer Before Asking - Can I Retire?

The key is to figure out your spending needs. Do you have pension or SS estimates? Have you run firecalc? (See link at bottom of page, make sure you click all of the tabs.)
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Old 02-02-2016, 08:03 AM   #3
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Welcome. I'm sure you know this already, but just in case, the 55 rule ONLY applies to 401-K plans, it does NOT apply to IRAs, so do not roll it over until you are 59 1/2. Good Luck!
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Old 02-02-2016, 08:52 AM   #4
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I have a grandson with Downs Syndrome and have set up a special needs trust which will assist him beyond your lifetime. Most times the government will give assistance provided the special needs person doesn't have personal wealth. The special needs trust, if set up properly, will use its funds to pay for extras; nicer clothes, special treats. Now, I set it up and funded it but since he still has family we haven't used it. See a specialist, my lawyer and CPA helped me set it up so I'm not an expert but you should look into it.
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Old 02-02-2016, 09:11 AM   #5
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Originally Posted by ugeauxgirl View Post
Welcome. I'm sure you know this already, but just in case, the 55 rule ONLY applies to 401-K plans, it does NOT apply to IRAs, so do not roll it over until you are 59 1/2. Good Luck!
Also, the k plan has to allow for "retirement" at age 55. Not all do.
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Old 02-02-2016, 09:23 AM   #6
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Is a reduced hours schedule a possibility for you?

I downshifted from a management position to a subject matter expert/consultant role (and 100% to 80%) and it significantly reduced stress (not that I was all that stressed to begin with). The blessing was that many of the annoying administrative hassles of my job were put off to others who were more willing to tolerate them and I was able to focus on client service issues.

Later, I made a further reduction (from 80% to 50%) with an understanding that I would then have limited travel in that if I was 50% there was enough work that did not require travel available to keep me fully utilized.
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Old 02-02-2016, 09:28 AM   #7
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Is a reduced hours schedule a possibility for you?
good suggestion.

nowadays it's difficult for those in senior roles to go to reduced hours - it is in my business anyway
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Old 02-02-2016, 09:45 AM   #8
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True... in my case the firm decided that 80% (or 50%) of pb4uski was better than 0% so they were accommodating. Since I was in consulting as long as I stayed on they made money on me since my client billing rate was much higher than what they were paying me plus benefits and other direct costs so it was a bit of a no-brainer for them. It helped that the firm had an established program for reduced hours work, albeit more targeted to young female professionals with young children who desired reduced hours.

If the OP might just quit anyway it might not hurt to ask.
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Old 02-02-2016, 11:58 AM   #9
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Welcome, scaubie! I echo the suggestion to consider asking for reduced hours at 55 if you really love your job and your most important consideration is more balance, particularly since your DW will continue employment for several years. This gives you a lot of options and you may be able to completely avoid withdrawals for a few years as well.

Even with your healthcare provided by DW, you should include an estimate for increased out-of-pocket costs over the years - friends who are teachers are seeing higher deductibles although not nearly as severe as those many megacorps are imposing.

It's not clear to me how your withdrawal rate will change when your DW retires - I assume she has some pension but significantly less than her salary.
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Old 02-02-2016, 01:08 PM   #10
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I'm not understanding how $1.2M with a 3-3.5% withdrawal rate will generate $80-90K yearly? Did I miss other sources of retirement income?


Other questions come to mind, but they are covered in the link rodi provided in post #2.


Good luck!
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Old 02-02-2016, 01:36 PM   #11
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Thanks for the response and great question. Wife's annual salary of $60k plus 3% withdrawal of $36k until she retires in 7 yrs. After that, 3% withdrawal ($36k) plus SS at 62 ($38k combined) and teachers retirement ($15k).
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Old 02-02-2016, 07:57 PM   #12
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Great job.... My story sounds a lot like yours. My wife is a teacher and plans on working 2or3 years after me. However I am not sure how that will work her knowing I am at home. I will most likely pick up a part time job but really start pulling from the plan at 59 when she retires. Debt free with her pension and nest egg. I see 80 to 90k easily. And in good years even more. And in bad years have an after tax money account to pull from.


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Old 02-02-2016, 11:37 PM   #13
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Originally Posted by scaubie View Post
Our son is profoundly mentally retarded and attends an adult daycare. We will place him in a group home one day but no time soon. He receives approx $500/mo in SSI. (I could go on and on about what a joy he is but I will spare everyone...for now!)
My cousin had Downs Syndrome, and he also attended an adult daycare. Due to terrible hearing problems, he was deaf and dumb. He lived in state mental hospitals most of his years, however his last 20 years were spent in a 3 bedroom apartment with 2 other gentlemen--managed by Volunteers of America.

I cannot tell you how happy my cousin was in his years with Volunteers. A gentlemen cooked their meals and got them to bed--while staying with them overnight. Another gentleman came in early a.m. and got them off to the state run day school program.

My cousin received Medicare and a VA disability from my uncle's time in service in WWII. He actually had more income than required, and the excess money was spent on big screen tv's and really nice furniture.

We were so thrilled to have an organization like Volunteers of America and found their employees to be truly caring and giving souls. I just wish such operations had been there for my cousin his first 30 years of life. We lost him 2 years ago at age 60 of prostate cancer. I'm just so thankful that he had his own life--and that he was fulfilled.
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Old 02-03-2016, 09:57 AM   #14
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It looks like you have done careful planning and are well positioned for your retirement. The only question I have is if you are planning to make arrangements to leave money in trust for your son, and if so, how does that fit into your plans? Could a few extra years work create more cushion for his future expenses or are you confident that future living and incidental costs will be covered by benefits available to him directly?
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Old 02-03-2016, 10:38 AM   #15
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Katiek, thanks for the response and great question!

In addition to the monthly SSI and based on his severity, our son qualified for a lifetime Medicaid waiver which pays for his adult daycare, diapers, and 20 hours per week of respite care. It will also pay for his group home one day and at such time the SSI will no longer be awarded. These services do not take our income into consideration and we could afford to pay for these services, but it was highly recommended we take these services and not assume he would qualify one day down the road.
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Old 02-03-2016, 11:56 AM   #16
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The only other question I'd have is if you're comfortable that your plan would work if something happened to your wife and she was unable to work for some reason, such as a health issue. Would the medical still be available at the same price?
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Old 02-04-2016, 12:55 PM   #17
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The only other question I'd have is if you're comfortable that your plan would work if something happened to your wife and she was unable to work for some reason, such as a health issue. Would the medical still be available at the same price?
Good call. Indeed, we will be depending on her salary & insurance for the 5yrs following my retirement at 55. If she were unable to work during that time, I would return to the workforce in some capacity. Ironic that we started out 30yrs ago with me the breadwinner and her the homemaker/mom, but now depending on her career and me taking of our son.
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