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53 & not sure about my financial position
Old 05-24-2016, 04:40 PM   #1
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53 & not sure about my financial position

I will be turning 54 at the end of 2016 and would like to retire sometime soon if possible. My wife is 52 and wants to work until she is 59. I have 600K in retirement accounts, 125K in cash and 300K in home equity. My monthly mortgage is $700. I also have some rental property with a business partner that we own equally. All of these properties are on shorter term mortgages so there is not a lot of positive cashflow monthly. My plan is to sell these properties when I turn 62. My half of the equity currently for these properties is 300K. I will receive a $1500 / month pension at 62 as well as roughly $1600 for S.S. My wife should get roughly $800 per month for S.S. as well when she turns 62. Her current salary is 24K a year and mine is around 75K. I've had a couple of heart attacks in the last 5 years which I believe is now under control but is the main reason why I'd like to try and retire. I believe that around 70K a year would be enough to live on. I don't have any bills except for my mortgage and the usual home bills. The property I own has two houses on it. I live in one and rent the other for $850 / month. My mortgage is 230K and has a $1500 payment. One other piece of information I don't like to think about but is a part of my overall financial picture is the fact that I will inherit roughly 400-500K from my parents sometime in the next 10 to 15 years.
I'm sure I probably missed some important information but would welcome the forums expertise on my particular situation. Thanks.
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Old 05-24-2016, 05:39 PM   #2
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Welcome bobbyg,

Run through this:

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

and Firecalc and then give us an update.
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Old 05-24-2016, 05:46 PM   #3
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.......... One other piece of information I don't like to think about but is a part of my overall financial picture is the fact that I will inherit roughly 400-500K from my parents sometime in the next 10 to 15 years.............
I wouldn't count on it, but accept that it would be nice if it happens. A few years in an Alzheimer's unit can take a bite out of an inheritance.
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Old 05-24-2016, 06:42 PM   #4
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+1 a friend was counting on an inheritance and due to a money grubbing sister (and a long story that I only know parts of) he ended up with nothing. Luckily for him, he has been relatively successful and will be ok without it but I would not count on those chickens until they have hatched.
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Old 05-24-2016, 07:24 PM   #5
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Welcome bobbyg,

Run through this:

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

and Firecalc and then give us an update.
+1. I have a medical issue as well, and although it was not the primary reason it was definitely a large factor in my decision to ER. So if your answers to those questions say yes, and the finances are there, you'll likely be very happy with ER.
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Old 05-24-2016, 11:16 PM   #6
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Looks like you should be OK, even without the inheritance. Just live modestly.
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Inheritance
Old 05-25-2016, 11:28 AM   #7
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Inheritance

You are probably right about not counting inheritance. I was reluctant to mention it in my first post but wanted to give a complete understanding of my financial picture. I feel like I am in decent shape financially for my age but am still nervous about pulling the pin. When I run my numbers through firecalc they look pretty good and the funny thing is that waiting a few more years to retire really doesn't make that much difference in the results. One major thing that concerns me is healthcare. I can get on my wife's plan for $400 / month but if she retires at 58 we are still left with a 6-7 year gap to get to medicare. What are others doing to bridge this gap? I appreciate all of your comments.
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Old 05-25-2016, 12:49 PM   #8
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We buy health insurance from our state exchange. From what I have seen if your health is pretty good then a bronze level plan is most affordable. In our state a bronze plan for a couple is ~$800/month, however we qualify to buy catastrophic coverage since the cost of bronze level coverage is more than 8% of our income and in our state the catastrophic coverage is a lot less expensive so we pay ~$460/month for the two of us which give us access to negotiated rates for medical services and coverage in the event we have a major medical issue.

You can check out rates in your state at the website for your state exchange or at healthsherpa.com
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Old 05-27-2016, 03:30 PM   #9
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In our state a bronze plan for a couple is ~$800/month, however we qualify to buy catastrophic coverage since the cost of bronze level coverage is more than 8% of our income and in our state the catastrophic coverage is a lot less expensive so we pay ~$460/month for the two of us which give us access to negotiated rates for medical services and coverage in the event we have a major medical issue.
I am going to investigate this option for 2017. If Florida's health insurers receive their requested rate increases for 2017, then the lowest cost bronze plan for me in 2017 will be about $500/mo or $6,000/yr. The corresponding income threshold for being allowed to opt-out of an Obamacare-compliant insurance policy will be $75,000. The problem is that it will be impossible for me to know at the end of 2016 whether my 2017 MAGI will be above or below this threshold. How does Obamacare handle this situation? Will I owe the 2017 Obamacare tax penalty if my 2017 income turns out to be above $75,000 and I purchase non-Obamacare compliant catastrophic coverage for 2017 instead?

P.S. If Obamacare had never been enacted, my 2017 monthly insurance premium would be about $220/mo or ~$2,600/yr. I'm one of those lucky Americans being forced to pay thousands per year in additional health insurance premiums for the privilege of receiving an insurance policy that is inappropriate for my particular financial situation.
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53 & not sure about my financial position
Old 05-28-2016, 10:23 AM   #10
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53 & not sure about my financial position

Yeah, and before Obamacare you could be dropped for having a heart attack then not insurable by another company because of a pre-existing condition. Yadayadayada...the eternal argument will not be solved here.

I'm 50 and if I'd had heart attacks I too would definitely be looking at ER seriously, even if it meant somewhat reduced lifestyle. There is also semi-retirement to consider, and the best book I've seen on all of the permutations of that middle approach is called "Work Less, Live More." I think the author is Bob Clyatt. Good luck.
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Old 05-28-2016, 11:39 AM   #11
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I am going to investigate this option for 2017. If Florida's health insurers receive their requested rate increases for 2017, then the lowest cost bronze plan for me in 2017 will be about $500/mo or $6,000/yr. The corresponding income threshold for being allowed to opt-out of an Obamacare-compliant insurance policy will be $75,000. The problem is that it will be impossible for me to know at the end of 2016 whether my 2017 MAGI will be above or below this threshold. How does Obamacare handle this situation? Will I owe the 2017 Obamacare tax penalty if my 2017 income turns out to be above $75,000 and I purchase non-Obamacare compliant catastrophic coverage for 2017 instead?

P.S. If Obamacare had never been enacted, my 2017 monthly insurance premium would be about $220/mo or ~$2,600/yr. I'm one of those lucky Americans being forced to pay thousands per year in additional health insurance premiums for the privilege of receiving an insurance policy that is inappropriate for my particular financial situation.
I already checked it out for us in FL (we are both 60 and in the process of buying a condo in Sarasota and were considering changing our residence to FL) but the pricing of catastrophic coverage is about the same as bronze (and much more than what we pay at home).

WADR, your view of what your premiums would be if ACA hadn't been enacted is pure speculation... many people were paying much more than $220/month even before ACA and annual premiums increases were significant even before ACA, and for all you know with medical underwriting you might not be able to get health insurance at all.
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Old 05-28-2016, 12:28 PM   #12
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I see you will have an issue of low income from when you retire until you hit 59.5 and can take out of retirement accounts.

You will have 5 years where wife earns 24K and you were used to income of 99K total.
You could explore selling off your share of the rental properties you are currently partnered in, and best to do this prior to retiring so you are not desperate for the cash.

Alternatively you could split your retirement money into a separate IRA and do a 72t on that separate IRA to avoid the penalties with taking money out of IRA's prior to 59.5
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Old 05-30-2016, 09:30 PM   #13
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I appreciate all of the great comments. I am also kicking around the idea of working part time as a way to ease myself into retirement. Part time work along with the 125K I have in cash could help get me to 59-1/2 when I am able to start withdrawing from my IRA's without penalties. I remember when I was younger thinking that if I ever got my net worth to $1,000,000 I would be set. I currently sit at over 1.3 million and am still worried about it. Does the worrying ever go away?
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Old 05-30-2016, 10:12 PM   #14
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I appreciate all of the great comments. I am also kicking around the idea of working part time as a way to ease myself into retirement. Part time work along with the 125K I have in cash could help get me to 59-1/2 when I am able to start withdrawing from my IRA's without penalties. I remember when I was younger thinking that if I ever got my net worth to $1,000,000 I would be set. I currently sit at over 1.3 million and am still worried about it. Does the worrying ever go away?


so I'm a natural " worrier" so I think I'll probably kick the bucket with that as part of my personality.

that being said I find that the more info I have the less anxiety I have.
I use to think stuff like what would happen if:

my stocks all crashed
my pension disappeared
I got catastrophically ill
on and on.

but then I try to remember all the things I've done to position myself as well as possible. I've got a good plan in place and strong faith to weather some down periods. ive run multiple calculators, envisioning multiple scenarios.
If I don't know something I come here and chat and question.

more importantly I've got friends and family who love me. the rest is gravy.
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Old 05-30-2016, 11:15 PM   #15
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As Sunset said, you can draw on IRA as early as 55 and that would add 27,424 a yr
https://www.calcxml.com/calculators/72t
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Old 05-30-2016, 11:58 PM   #16
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I appreciate all of the great comments. I am also kicking around the idea of working part time as a way to ease myself into retirement. Part time work along with the 125K I have in cash could help get me to 59-1/2 when I am able to start withdrawing from my IRA's without penalties.....
In your original post you said you could get by on 70K per year, even if this is true, you need to earn 20K per year working part-time, unless you do the 72t option (or sell properties).

Just be sure to read up on it at IRS site, etc, as penalties are severe if you screw it up, and don't do it on your entire IRA, split the IRA into 2 different ones, you can figure out how much should be in the one that will have the 72t done on it, and keep the rest in the other IRA.
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Old 05-31-2016, 08:43 AM   #17
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While it was a long time ago, I couldn't help but think of the similarities between your current situation and my own, at that time in 1989.

concern about health... in my case, cancer
age 53 - self and DW
assets not particularly liquid
considered fallback to return to work, or part time
healthcare expense

long and short:
liquidated business
sold home
moved from high expense to lower income area
reduced expenses to bare minimum

life story from 1989 to today, here:
Sharing 23 years of Frugal Retirement

No two lives are ever the same, so no recommendations. Lots of mistakes, lots of luck, still here... still solvent... and no worry. Never had to go back to work.

Retiring was the best decision we EVER made.
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