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Can I retire?
Old 10-13-2012, 09:49 AM   #1
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Can I retire?

Hi, I am SherryI would love to know if I can reire now, on an annual pension of 34,000 dollars a year and my health insurance and dental care are already paid for.
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Old 10-13-2012, 09:54 AM   #2
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Hi Sherry, welcome to the forum. Tell us, does your pension have cost of living adjustments? Does this include Social Security? How much do you need to live, including taxes? Do you have any savings? A little more info will help members answer your question.
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Old 10-13-2012, 10:00 AM   #3
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Quote:
Originally Posted by Sherry
Hi, I am SherryI would love to know if I can reire now, on an annual pension of 34,000 dollars a year and my health insurance and dental care are already paid for.
Thank you for your help
My pension has cost of living increases. I will only receive about 300 dollars a month of SS and I am not counting this in the 34 thousand dollar pension. I am married but if my husband dies, i am not eligible for his SS. And, he does not have a 401 or pension. I have thought about moving to Wasington or Florida bkz they do not have income tax. Thank you
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Old 10-13-2012, 10:02 AM   #4
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Welcome to the forum. Along the lines of MichaelB's questions, you might find it helpful to run your numbers through FIRECalc: A different kind of retirement calculator first too, then we might be able to discuss any questions you may have after you see those results. No one can answer without knowing (at the very least):
  • Your nest egg
  • Your retirement income sources (you've provided this)
  • Your projected retirement expenses, annual spending
  • How long you plan to be retired (how old you are and how long you plan to live). While you can't know for sure, you have to plan on some number unless your retirement income safely covers all expenses.
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Old 10-13-2012, 10:05 AM   #5
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If you and DH can live on $34k you're all set. Given the level of your retirement income I wouldn't think that state income taxes would be very significant after considering other costs of living of various states, but you could easily analyze your tax situation in your current home state vs FL or wherever at your level of retirement income.
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Old 10-13-2012, 10:11 AM   #6
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Originally Posted by Sherry
Hi, I am SherryI would love to know if I can reire now, on an annual pension of 34,000 dollars a year and my health insurance and dental care are already paid for.
I am just including my income if I retire soon. My husband is still working for a few more years. He receives a commision. We will live in LA until he retires.
Thank you for your help
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Old 10-13-2012, 10:21 AM   #7
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Originally Posted by pb4uski
If you and DH can live on $34k you're all set. Given the level of your retirement income I wouldn't think that state income taxes would be very significant after considering other costs of living of various states, but you could easily analyze your tax situation in your current home state vs FL or wherever at your level of retirement income.
I agree with PB on this. If you think you will be on a modest retirement budget, I wouldn't just move to a state with lower income taxes based on your expected income as that would be minimal. Heck, home owners insurance or property tax differential to a new state could swallow up that income tax savings and more. I have a pension and live in a state with an income tax. Though it is partially exempted, moving to a no state income tax residence would actually cost me money after allowing for health insurance costs, and other expenses, so currently I am staying. Of course moving from California, would provide relief in most instances probably compared to a future location. Just fully study the trade offs before moving.
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Old 10-13-2012, 02:16 PM   #8
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Originally Posted by Sherry View Post
Thank you for your help
My pension has cost of living increases. I will only receive about 300 dollars a month of SS and I am not counting this in the 34 thousand dollar pension. I am married but if my husband dies, i am not eligible for his SS. And, he does not have a 401 or pension. I have thought about moving to Wasington or Florida bkz they do not have income tax. Thank you
Hi Sherry, Washington State doesn't have income tax, but we do have sales tax, and depending where in the state you live, the combined state + local rate can approach 10%. I live in Washington and can't think of anywhere else I'd rather be, but don't assume it's inexpensive to live here just because there's no income tax. Washington, the part west of the Cascade range anyway, has a pretty high cost of living. Have you looked at City-Data.com? You can get some idea there how the cost of living in areas you might move to compares to where you live now.

Ooops, I just noticed in your signature that you live in LA...where (according to City-Data) the cost of living is even higher than it is here!
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Old 10-13-2012, 07:32 PM   #9
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My federal pension will be about the same as the amount you describe, except mine's after all taxes, after health insurance, life insurance (greatly reduced from the present amount of coverage) and survivor's benefits. The net amount will be around $32000-$33000. Five years later, I will begin receiving an additional approximate $1000 per month from a military retirement. My wife will have no pension, but will qualify for a small SS at age 62, and has a small 401k. I'm like you on SS, I will only get a small amount, somewhere around $250 or so. Are you a government employee that falls under the WEP for SS purposes?

Bottom line is what matters most isn't how much you bring in income-wise, it's how much of it you need to spend to live.
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Old 10-14-2012, 10:38 AM   #10
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Welcome to the forum, Sherry. I agree with Midpack re: using Firecalc first.
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Old 10-14-2012, 10:50 AM   #11
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Originally Posted by Sherry View Post
Hi, I am SherryI would love to know if I can reire now, on an annual pension of 34,000 dollars a year and my health insurance and dental care are already paid for.
It's quite simple.

Does your income => than your expenses?

Yes, it is that easy ...
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Old 10-14-2012, 10:51 AM   #12
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I am married but if my husband dies, i am not eligible for his SS.
Sure you are. If you are legally married, you can get 100% of his benefit, measured on the last day of his life.
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Old 10-14-2012, 12:20 PM   #13
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Sure you are. If you are legally married, you can get 100% of his benefit, measured on the last day of his life.
That may not be true if they are subject to the Govt. pension windfall elimination situation. I'm not sure how it works, since it doesn't affect us, but I know this sometimes happens for spouses.
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Old 10-14-2012, 12:41 PM   #14
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It's quite simple.

Does your income => than your expenses?

Yes, it is that easy ...
It's rarely if ever that simple, hopefully the OP knows better...
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Old 10-14-2012, 02:09 PM   #15
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It's rarely if ever that simple....
I agree that it's rarely ever that easy. There are many factors to consider and for DW and me it's a constantly evolving process.

However, the OP has not indicated their annual expenses. To ask the forum if they can live on $34k per year begs the question... how much do you live on now. Not how much you make, but how much do you spend?

So, Sherry... just as others have said, you need to have a firm understanding of what you spend now. It's comforting to know you have a COLA pension and your medical/dental is covered but that's only the start. What are you're expenses? Can you adjust/reduce those expenses if necessary?

One of the best books DW and I read on the subject is Your Money Or Your Life by Joe Dominguez and Vicki Robin. It's not specifically about retirement - instead it approaches the topic by helping you understand where money fits into you life and provides several ideas about how much you spend and what you buy with that money.
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Old 10-14-2012, 02:24 PM   #16
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My own mother's pension and SS are less than $34K. Yet, she is doing fine despite having to pay for dental care and Medicare supplement. An important factor is that she owns her home, a very comfortable 1,700-sq.ft. home that is relatively new and needs little maintenance.

So, I would say that it is definitely doable for the OP, who has medical costs already covered. But only the OP would know whether her current expenses are under her income. I am sure that my mom does not feel at all deprived, but then she is 80-yr-old and does not have the same needs as someone in the 50s or 60s.
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Old 10-14-2012, 03:54 PM   #17
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Originally Posted by NW-Bound
My own mother's pension and SS are less than $34K. Yet, she is doing fine despite having to pay for dental care and Medicare supplement. An important factor is that she owns her home, a very comfortable 1,700-sq.ft. home that is relatively new and needs little maintenance.

So, I would say that it is definitely doable for the OP, who has medical costs already covered. But only the OP would know whether her current expenses are under her income. I am sure that my mom does not feel at all deprived, but then she is 80-yr-old and does not have the same needs as someone in the 50s or 60s.
I was just talking to my 83 year lady neighbor a couple days ago, as she was talking about just spending 10k on home renovations ( not needed, just wanted to change things). I told her I would like to change some things, but I didn't have the money to spend on all my travels and my wish list on home. She emphatically stated spend the money on things to do while you can, because she doesn't have the energy or physical strength to do many things anymore.
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Old 10-14-2012, 08:04 PM   #18
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My mother also has some cash and equities. But her largest asset outside of the home she lives in is a rental home that she is not renting anymore because of the hassle with renters. She is waiting for the RE market to recover to sell.

So, my mother has money to spend but not a whole lot of needs nor wants to spend it on, except clothes. Oh, and every closet in her house is stuffed with clothes, but she has to spend money on something, right?
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Old 10-14-2012, 08:22 PM   #19
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If as you say, your nestegg ie savings is small, it seems like through out your working career you believed you would be able to retire on your anticipated pension. Why start to doubt that now?
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Here's my budget to compare
Old 10-16-2012, 05:35 AM   #20
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Here's my budget to compare

Heres my projected budget, so if you take out healthcare and a bit of misc, then you should be able to give it a go.
Household Tax and Ins 4600 Health Ins 15000 Vehicle Ins 800 Phone internet cable 1800

Vet Dog 300 Utilities 2400 Gym 1080 Food 200 per wk 10400 Entertainment 5200 Misc 10400 Gas 2600 Expenses 54580
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