Can we afford retirement in a possible recession?

[bigcedargrandma]

My husband and I are both teachers, wanting to retire this year if possible. We are both 59 (my husband will be 60 in July). At this time we each will get approximately $2200 a month in pension and we have $600,000 in annuities, IRA accounts, etc. At age 62, we are planning to take our social security and we should each get about $1400 a month. (all of these numbers are before taxes, of course). We each have a health insurance account which has about $25,000 each in it. This will pay for the cost of our health insurance for approximately 42 months...at which time, we will be using social security money to pay for health insurance until Medicare kicks in.

Our question..If we retire this year, we would have to take about 6% out of our annuity accounts for two years, until we began taking our social security. After that, we would probably need between 3 and 4% a year. (We are planning on a budget of $6000 a month for right now). Is that much going to affect the long-term of our annuity??

We have a mortgage of $175,000. (We built our retirement home on a lake 5 years ago). We have one car payment and a boat payment and no credit card debt at this time.

We don't plan to do lots of traveling (we have NEVER flown anywhere). Our plans are to spend time with grandkids, do some volunteer work, and take a couple small trips within the U.S. a year.

With the uncertainty of gas, food expenses, etc...should we wait another year to see what happens??

 

[REWahoo]

With the uncertainty of gas, food expenses, etc...should we wait another year to see what happens??

If you haven't already seen it, here is a good discussion of your question:

http://www.early-retirement.org/forums/f29/handling-just-one-more-year-syndrome-20091.html

We will always have uncertainty. If you wait until everything looks rosy before retiring, you may still be working when the grim reaper comes calling.

 

[Milton]

We don't plan to do lots of traveling (we have NEVER flown anywhere). Our plans are to spend time with grandkids, do some volunteer work, and take a couple small trips within the U.S. a year.

Obviously you should enjoy your retirement however you see fit. That said, if I were you I would seriously consider taking at least one trip to Europe, or Africa, or Asia, or South America. There is a lot more to the world than your immediate location, and it will broaden and enrich your lives to discover other countries and cultures firsthand.

 

[Achiever51]

Obviously you should enjoy your retirement however you see fit. That said, if I were you I would seriously consider taking at least one trip to Europe, or Africa, or Asia, or South America. There is a lot more to the world than your immediate location, and it will broaden and enrich your lives to discover other countries and cultures firsthand.

Funny, that was my immediate reaction too! No matter how much you read about other cultures -- or watch on TV -- there is no substitute for being there.

As for the OP, only you can make the decision on when to retire, but there will always be something to keep you working one more year...possible recession....one more promotion....paying off the mortgage...whatever. Sometimes you just have to step off the moving walkway and start enjoying the rest (and quite likely, the best) of your life!

 

[ziggy29]

Obviously you should enjoy your retirement however you see fit. That said, if I were you I would seriously consider taking at least one trip to Europe, or Africa, or Asia, or South America. There is a lot more to the world than your immediate location, and it will broaden and enrich your lives to discover other countries and cultures firsthand.

I can see the merit to that, but on the other hand, I'd also mention that some people may not be that interested in travel, and others may not want to start traveling for the same reason I'm not willing to take up golf -- it's expensive and potentially very addicting, which can kill a retirement of fairly modest means.

 

[bigcedargrandma]

About the traveling....

It's not that we don't want to travel. We have traveled (driven and camped) to every state in the U.S.(except Hawaii), to most of the Canadian provinces, cruised to S.Amer, Central Amer, Mexico, and the Caribbean...but we've never flown anywhere. We really don't like to stay in hotels, etc. I've taught social studies for over 30 years and there are places in the world I'd love to go, but since I don't want to fly..I'm limited. I'm just concerned that we don't "drawn down" our annuities too soon.

 

[Milton]

Well, as I said, it's your retirement and you should definitely please yourself rather than doing what I or anyone else thinks would be a better plan.

I think the advantages of air travel outweigh the disadvantages ... but the TSA and the airlines are doing their best to persuade me otherwise.

Since I can't say "Bon Voyage!", let me say "Bonne chance!".

 

[Moemg]

Have you made out a budget ? You have $4,400 a month coming in plus at 4% you could take another $ 24,000 from your investments . That gives you a monthly income of $6,400 monthly in retirement . Lots of people on this board live on that and lower amounts . Maybe you just haven't tried it . I would be a little nervous about taking more than 4% in this market . Hope this helps !

 

[Arc]

Just because there is (or might be) a recession - doesn't mean you have to participate in it.

 

[Rambler]

As one who has flown around the world more times than he cares to count, and as one who has spent almost as many nights in hotel rooms as nights in his own bedroom in the last 10 years, I can certainly understand the lack of desire to fly or to stay in a hotel.

There is something to be said for seeing other places, but it appears you have already had the opportunity to see some of that.

All of this said, I second Moemg's opinion: I would be pretty leery of taking a 6% withdrawl at your relatively young age young and especially in this market. I'm looking at 48 or 49, a couple/three years down the road, but trying to get things lined up so we can make it on 3%...but then again I'm younger than you and have no pension.

R

 

[militaryman]

This seems rather simple (maybe I am missing something)

You said you need $6000/mo

You indicate that you need to withdrawl additional $$ to match? SS until it kicks in...

Look at it this way....

Consider withdrawn the $67,200 shortfall ($1400x2 for 24 months) that is needed before SS kicks in.

That means you are left with $532,800 which at 3.5% withdrawl rate = $1554/mo

Add $1554 to $4400 and your at $5954 /mo

Done deal!