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Can we pull the plug?
Old 04-24-2019, 09:43 AM   #1
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Can we pull the plug?

I posted a while back and now really struggling to keep my head in the game at work. I've seem too many co-workers and friends plan everything for "tomorrow" and then end up dying younger than expected. Struggling to stay engaged knowing that I probably don't NEED to work much/any longer.

Here's the numbers
$1.5M Tax Deferred 60/40 stocks/bonds
$1.3 Taxable 60/40 stocks/bonds
$2.8 Total Investments for retirement

We are both around 50 years old and are "planning" to 95
No debt. House paid off.

Assuming 25% haircut for SS ($22.5k each at 68)
$90k Spending - with assumption of $25k for COBRA and then switching to ACA or some other Healthcare in the future, Fixed Exp $25k

The other $40k has a discretionary element to it and could be manages. It does includes placeholders for dining, charitable giving, gym memberships etc. Also includes "one-time" or non-recurring items like household repairs, auto repairs, fund for auto replacement and includes $6k annual travel budget.

Firecalc, Personal Capital and Fido all greater than 95%
Firecalc shows $100k spending at 100%

The numbers would say we should be good. My biggest question mark is healthcare to get to Medicare. Also, convincing my DW that we should pull the plug. I don't think it would go well if I stopped working and she kept working.

I've also thought about convincing DW to take a sabbatical. This could do one of a few things after said sabbatical:
1. Ease into full retirement.
2. Re-charge and get a plan to work a few more years (either full time or contract)
2a. There is the risk of becoming stale and not obtaining work again.
3. Find some fulfilling work (likely at significantly less pay but could partially offset our cash burn rate)
4. Last point here is that I am not resolved to never work again...

Thoughts? Advice?

Thanks in advance!!
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Old 04-24-2019, 09:51 AM   #2
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Calculators say you are good, you have significant discretionary expense in your budget that you could pull back on to decrease the pull from accounts if needed. Healthcare is always a wild card, unfortunately.
If DW is not ready to retire, I would vote with the sabbatical for both of you as a trial. See how it goes.
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Old 04-24-2019, 09:55 AM   #3
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This won't help you OP, but for anyone reading who will need ACA subsides to lower HI cost, you must think ahead and have some after tax money to live on between retirement and Medicare. Anything you can turn to after tax before you retire will help keep you below the ACA cliff. 90K of taxable income will put you over.
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Old 04-24-2019, 10:06 AM   #4
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Originally Posted by ivinsfan View Post
This won't help you OP, but for anyone reading who will need ACA subsides to lower HI cost, you must think ahead and have some after tax money to live on between retirement and Medicare. Anything you can turn to after tax before you retire will help keep you below the ACA cliff. 90K of taxable income will put you over.
Thanks for the note comment on ACA subsidies.

For us I'm not counting on saving money, just trying to figure out where to get coverage. COBRA is expensive, but I know it's reliable (at least for 18 months). After that, where and how we get coverage is a wild card.

For my planning, I am counting on the cost is not greater than COBRA...ACA or otherwise.
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Old 04-24-2019, 10:11 AM   #5
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Originally Posted by wannabefire View Post
Thanks for the note comment on ACA subsidies.

For us I'm not counting on saving money, just trying to figure out where to get coverage. COBRA is expensive, but I know it's reliable (at least for 18 months). After that, where and how we get coverage is a wild card.

For my planning, I am counting on the cost is not greater than COBRA...ACA or otherwise.
You're welcome you can work towards getting some after tax money between now when you stop working. Take a good look at your tax situation, run some numbers. It could be cheaper to pay more tax now to get below that cliff. After COBRA it seems like the trend toward almost all HI being ACA coverage and it's the same coverage. It can cost nothing, it can be greatly discounted, or it can be rack rate. At the 90K level you are in a bad spot over the cliff but not with a huge income to help mitigate your insurance costs.
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Old 04-24-2019, 11:33 AM   #6
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Your situation sounds just like mine when I first joined this forum 4 years ago.

At that time, I decided to let my megacorp decide for me, and 4 months ago, they did. I held on to get the severance package. I was not going to walk away from easy money and great benefits.

I also have similar worries about healthcare costs, but those are insignificant to worries about my personal longevity. I have seen way too many coworkers die unexpectedly before retirement (actually before 55).

I am much more worried about dying before enjoying my retirement than having money issues if the ACA is repealed and/or the economy crashes, etc...

You seem to be FI to me given your spending. For me, knowing that I was close to FI 4 years ago made it easier to stay at work. I did not struggle to stay engaged. I disengaged and enjoyed myself. Perhaps you have the option to do something like that for a while?
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Old 04-24-2019, 11:42 AM   #7
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Originally Posted by wannabefire View Post
$2.8 Total Investments for retirement

We are both around 50 years old and are "planning" to 95
No debt. House paid off.

$90k Spending - with assumption of $25k for COBRA and then switching to ACA or some other Healthcare in the future, Fixed Exp $25k

The other $40k has a discretionary element to it and could be manages. It does includes placeholders for dining, charitable giving, gym memberships etc. Also includes "one-time" or non-recurring items like household repairs, auto repairs, fund for auto replacement and includes $6k annual travel budget.

The numbers would say we should be good.
Looks good to me.

Quote:
My biggest question mark is healthcare to get to Medicare.
Yup, it's pretty hard to project healthcare expenses for 15 years.

If the ACA survives intact, I suspect you'll be just fine. If not, then anything is possible, some of the possibilities could be very, very bad.

Do you or your spouse have any pre-existing conditions yet?

Quote:
Also, convincing my DW that we should pull the plug. I don't think it would go well if I stopped working and she kept working.
Yup, that's always a concern. Why don't you think it would go well? When I retired, my wife continued to work. It went fine.
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Old 04-24-2019, 11:46 AM   #8
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Originally Posted by wannabefire View Post
For us I'm not counting on saving money, just trying to figure out where to get coverage. COBRA is expensive, but I know it's reliable (at least for 18 months). After that, where and how we get coverage is a wild card.
If the ACA is intact, you won't have a problem getting coverage.

If not, then nobody really knows. If you don't have pre-existing conditions then you'll likely be able to get coverage at some (potentially high) cost. If you do have pre-existing conditions and the ACA is gone, then all bets are off.

Quote:
For my planning, I am counting on the cost is not greater than COBRA...ACA or otherwise.
Maybe... I suppose you have to take a guess somehow.
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Old 04-24-2019, 11:53 AM   #9
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those are insignificant to worries about my personal longevity. I have seen way too many coworkers die unexpectedly before retirement (actually before 55).

I am much more worried about dying before enjoying my retirement than having money issues
IMHO, these fears of dying early are way, way overblown.

Unless you are working in some particularly dangerous field, very few of your coworkers actually die "early". The few that do stick in your mind more than the vast majority that don't.
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Old 04-24-2019, 01:23 PM   #10
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IMHO, these fears of dying early are way, way overblown.

Unless you are working in some particularly dangerous field, very few of your coworkers actually die "early". The few that do stick in your mind more than the vast majority that don't.
Probably statistically true, but it is still a gut punch when you hear your from a sibling or close friend that they have cancer or some other serious illness.

It is certainly a balance. Work to live, live to work.

Enjoy life!

I'm in the camp of, "every day is a gift, live your life as if there is no tomorrow". Now that said, I'm not going to quit my job and blow all my money...

so again, balance!
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Old 04-24-2019, 01:40 PM   #11
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Do you have taxes figured into your spending? Looks like your taxable balance is high enough to carry you for a while, but at some point you'll have to start paying taxes on that qualified money
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Old 04-24-2019, 02:45 PM   #12
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...convincing my DW that we should pull the plug. I don't think it would go well if I stopped working and she kept working.
Congrats on being FI, and being able to RE!

To me, the statement above is what you now need to address with your wife. If I were you, I'd let my wife know my desire to RE, and let her know that since you both are FI, you intend to retire within xx months, whether she does or not. Then, it's her choice as to whether to continue working, and she can't blame you for her working while you're not (well, as least, not logically). You might want to start the conversation by describing all the great travel and hobbies and things you plan to do (for me, getting into better physical shape is first).

Good luck!
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Old 04-24-2019, 03:06 PM   #13
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I'm in the camp of, "every day is a gift, live your life as if there is no tomorrow".
I agree! If you need to retire in order to live your life well, you are doing it wrong, IMHO.

Quote:
Now that said, I'm not going to quit my job and blow all my money...

so again, balance!
Again, I agree.

Just because someone I happened to know dies at 35, that doesn't make me feel compelled to quit at 34.
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Old 04-24-2019, 04:06 PM   #14
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Do you have taxes figured into your spending? Looks like your taxable balance is high enough to carry you for a while, but at some point you'll have to start paying taxes on that qualified money
Yes - I'm roughly" including taxes as our spend is ~90k and we should be able to withdraw ~100k (or 110k if you thin 95% success rate).

But I have not attempted to model it out due to uncertainty of tax rates in the future.
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