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Early retiree...wondering if I'm on track
Old 04-04-2012, 01:41 PM   #1
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Early retiree...wondering if I'm on track

Before my 60th birthday (in September 2010) I voluntarily left my position working at a very dysfunctional organization. What a relief! I had more than $1 million in my TIAA CREF account. During 2011 I withdrew about $52,000 from my IRA account and will do the same for 2012 (nets me $3500 per month after paying federal tax) Starting in January 2013 right after I turn 62 I will start collecting my social security plus social security for my 6 year old daughter that will amount to less than $35,000 per year. As some readers are aware, social security sends a check, tax free, for dependents under the age of 18. (I understand it's tax free since the tax return is filed under the child's name). We plan to use those funds to pay for any and all expenses for this active child, including her 529 plan (currently valued at around $7000) and her many extracurricular activities. We have no child care expenses, since my daughter attends an excellent public school kindergarten.

My wife (17 years younger than I) makes around $50,000 per year and through her teaching position provides the health insurance. I'm taking early social security since I have health issues to deal with (diabetic and prostate cancer survivor). I hope to last until age 75, but who knows!!! Our only debt is the mortgage of less than $120,000. We own a rental property, mortgage free, that generates about $700 per month net and has a value of $85,000. I've taken out most of my savings and deposited them in the ROTH IRA account since I can easily withdraw these monies if necessary and the TIAA CREF guaranteed fund generates 3% interest.

Today, my TIAA CREF account, including about $65,000 in a Roth IRA, still amounts to a little more than $1 million of which 47% is in the guaranteed fund, 34% in equities, 12% real estate, 3% bonds, and 5% in multi-asset (their 2010 target fund). Several financial advisors have suggested I take out some of my TIAA CREF funds and invest them in other instruments...most of which I have difficult time understanding even though I have a Ph.D.

I am very active in community activities and have no intention to seek a full or part time job....and that's OK with my wife. I feel I don't want to take on additional stress due to my medical conditions and my responsibilities helping with the care of my daughter.

I will probably reduce my TIAA CREF payment to around $2000 net per month starting in January once I start receiving social security. If anyone has suggestions about the strategies I'm using, please share with me. I've really enjoyed reading this discussion board, but this is the first time I've posted. Thanks so much!!
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Old 04-04-2012, 03:36 PM   #2
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Since SS is an important part of the equation, if I were you I would visit SocialSecuritySolutions.com and have them provide advice on your best course. While it is true that those in poor health should draw early as a general rule, I'm not sure if that general rule would apply given your young daughter and younger spouse.

The AA in your TIAA CREF account seems ok to me, if anything a bit conservative given your situation. While it is hard to have a view on these other instruments since you haven't provided any details, if you don't understand them then I would stay away from them. With an account that size I would think that TIAA CREF would provide some support to you on how to best invest it given your personal situation - have you checked to see if they offer anything like that?
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Old 04-04-2012, 03:39 PM   #3
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Welcome to ER.org. Might be worth your while to enter all your info in FIRECalc: A different kind of retirement calculator. It won't give you all the answers because it only "knows" past real returns/history, but it may help you narrow down the questions. Most if not all of us here use it as one of many retirement planning tools. Best...
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Old 04-04-2012, 04:10 PM   #4
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I am skeptical of any advice someone gives, especially if they benefit from the advice too. Sounds like you got it all figured out, so be safe and happy with the system you've been successful with.
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Old 04-04-2012, 11:44 PM   #5
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Quote:
Originally Posted by pbcoastal View Post
As some readers are aware, social security sends a check, tax free, for dependents under the age of 18. (I understand it's tax free since the tax return is filed under the child's name).
Well....most of the time that probably is true. However, if the child has sufficient other income then the benefits could become taxable. For younger children probably not much of an issue but theoretically could be for a teenager who has a job.
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Old 04-05-2012, 08:54 AM   #6
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Since your DW is so much younger, I would suggest you invest based on her age and survival statistics......she'll have to raise your daughter AND probably will outlive you by a long period of time. I'd also take SS ASAP......the odds are with that decision.

I also have a much younger wife.......a lot of our assets are based on her age. Good luck and I hope you have a long life! Sometimes those with health problems get the most regular and best health care so they outlive others who think they are the healthiest and skip their regular check ups.
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Old 04-05-2012, 10:20 AM   #7
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Thanks

Thanks to everyone for their feedback. In terms of taking my social security at age 62 I found out I am not able to obtain the social security for my daughter unless I am receiving social security...so I prefer not to wait.

I do receive financial advice at no charge from the folks at TIAA CREF. They have been quite helpful, though their advisers seem to change often. Their latest advice was to cut our expenses by 10% based on their estimates that I would live until age 95. Due to my high risk factors, I doubt that will be the case. Be as it may, we don't live "high on the hog" and I feel I don't want to deny the family some quality of life diversions...like taking a cruise next week that will cost around $3000.

Honestly, I prefer to keep most of my funds in the guaranteed account. I am a bit weary of the market gyrations.

All in all, these discussions are most interesting and helpful. Again, thanks to everyone! Long live early retirement...
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Old 04-05-2012, 12:48 PM   #8
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Just wondering. If you take SS at age 62 so your daughter can receive benefits from when you turn 62 to when she turns 18, will that affect your wife's benefits that she will receive from age 62 or later for the rest of her life?

If her benefits under her own work record are expected to exceed her spousal benefit, then it probably wouldn't matter; but if she will be using spousal benefits then it might.
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Old 04-07-2012, 09:52 PM   #9
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In order for your daughter to receive SS benefits, do you actually have to receive your own or is it sufficient for you to have filed and suspended your benefit?

I don't have similar health problems, but I do have a younger wife and enough assets not to need to take SS now (age 62.) So, I will wait until age 70 to collect in order to maximize our lifetime benefit. SS should still be feeding my wife in 50 years. So, from now until age 62, we are living on savings and some bond fund income which allows me to do a Roth conversion each year while our taxes are low. I expect to be able to convert all of the IRAs before age 70 and so should not face any RMDs in the future. This will also reduce the taxes I will have to pay on the SS benefit.

It is not clear from your mention of your illnesses what your current life expectancy is, but in terms of maxing your family's SS it may not matter very much. Delaying might be the best choice, although it would depend how much your daughter's SS benefit would be and whether she could receive it if you have filed and suspended.
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Old 04-07-2012, 11:50 PM   #10
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Delaying might be the best choice, although it would depend how much your daughter's SS benefit would be and whether she could receive it if you have filed and suspended.
I am not sure about the file and suspend, but a child's benefit is half of the retired parent's full retirement benefit...that is half of the benefit the parent would receive at full retirement age even if the parent elects to actually take benefits before FRA. This is per child by the way although it is subject to the family maximum.

Research on the internet says you can file and suspend for child's benefits. My husband did take SS benefits before FRA and our children did receive benefits. He wasn't interested in delaying benefits so we didn't really look into file and suspend (we felt that delaying benefits is most likely to be beneficial when one spouse has a much higher benefit than the other spouse so there is a good reason to delay to protect the lower benefit spouse -- in our case our benefits are or will be very close to one another).
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Old 04-08-2012, 08:49 AM   #11
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That makes sense to me. So if OP's benefits are significantly higher than his DW's based on her own work record, if he filed and suspended at 62 his DD would get the same benefits as if he claimed at 62, but his DW would get richer SS benefits for the rest of her life.

OTOH, if DW's benefits based on her own record are similar to OP's, then given OP's health issues OP may be best to claim at 62.

Given OPs unusual situation I still think he would be best to get advice from some of the SS experts at SocialSecuritySolutions.com. As I understand it, the cost is modest and they may have an even better strategy.
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Old 04-08-2012, 10:48 AM   #12
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Given OPs unusual situation I still think he would be best to get advice from some of the SS experts at SocialSecuritySolutions.com. As I understand it, the cost is modest and they may have an even better strategy.
Agree that it is worth getting accurate advice (don't know anything about the website you refer to). He also should do more research on whether he can actually file and suspend then have the child get benefits.
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Old 04-19-2012, 08:12 AM   #13
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[QUOTE=Khufu;1182777]In order for your daughter to receive SS benefits, do you actually have to receive your own or is it sufficient for you to have filed and suspended your benefit?

I was told by someone who retired after many years at Social Security Admin that I must receive my benefits in order to obtain the benefits for my daughter. Even if I could, I prefer to receive my benefits at age 62 instead of suspending them.
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