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Gettin' close and gettin' nervous!
Old 07-05-2019, 10:32 AM   #1
Confused about dryer sheets
 
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Gettin' close and gettin' nervous!

Hello all,

My bride and I are about to pull the ripcord and bail out of the rat race. We both turn 55 at the end of the year and will begin the next chapter.

A bit of background:



We both have relatives that have passed early and some that lived well into their 90's. We're mathing to the age of 100. Health insurance is part of my private sector pension.

We live in NJ but there is a good chance we'll move to Florida. A move would save us over 15% of our net spending. I took a buy out (paid weekly) and have essentially been retired since November 2018.

First I've run numerous scenarios through FireCalc (from nothing goes wrong to new roof, HVAC, etc) and they all come up as "100%" success. Has anyone found FireCalc was completely wrong? It shows a healthy success (even on the worst case line).

We'll begin collecting my early pension Jan 2020. It'll be about 1/3 of our yearly income (if we don't sell our house and move to a much friendlier state in the US). Since we're both young I obviously picked the 100% survivor benefit. I recently discovered I'll be getting an extra $94 a month from a 2nd pension I had no idea I was eligible for.

Currently we have an annuity through the union I've been with for 38 years. As soon as I sign the papers and make everything official we're moving it to a 401K and using a financial advisor. This person was recommended by 3 separate friends that have been using him for many years. It's with one of the larger wealth management companies. (I don't know if naming it here is appropriate). This will provide 2/3's of our post retirement income. The plan is to take the same amount for the first 5 years to avoid the 10% penalty.

At 62, we're both planning on collecting SS. My wife has had jobs in the past but raising our kids was the main one. She'll collect the 50% of what I collect. This will be used to supplement our income and allow our 401K to grow (hopefully)


I've figured our possible budgets and added 10%-15% to each. We should have a 25% of our annual income as a cash emergency fund on hand.

I know I've been vague but I'm still adjusting and pretty freakin' nervous about the future.


Cheers all and thanks for the information I've already read and will continue to read.
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Old 07-05-2019, 10:45 AM   #2
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The feeling nervous is a normal thing, but after a short time that will go away. I like your plan and to have a plan then to work that plan is the most important thing. There are many ways to skin a cat and there will be many thinking in a different direction, then what you have planned. My suggestion to you is you do what works for you, which might no be what other would do.
Glad for you to get out of the rat race.
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Old 07-05-2019, 10:59 AM   #3
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You expressed your calculations in terms of %, but there is also an absolute component. If your annual spending is $200,000 then a failure of FireCalc is probably less important than if your annual spending is $30,000. ("Our retirement was *ruined* when we had to choose between the country club membership and the timeshare in Vail".)

Otherwise, welcome to the wonderful world of combining your existential freedom with economic freedom! The realisation that what you've been doing for 30+ years straight (i.e., get up in the morning and go to w*rk) is not the only option, is quite a jump for many people. But you'll adjust real quick.
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Old 07-05-2019, 02:32 PM   #4
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Originally Posted by Harrald View Post
At 62, we're both planning on collecting SS. My wife...will collect the 50% of what I collect.
Congratulations! Sounds like you're financially set. Could you wait to 67 to collect SS to maximize your wife's spousal benefits?
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Old 07-05-2019, 04:21 PM   #5
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I would skip the financial advisor and put the money in a couple Vanguard funds. The advisor will cost you real $$. Jmho
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Old 07-05-2019, 04:27 PM   #6
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Originally Posted by LiveBelowMeans View Post
I would skip the financial advisor and put the money in a couple Vanguard funds. The advisor will cost you real $$. Jmho
Another alternative is to find a fee only advisor to critique your plan and offer advice on how to proceed. Then DIY using Vanguard or Fidelity funds to save $ on fees - which can be costly, especially if you pay an advisor for ongoing management. You can always return to the FO advisor for an annual check-up if you prefer and will still save.
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Old 07-05-2019, 04:38 PM   #7
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Originally Posted by Harrald View Post
Currently we have an annuity through the union I've been with for 38 years. As soon as I sign the papers and make everything official we're moving it to a 401K and using a financial advisor.
You are moving an annuity to a 401k?

You might wish to discuss that with the advisor first. Make sure you are out of any surrender period.

Hopefully your advisor is a fee-only fiduciary financial planner? If you don't already know, that's a bad sign.

Quote:
At 62, we're both planning on collecting SS.
Why both at 62?

This is something you'll definitely want to discuss with your advisor. Until then, experiment with https://opensocialsecurity.com/

Having both low and high earner claim at 62 is seldom optimal.

Quote:
We should have a 25% of our annual income as a cash emergency fund on hand.
Once again, talk to your advisor about this. 25% might be a bit light in my experience.

Quote:
I know I've been vague but I'm still adjusting and pretty freakin' nervous about the future.
It's a big change - it's normal to be nervous.

Good luck - talk to your new advisor before making big decisions.
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Old 07-05-2019, 04:40 PM   #8
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Originally Posted by HNL Bill View Post
Congratulations! Sounds like you're financially set. Could you wait to 67 to collect SS to maximize your wife's spousal benefits?
Or wait until 70 to maximize her eventual survivor benefits.
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Old 07-06-2019, 10:36 AM   #9
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So much advice, so much information and so much to think about.



A couple of answers/notes

No country club or place in Vail for us. So no hardship deciding which one to keep.


We have a few years to decide on the SS. These are our initial thoughts



I know financial advisors aren't well liked here. We're willing to pay the cost for a set it and forget it retirement. 4 meetings a year to keep us apprised of how everything is going is enough for us.


The ability to change from annuity to 401K happens when I sign the papers, without a surrender fee.


My wife isn't eligible for SS based on her work history. Housewife doesn't show up in work history. It should but...


25% of my annual net income has always been our safety net. I would have thought not having to worry that our income could go away because of loss of work would make planning easier. Easy enough to try and bump that number up.


We've been using our FA for a while. He's looked at my annuity and re-balanced it. I really have no knowledge of money management other than running a home and budgeting a department/projects. If at sometime I decide to start learning more, I may try and run it myself. As it stands now, I'm a dope and would rather pay for peace of mind.


Cheers all
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Old 07-06-2019, 10:58 AM   #10
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Quote:
Originally Posted by Harrald View Post
So much advice, so much information and so much to think about.



A couple of answers/notes

No country club or place in Vail for us. So no hardship deciding which one to keep.


We have a few years to decide on the SS. These are our initial thoughts



I know financial advisors aren't well liked here. We're willing to pay the cost for a set it and forget it retirement. 4 meetings a year to keep us apprised of how everything is going is enough for us.


The ability to change from annuity to 401K happens when I sign the papers, without a surrender fee.


My wife isn't eligible for SS based on her work history. Housewife doesn't show up in work history. It should but...


25% of my annual net income has always been our safety net. I would have thought not having to worry that our income could go away because of loss of work would make planning easier. Easy enough to try and bump that number up.


We've been using our FA for a while. He's looked at my annuity and re-balanced it. I really have no knowledge of money management other than running a home and budgeting a department/projects. If at sometime I decide to start learning more, I may try and run it myself. As it stands now, I'm a dope and would rather pay for peace of mind.


Cheers all
Well in case you change your mind, there are many knowledgeable folks on this site who can assist in making you feel comfortable about managing your own investments.
Many folks on this site were not in Finance or Investment type departments.
There are also investment type books to read if so inclined.
Up to you of course; just throwing it out there.
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Old 07-06-2019, 11:08 AM   #11
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Welcome. Sounds like you have plan you are comfortable with. I have learned so much here and continue to do so, however, we meet with a fee only FA occasionally also. Nothing wrong with that, do what works for you.
Hope to hear more from you!
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Old 07-06-2019, 12:29 PM   #12
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Quote:
We've been using our FA for a while. He's looked at my annuity and re-balanced it. I really have no knowledge of money management other than running a home and budgeting a department/projects. If at sometime I decide to start learning more, I may try and run it myself. As it stands now, I'm a dope and would rather pay for peace of mind.
I get the peace of mind concept, believe me. I'm going to play devil's advocate for a minute. I'm doing this, because people on this board helped me when I was struggling with similar issues.

What are you paying your FA, annually? 1%? What are the fees in the investments you're in? In our case, that 1% and those high investment fees would pay for a REALLY nice vacation for us each year.

When we were shopping for an advisor, someone here suggested a fee-only planner which I found through NAPFA. Our very first visit was ~$1500. I walked out of there with explicit instructions for moving everything to Vanguard, where our fees are low, low, low. Whenever I have a question, we do a 'tune up' which is $400. We've done about three of those over the years, just for some hand holding when DH was offered a lump sum, the first time I rebalanced, or making sure we were ready to retire.

We established the asset allocation we were comfortable with, and she gave us suggested funds. Set it & forget it. I've become confident enough to rebalance without her help. And, we're saving 90% over what someone who wanted to "manage" our money would charge us. As someone here says, "no one cares about your money as much as you do".

Some people just aren't interested in getting comfortable with doing it themselves, and that's certainly their prerogative. You've got to do what helps you sleep at night, obviously. A good relationship with a trusted adviser may be more valuable to you than the cost. <stepping off my soapbox>

Good luck on the next chapter of your lives!
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Old 07-06-2019, 12:30 PM   #13
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SIf at sometime I decide to start learning more, I may try and run it myself. As it stands now, I'm a dope and would rather pay for peace of mind.
Choosing to pay someone more knowledgeable to help out, rather than relying on yourself or random internet strangers (with a wide range of opinions) doesn't make you a dope. It makes you wise.
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Old 07-06-2019, 09:58 PM   #14
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Sounds like your plan will support you very well. Don't be nervous, all will be fine! You've got enough, you've budgeted, you've thought through all the big issues, now go and enjoy some freedom!
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