Hi from a Grammie wanting to retire soon

[TBAR]

I am a 58 year old Grandmother wanting to retire to spend more time with family. Due to illness, Husband retired this past January from Verizon. I am currently working at a utility also. We both have pensions and 401k's valued at 1.6mil. Other savings and stocks about $100k. The only debt is a $17,000.00 equity loan. We live a very frugal lifestyle by choice. Vehicles are 1986 to 2011 being the newest, as an example. Husband has healthcare for us both with previous company. His money ($800K is invested 50% stocks, 40% bonds, 10% cash). Mine will be invested the same.

Want to retire in July 2017 but want to feel as financially secure as possible. Thoughts....have been enjoying the forum for a couple of weeks now. Lots of good advice and I need some food for thought before giving my final notice!

 

[iloveyoga]

Hi, and welcome to the board!!

 

[TBAR]

Forgot to mention will be able to live on a 3.5% WR.

 

[Golden sunsets]

Welcome! You mentioned pensions. Do you or DH receive a monthly cash allotment or is it a lump sum that you will receive that is part of your 1.6M? If the latter, what are your annual gross expenses including income taxes?


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[TBAR]

Lump sum for both pensions. Our yearly expenses are $45000K including taxes.

 

[Midpack]

Without knowing spending, it's hard for anyone to assess how "financially secure" you are. But no need to share more info, just plug it all into FIRECalc: A different kind of retirement calculator if you haven't already.

[edit: cross post, but I'd still recommend FIRECALC]

 

[ivinsfan]

I had a few questions pop up. Sorry your husband has been ill, does he qualify for SSI?
You didn't mention his age, how close is he to SS?. Since your entire income is tied to market returns,SS will be a big part of your security as you age.

If something happens to your DH, can you stay on his health care plan? And it appears that apart from your 401's, you live frugal, have paid off cars and yet have after tax savings of around 80K . This tells me apart from funding the 401s you haven't had much money left over, so I suggest you start tracking all your expenses, have you put them in black and white? Health care will be a major wild card in the future.
Good Luck.

 

[TBAR]

DH is 57. We have tracked our expenses as accurately and closely as we can. Adding a cushion for unplanned expenses. Can tighten up if necessary. Will not be able to continue on his plan if something were to happen. Not feeling as confident about ER! However, time is a major factor to me but not at the expense of our future financial security. Part of the reason I am reaching out to you all .......who understand making this dream a reality or NOT....

 

[2017ish]

Lump sum for both pensions. Our yearly expenses are $45000K including taxes.

Do you have a choice as to whether lump sum or stream income on either of the pensions? If so, is lumpsum a clear cut winning choice? An actuarially sound COLA'd pension can be more attractive than a lump sum...

(No personal knowledge here, but others have posted about their pensions being pretty clearly beneficial one way or the other--while still others have seen it as a wash.)

 

[ivinsfan]

DH is 57. We have tracked our expenses as accurately and closely as we can. Adding a cushion for unplanned expenses. Can tighten up if necessary. Will not be able to continue on his plan if something were to happen. Not feeling as confident about ER! However, time is a major factor to me but not at the expense of our future financial security. Part of the reason I am reaching out to you all .......who understand making this dream a reality or NOT....

Has your DH applied for SSI since his illness? If he cannot work there is no downside to applying a monthly check starting now would help you a lot.

 

[Bikechuck]

Lump sum for both pensions. Our yearly expenses are $45000K including taxes.

With yearly expenses of $45 million you are not ready for retirement. Better work another year or two and save as much as possible!

 

[Midpack]

Do you have a choice as to whether lump sum or stream income on either of the pensions? If so, is lumpsum a clear cut winning choice? An actuarially sound COLA'd pension can be more attractive than a lump sum...

(No personal knowledge here, but others have posted about their pensions being pretty clearly beneficial one way or the other--while still others have seen it as a wash.)

Not disagreeing, definitely worth checking if the OP has options, no hasn't already checked. Lump sum has been the better bet for some too, even if appears to be a wash.

If you take a pension, your options are gone. A lump sum can be like having your cake and eating it too. Even if it's a wash, you can buy a SPIA with a lump sum, anytime after you retire. I don't like annuities in general, but a pension is basically an annuity. Annuity payouts are so low now, when they improve, you can buy a higher payout with the same purchase price. "When" is of course an unknown, but it can't get much worse than it is today - annuities have been relatively expensive almost since the 2009 crisis with yields so low.

 

[2017ish]

Not disagreeing, definitely worth checking if the OP has options, no hasn't already checked.

But lump sum has been beneficial for many too, and it can be like having your cake and eating it too. ...

No doubt. I probably wasn't as clear as I might have been--could be good, could be bad, but worth examining.

 

[TBAR]

Oops Bikechuck.....LOL

 

[W2R]

Welcome!

It sure sounds like you are close to being able to retire, if you can keep expenses down. Sometimes unusual big expenses arise in retirement, like having to replace your car or the roof, or having unexpected dental work. So hopefully you have thought about that and feel that the $45K/year spending money will cover occasional expenses like that, too.

I'm not trying to be negative! I'm so excited for you.

 

[Fedup]

It's not clear to me how much is the pension and how much is the savings in your 401k. Maybe I need to have some coffee first.

 

[ERD50]

It's not clear to me how much is the pension and how much is the savings in your 401k. Maybe I need to have some coffee first.

Me too. Is it $800K in IRA's (edit- but that is 'his' money?).

Not adding up - stated $45K in expenses / $1600K = 2.8% WR, not the stated 3.5%.

-ERD50

 

[TBAR]

We each have a pension and 401K split equally $400,000 in each. He is already retired and money has been rolled over (his $800,000.00). My pension and 401K ($800,000) is invested thru my work still. Sorry for the confusion....I need coffee as well!

 

[ivinsfan]

We each have a pension and 401K split equally $400,000 in each. He is already retired and money has been rolled over (his $800,000.00). My pension and 401K ($800,000) is invested thru my work still. Sorry for the confusion....I need coffee as well!

Why is everything lumped together? Do you have a monthly pension check option to lower the withdrawal on your assets? It does make a difference when planning ER.

 

[ERD50]

We each have a pension and 401K split equally $400,000 in each. He is already retired and money has been rolled over (his $800,000.00). My pension and 401K ($800,000) is invested thru my work still. Sorry for the confusion....I need coffee as well!

So 'his' $400K pension lump sum is now included in 'his' $800,000 IRA. And 'your' pension will provide a $400K lump sum, and 'your' IRA currently has $400K in it? So $1,600K total, right?

Still not adding up - stated $45K in expenses / $1600K = 2.8% WR, not the stated 3.5%.

-ERD50

 

[TBAR]

When I retire....I can opt for an annuity or part annuity and part lump sum. ERD50, the WR rate is not finalized. Should have stated would like to take between 3 or 3.5%. Because husband is not 59 1/2, he locked into a withdrawal of $2200.00 for 5 years.

 

[imoldernu]

Lots of good advice and I need some food for thought before giving my final notice!

I try not to give advice, but your use of the word "frugal" struck a chord.
I'm not much into the financial part, but we retired early, and some of our adventures are here:

http://www.early-retirement.org/forums/f27/sharing-23-years-of-frugal-retirement-62251.html

Long read, but may be worth a look to see where we went right and wrong.

Best wishes for a happy retirement. Know you're going to be okay!

 

[TBAR]

Thank you imoldernu!