I'm 53 and almost ready but need some suggestions.

[Plan_Early]

My wife and I hope to retire in the early part of 2020.
Here is a quick run down on our financial picture:
Roth Ira $280k invested in vanguard sp500 index
my $401k $740k invested in vanguard sp500 index
DW $401k $130k invested in ( need recommendation for bond fund )
Etrade $40k invested in vanguard sp500 index

Total $1.19 million
We are putting away a little over $100k per year so are total should rise a little more before we retire if the stock market doesn't crash.


As I mention I'm 53 and DW is 52. We hope/plan on retiring the year I turn 55 which is 2020. I have two pensions that will start at 65 and total $10k but both are not COLA. We have a rental property that we get $20k a year from after expenses. My S.S. will be $23.5k at 62 and Dw will be $17k at 62. Not sure how to calculate the impact of stopping work at 55 versus 62 on S.S.
The total income once we reach 65 is $70k.

We plan on a budget of $100k and fire calc says we are good to go with some room as they say we could spend $135k. We could reduce that if needed.


My questions:
1. Where should I put the DW 401k as far as a bond account goes.
2. Does it make since to keep the Roth as the more riskier account in the SP500 versus a bond, so if it does grow it will be tax free?
3. I plan on keeping our income below the $64k for the ACA and pull the remaining part of our budget $36k from our ROTH so it's not counted as income. Does this make since?

I sure appreciate being able to tap the wisdom/experience in this group. I've been following this group for the last couple of years and applying advice I see in some of the discussions.

This is an exciting time for my DW and I. Some days it feels like we need to pinch ourselves to make sure this is real and we are really this close to retirement.

 

[Dtail]

My wife and I hope to retire in the early part of 2020.
Here is a quick run down on our financial picture:
Roth Ira $280k invested in vanguard sp500 index
my $401k $740k invested in vanguard sp500 index
DW $401k $130k invested in ( need recommendation for bond fund )
Etrade $40k invested in vanguard sp500 index

Total $1.19 million
We are putting away a little over $100k per year so are total should rise a little more before we retire if the stock market doesn't crash.


As I mention I'm 53 and DW is 52. We hope/plan on retiring the year I turn 55 which is 2020. I have two pensions that will start at 65 and total $10k but both are not COLA. We have a rental property that we get $20k a year from after expenses. My S.S. will be $23.5k at 62 and Dw will be $17k at 62. Not sure how to calculate the impact of stopping work at 55 versus 62 on S.S.
The total income once we reach 65 is $70k.

We plan on a budget of $100k and fire calc says we are good to go with some room as they say we could spend $135k. We could reduce that if needed.


My questions:
1. Where should I put the DW 401k as far as a bond account goes.
2. Does it make since to keep the Roth as the more riskier account in the SP500 versus a bond, so if it does grow it will be tax free?
3. I plan on keeping our income below the $64k for the ACA and pull the remaining part of our budget $36k from our ROTH so it's not counted as income. Does this make since?

I sure appreciate being able to tap the wisdom/experience in this group. I've been following this group for the last couple of years and applying advice I see in some of the discussions.

This is an exciting time for my DW and I. Some days it feels like we need to pinch ourselves to make sure this is real and we are really this close to retirement.

Welcome to our wonderful forum.
On #3, in general it does make sense to manage one's income for ACA purposes. The subsidies can be rather substantial depending how low one goes for their MAGI. Have you checked out Healthcare.gov and the Healthsherpa.com sites for some more specific medical costs even though it is for this year?
Many folks on this site like to let their Roth account grow and not be touched for as many years as possible, so possibly use the rental income of 20k to fill part of the gap instead of the Roth IRA. At age 62, SS would count as MAGI income, so that would be another decision.

As for calculating stopping at 55 vs. 62 and the effect on your payout, you can calculate this effect on the SS site. The effect should probably be less than $100 per month, but not sure.

Will leave some other questions to our resident experts.

 

[Plan_Early]

Thanks Dtail.
I have checked out healthsherpa.com and its about a $900 difference if you stay below $65k. If I use the rental income instead of the Roth to bridge the gap from $64k to $84k it will counted as regular income where the Roth does not. That's my understanding anyways.
I'll have to check out the SS site and see what impact that has.

 

[Dtail]

Correct on the rental income, but see below for the MAGI rules. Won't you have to count the rental income in the calculation anyways?

http://laborcenter.berkeley.edu/pdf/2013/MAGI_summary13.pdf

 

[pb4uski]

$64k ACA subsidy income limit -$20k rental income (check... is this $20k income or cash flow? is depreciation included in the $20k?) = $44k headroom for other income (perhaps from a 72t? or low-cost Roth conversions?).... +$36k from Roth = $100k available for spending.

OP's main issue is penalty-free access to tax-deferred funds from ER at age 55 to penalty-free access at 59 1/2... while it looks like the Roth may have enough it would be a shame to drain the Roth so early given it's tax free status.

 

[Bir48die]

$64k ACA subsidy income limit -$20k rental income (check... is this $20k income or cash flow? is depreciation included in the $20k?) = $44k headroom for other income (perhaps from a 72t? or low-cost Roth conversions?).... +$36k from Roth = $100k available for spending.

OP's main issue is penalty-free access to tax-deferred funds from ER at age 55 to penalty-free access at 59 1/2... while it looks like the Roth may have enough it would be a shame to drain the Roth so early given it's tax free status.

I'm with you on this. Not that jazzed on this plan so early.

Easy to check you SS with no future income. I've done it a number of times through the SS website.

 

[gauss]

If I were in your position, I would consider delaying SS until age 70. This combined with your pensions would help to beef up your "secure" income streams (ie those not subject to market behavior).

I know the return is 8% a year for each year drawing SS is delayed from age 67 in my case. There would also be considerable credits for delaying from age 62 to age 67.

That being said, you may wish to discount the SS by 1/4 to 1/3 to account for any possible SS reforms.

-gauss

 

[Plan_Early]

Yes i will have to count the rental income.

 

[Plan_Early]

$64k ACA subsidy income limit -$20k rental income (check... is this $20k income or cash flow? is depreciation included in the $20k?) = $44k headroom for other income (perhaps from a 72t? or low-cost Roth conversions?).... +$36k from Roth = $100k available for spending.

OP's main issue is penalty-free access to tax-deferred funds from ER at age 55 to penalty-free access at 59 1/2... while it looks like the Roth may have enough it would be a shame to drain the Roth so early given it's tax free status.

The $20k is income.
I've checked with my 401k provider at work and if I retire the year I turn 55 I can access my 401k penalty free. I agree on the Roth but unless I'm missing something it would help us qualify for ACA.

 

[Plan_Early]

If I were in your position, I would consider delaying SS until age 70. This combined with your pensions would help to beef up your "secure" income streams (ie those not subject to market behavior).

I know the return is 8% a year for each year drawing SS is delayed from age 67 in my case. There would also be considerable credits for delaying from age 62 to age 67.

That being said, you may wish to discount the SS by 1/4 to 1/3 to account for any possible SS reforms.

-gauss

Good thought. Thanks for the suggestion.

 

[Dtail]

Hmm a little bit of a decision to make here. Is there any way to reduce the 100k spending number?
I realize being in your 50's is the part of the go go years.

 

[Plan_Early]

Hmm a little bit of a decision to make here. Is there any way to reduce the 100k spending number?
I realize being in your 50's is the part of the go go years.

Oh for sure, it's all about priorities. Do you see that amount as too high for the amount we have saved? I realize it's more then the traditional 4% but at 62 we will fall well below the 4%.

 

[Monterey298sc]

Keep saving, sorry what about health insurance cost?

 

[Dtail]

Oh for sure, it's all about priorities. Do you see that amount as too high for the amount we have saved? I realize it's more then the traditional 4% but at 62 we will fall well below the 4%.

With Firecalc at a max of 135k, your budget appears fine over a retirement lifetime. It is just the mix of assets potentially needed for spending until 59.5 years old which needs further analysis.
As others have stated, spending down the Roth early in retirement is not the typical pattern to maximize tax free growth.
Perhaps others can chime in.