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Late 50's, interested in financial strategies for retirement
Old 11-04-2019, 11:58 AM   #1
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Late 50's, interested in financial strategies for retirement

This is my first post to introduce myself on this forum, share the outline of our situation and begin to learn from and interact with this community.

Facts:
  • 59+; wife 58+
  • I am working but in transition - waiting to find out about a position
  • Spouse is a professor in a public university
  • While no financial or tax background, I am financially fairly literate and capable of mathematical reasoning / research to analyze the decisions
  • No children - leaving legacy to heirs not a significant consideration
  • Approximately 4M in tax deferred retirement savings; approximately 2.5M in post-tax savings; condo paid for; no debt; max contributions to Social Security - so the benefit should be close to max for one of us; spouse has worked on social security exempt jobs - so will only receive the spousal benefit
  • Overall, happy with our professional lives, so retiring early is not a goal. Neither is working very late in life.

Plans:
  • Next 6-8 years - A bit unclear. The job situation I am waiting to materialize is in a different and expensive city (though in an income tax free state) - and will force us to live apart and maintain two residences for some time until resolved. But, it will compensate generously for the trouble, should it happen. Until that is resolved one-way or the other, it is hard to be clear about how we are spending the next 6-8 years.
  • Retirement plans (beyond 6-8 years) are a bit unformed. Our ideas/options - to be examined a bit closer to retirement, include:
    1. Retire in place - We love where we live and our condo. There are retired folks living in the building and it is suitable for independent living in an older age.
    2. Retire to California - Seems like as one gets old, the weather becomes important. So, we have a tentative interest in living in coastal California. The main concern there is taxes, and housing cost.
    3. Retire to Germany - My wife is a dual citizen and is native of Germany. We like a lot of aspects of that. So, there is some thought of retiring there. That said, it is not the plan right now.

The key questions relating to the retirement that interest us are:
  • Financial decision making, particularly optimizing the conversion/distribution from the tax-deferred plans, which are a very significant part of our portfolio. I saw some on-going threads on this topic that were discussing exactly this topic.
  • Late life financial and care management plans for those without family members: As shared above, we have no children. And, since both of us are immigrants - we also do not have relatives that are nearby; foreign relatives are not familiar with the US financial system to be much help. So, the late retirement stage where one may lose some faculties and/or partner - the management of care and financial assets for us would need be third party, with little supervision. So, strategies for managing that are of interest - though we are still some distance away from this.

Hope to learn from the collective wisdom of this community and, where possible, contribute.
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Old 11-04-2019, 01:19 PM   #2
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Welcome. The formatting of your message alone says you are organized, and that's half the retirement battle. Looks like you've saved enough to afford living most anywhere if you keep housing costs reasonable.
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Old 11-04-2019, 01:43 PM   #3
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With that much money don't wait too long to retire. I would not want to live separately for a long time. I think it can take a toll on marriage. You guys have done well for yourselves and are prepared.
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Old 11-04-2019, 02:37 PM   #4
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Thank you very much for the welcoming messages!

We have a wonderful relationship and definitely don't want to live separately. We'd consider it for a limited time is if the offer were absolutely compelling. Even then, we will look to resolve that as soon as possible. In academics (and elsewhere), one needs to be mindful of one's responsibilities to the students and colleagues.
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Old 11-04-2019, 02:46 PM   #5
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You look like to have a large retirement portfolio. What is your expected annual living expenses in retirement?
Unless your expenses is significantly more than $250K per year, you can retire now and enjoy your life.
I am also a professor and I do not think I will be working after 60.
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Old 11-04-2019, 03:00 PM   #6
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Thanks, flyingaway! We live a comfortable but fairly modest lifestyle. Our main expenses relate to travel, which is something we expect to do more of as we travel. That said, we haven't really done an estimate of expenses/budget during the various stages of retirement. Unforeseen catastrophic events aside, we do not see our expenses exceeding $250k per year.

So far, retiring early (around 60) hasn't been a goal - as we are still happy with our respective professional lives and our work is rewarding and not really draining. Depending upon how the coming years and our professional lives develop, we might change our mind about that.

Only one of us (my wife) is in academics. I began my career in academics after Ph.D. but have been in industry for many years.
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Old 11-04-2019, 03:17 PM   #7
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Welcome! Time>$. Retire now!
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Old 11-04-2019, 03:20 PM   #8
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Quote:
Originally Posted by kavm View Post
Thanks, flyingaway! We live a comfortable but fairly modest lifestyle. Our main expenses relate to travel, which is something we expect to do more of as we travel. That said, we haven't really done an estimate of expenses/budget during the various stages of retirement. Unforeseen catastrophic events aside, we do not see our expenses exceeding $250k per year.

So far, retiring early (around 60) hasn't been a goal - as we are still happy with our respective professional lives and our work is rewarding and not really draining. Depending upon how the coming years and our professional lives develop, we might change our mind about that.

Only one of us (my wife) is in academics. I began my career in academics after Ph.D. but have been in industry for many years.
It looks like you're in an excellent financial position, given that you don't expect your spending to be over $250k per year. With your current savings, you have a pretty safe withdrawal rate of $250k per year, and this is excluding SS and any pensions. I'm assuming your wife has a pension working in public education?

My opinion, and I'm sure many would disagree, is that with your high net worth and presumably a pension, you won't need long term care insurance. Long term care plans are very expensive, particularly when purchased at 60+ years old. Unless you spend down your retirement savings at a fast pace, if the time comes that you and/or your wife need long term care, your annual retirement income should be able to cover most situations, and if you keep working a few more years and your savings climb further, it'll only be that much better.

I'm not an expert, but I did used to sell insurance for a short time, specializing in senior citizens, to include long term care plans. Although our sales managers wanted us to sell to everyone, realistically those who had very low net worths were much better to live life to the fullest while healthy and then rely on Medicaid, due to the high cost of premiums they couldn't afford. Those who had high net worths could afford the care on their own, and it is hard to justify the cost of the insurance. Long term care insurance is best for those that fall somewhere in between those two extremes.

EDIT:

Oh, and I vote not to take a job that will move you and your wife apart, given your financial situation. If I were in your shoes, it would take a hell of a lot of money to make me consider that... and there may be no amount of money that would convince me. We'd be much more likely to have my wife retire (Or take a sabbatical. She's also a professor at a public university) and move with me for a lucrative opportunity than be apart voluntarily. And I do speak with some authority on this subject. I'm currently deployed away from my wife and children with the military, and have done a total of four overseas deployments between two marriages. Long distance marriages are tough. Very tough.
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Old 11-04-2019, 03:22 PM   #9
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As I read the OP you have $6.5m in retirement savings ($4.0m pre-tax and $2.5m psot-tax) plus SS (or really 1 1/2 SS) on top of that.

With that nice of a nestegg and no heirs, I think you're crazy not to retire as soon as possible. We have a number of forum members who had grand plans for retirement and the unfortunate realities of life intervened and disrupted their plans.

At 58/59, who knows what is around the corner or how long you have good health left.... while it could be 40 years, it could be 5.... you have plenty.... why not enjoy the rest of whatever you have left I'd hate to see you work another 6-8 years and have something unfortunate happen and not get to spend anytime together retired and traveling the world.

With over $250k of annual retirement income available to you the world is your oyster.
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Old 11-04-2019, 03:43 PM   #10
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Originally Posted by pb4uski View Post
As I read the OP you have $6.5m in retirement savings ($4.0m pre-tax and $2.5m psot-tax) plus SS (or really 1 1/2 SS) on top of that.

With that nice of a nestegg and no heirs, I think you're crazy not to retire as soon as possible...With over $250k of annual retirement income available to you the world is your oyster.
+1000. You never know how long your health will hold out. If you have anything you want to do (travel, hobbies, fitness, etc.)...now is the best time. Deteriorating health will eventually inhibit your ability to do some things. People get sick, cancer, memory loss, etc. It's varied, and unpredictable. You're assuming your health will be the same in 6-8 years?
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Old 11-04-2019, 03:47 PM   #11
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... People get sick, cancer, memory loss, etc. It's varied, and unpredictable. You're assuming your health will be the same in 6-8 years?
Your post reminded me of a childhood friend a year older than me that I had the hots for as a teenager... beautiful young woman... developed early onset dementia at 63.... sad situation.
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Old 11-04-2019, 03:53 PM   #12
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Your post reminded me of a childhood friend a year older than me that I had the hots for as a teenager... beautiful young woman... developed early onset dementia at 63.... sad situation.
I'm heading to San Diego this month...was planning to visit a friend's mom that I knew in college. I wanted to visit with her while she was still healthy. Too late. She was just moved into a senior living place, lost her independence, and all of her short term memory.

My mom also lost her short term memory, beginning around age 72.
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Old 11-04-2019, 04:05 PM   #13
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Welcome, and congratulations on setting yourself and your spouse up so well for the future.



As a single person, I've also wondered about handling things in the future, especially if my mental abilities become significantly worse. I have some nieces and nephews, but they don't live nearby and I wouldn't expect them to be actively involved. I think at some point I would consider a living arrangement that had some aspects of assisted living but also allowed for independent apartments or houses.



I might also consider a SPIA for some portion of my funds to make sure I had a steady income each month that covered expenses. I think that would be easier to administer and harder to mess up in the future.



I'll also ask for recommendations for reliable lawyer or financial advisor who may notice if there are transactions that seem out of the ordinary. I don't have to worry about transitioning something to a spouse, but that could be helpful if one spouse is more involved with financial arrangements than the other.



Finally, even though this is an early retirement forum, I think working is great if you enjoy it (and you like the financial cushion), but with your portfolio, I'd think long and hard about a new job that would have such an impact on my lifestyle. 5-8 years with the one you love is something no amount of money can buy. But I understand that's a personal choice.


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Old 11-04-2019, 04:45 PM   #14
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+1000. You never know how long your health will hold out. If you have anything you want to do (travel, hobbies, fitness, etc.)...now is the best time. Deteriorating health will eventually inhibit your ability to do some things. People get sick, cancer, memory loss, etc. It's varied, and unpredictable. You're assuming your health will be the same in 6-8 years?
Pull the plug now! My wife died of cancer at 68
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Old 11-04-2019, 07:02 PM   #15
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Too bad you can’t quit 5 years ago and buy your time back.
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Old 11-04-2019, 07:47 PM   #16
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Thank you very much! Really appreciate it! I tried to cover the points that came up in the discussion below:
  • Seems like very consistent input on retiring early. I will discuss with my wife. I will have a harder time prying her away from her calling!
  • We are in fairly good health so far [hiked to the Everest base camp last year] but one never know what surprises life has. Who know what happens in the next year, let alone 6-8 years.
  • As for my potential job, I would only take it on in special circumstances. I was approached rather than applied for it, and the company involved is capable of making it a compelling proposition financially. Furthermore, I did find it an interesting challenge and a potentially stimulating situation. It should become clear in a month or two whether it happens or not. The company is aware of our situation - and is expected to make room and help us with it. We will be able to find enough time to be together. If we were to live separately, it will not be more than 6 months, with time together in between. One of the advantages of an academic career is that there is flexibility.
  • I forgot to mention that we do have the LTC insurance coverage for each of us. It seems fairly good - daily max of about $425/day within US, around $250/day abroad and a max of $1.2M in total.

Thanks again for highlighting how close we are financially to be able to retire and we need to discuss how long to continue working.
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Old 11-04-2019, 08:31 PM   #17
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kavm, I would encourage you and your wife to think of yourselves as retired, but working for fun. Financially speaking, you definitely can retire now, so if anything about your jobs bothers you, you should know that you can leave pretty much any time the mood strikes you. But if you keep enjoying it, then keep doing it!
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Old 11-04-2019, 08:47 PM   #18
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Thank you, The Cosmic Avenger! That's more or less our attitude to our work. We are are happy with our working lives as they stand. Still learning new things and taking on new challenges (the job possibility I mentioned falls in that category).

That said, it has definitely been very good to get the feedback on this thread. It will be good for me to read it with my wife and and think about it a bit. My guess is that we will continue working for now, but the fact that we can retire any time is a good comfort.
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Old 11-05-2019, 05:05 AM   #19
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Welcome! Time>$. Retire now!
+1. I live visiting California but would not want to live there. Expensive, fires, earthquakes. No thanks.
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Old 11-05-2019, 06:40 AM   #20
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Unless you're asking for permission to retire now I'm not sure what you hope to get from this group (EARLY-retire.org). I can't imagine being away from my spouse that long since you don't NEED the extra money...at least not to retire.

BTW, permission granted
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