Mixing Assets in Houston

[Grigori]

I ride out the gate of our townhouse on my recumbent bike and have a nice hour or so spin on paved trails through the swamp and forest. There's wild pigs, deer, snakes, alligators.

Dear wife and I married two years ago, and she paid off the $240 K townhouse. She loves watching those snakes; you could say we're snakers, not birders. She's 58 and retired. We have no kids. No debts. We are staying here in Houston to help with her sick parents, but may move to San Antonio or try to find some other place with some desert or surfing, and not too expensive. I'm 57 and hope to be retired some day.

My wife is scared of the bad things that could happen to medical care, the stock market, etc, and wants me to keep w*rking until 60.



I'm hoping to have time to try all those things that don't quite fit into my very busy life right now. It's getting tougher to get myself into the office. I don't enjoy the w*rk too much and never did.


I have 1.86 MM$ (55% stock / 45% bonds)
She has 1.29 MM$ (100% cash)
Total is 3.15 MM$ (32% stock/28% bonds/40% cash)

We have really different investment styles, and have trouble agreeing on an asset allocation. She lost a several hundred thousand in the stock market in 2000, and distrusts anything except for cash and CDs. She wants to sell all the stock within 10 years. I've been luckier, and am more concerned with inflation, and want to have more in stock.


Pensions
DW is receiving $624/mo, or $7488 / year.
I will get $1421/mo, or $17052 / year at age 65 in 2019.

Social Security
DW $1421/Mo, $17052/Yr, @ age 62, 2016
I $1901/Mo, $22812/Yr, @ age 62, 2017

Medical
DW has retiree medical
I have no retiree medical. It will be Obamacare.


Expenses - Since I read "Your Money of Your Life", an eye opening book, I've been tracking my personal expenses for 18 years - the past 10 years, they average $4,500 a month. For the two years since we've been married, our expenses have been $5,000 a month, including several vacations a year and plenty of eating out. We don't know what medical care will cost. I anticipate spending more on hobbies and activities, but not sure how much. We are both pretty frugal and used to squeezing those dollars to death.

I've run through about every calculator, Firecalc, Esplanner, Fidelity RIP with the current asset allocation. Everything says that together we should be able to spend gross $10,000 or more a month.

We had Vanguard to a financial plan last week, setting aside $220,000 in cash in DW's accounts for living expenses, and the rest 50/50 stocks/bonds. Vanguard said $10,800 after tax would be a 99% success.


However, if I spend from only my assets, and tell her to keep hers in the piggy bank, we're cutting it close, unless I w*rk a few more years.


She'll says she'll go along with me if I retire before 60, and we'll both start spending money, but I know she would like me to work until 60.

Since I'm at the office still, I'm going to get myself engaged in the work to occupy my attention. Time goes faster that way.

I better do it. Thanks for reading. I'm enjoying reading your posts!

 

[jclarksnakes]

You might tell your DW that it is really too bad about losing money way back in year 2000 but that just since the first of this year she has "lost" 100K in gains that she would have gotten if she had a million dollars of her money in equities where it belongs. But be sure to not sound bitchy about it like I just did. Oh, I almost forgot...welcome to the forum.

 

[militaryman]

Based on the data you have supplied I would estimate that if you were to make sure you have good health insurance coverage you will both die with a bunch of $$ in your investments.

I mean just considering your $3,000,000 @ 3.3% withdrawl rate is $100,000/year (way higher than your spending estimates)

You will leave bunch of $$ on the table, and continuing to work will only make that pile higher IMHO

 

[pb4uski]

I'm not sure what you are waiting for. Even if you had to pay full boat on medical with no Obamacare subsidies you would still have plenty to cover your current lifestyle.

Perhaps she likes having the townhouse all to herself during the day and that is why she wants you to keep working?

 

[Midpack]

Your situation is eerily similar to DW and I, except we don't have pensions or retiree health care. I'd agree with the others, your portfolio size, AA, spending, ages, other income put you in the high/well above average probability of success category IMO. History would suggest you can retire if you'd like...

 

[eytonxav]

Maybe she is trying to kill you off by wanting you to keep working so she has everything for herself. Seriously, given your port, pensions, SS, what are you waiting for?

 

[Grigori]

Thanks for your reassuring confidence in the numbers. It gives me more comfort that based on others experiences and perceptions I can retire any time, and soon.

I think my wife is a little selfish, spoiled, and scared, but nothing more. It has occurred to me at times that I was married to a black widow, but we've had some very emotional confrontations, I've tested things, and I feel there's a real love.

I think I'll have to do this all on my own. I think it's just going to be when I feel ready emotionally to jump. I'm feeling a little scared, and happy too. Hopefully, this year. My sole support is my spiritual director who retired at 47, and sees ER a very good thing for me. Everyone else - sisters, inlaws, wife, friends, mother love my $200 K salary and the prestige of a job at a large oil company. They can all always find a reason for me to keep going to work and can't hear the despair and hate for the work in my voice. In the end I have to make my own decisions, or be a whore.

 

[pb4uski]

To be scared is very natural - us humans are resistant to change.

Tell sisters, inlaws, et al that being a retired large oil company mucky-muck is as prestigious as toiling in as a large oil company mucky-muck if that helps them accept it. In fact, I could argue that being ER'd from a prestige job is better in that it shows that not only did you have the smarts and gumption to earn the big bucks but that you also had the wisdom to save for, and now enjoy, your retirement.

 

[Katsmeow]

With a 2 year marriage and just different ways of looking at things if I was you I would also want to run my numbers based upon what happens if, well, your marriage didn't work out and you ended up being single again.

It sounds like by any reasonable measure you could certainly retire. It is always easy to want the other spouse to keep working.

 

[haha]

I think my wife is a little selfish, spoiled, and scared, but nothing more.

Well, that is reassuring. Nothing troublesome about a selfish, spoiled and scared wife.

It has occurred to me at times that I was married to a black widow.

Whoa dere pardner!

But we've had some very emotional confrontations, I've tested things, and I feel there's a real love.

Oh, to be a fly on that wall.

My sole support is my spiritual director who retired at 47, and sees ER a very good thing for me. Everyone else - sisters, inlaws, wife, friends, mother love my $200 K salary and the prestige of a job at a large oil company. They can all always find a reason for me to keep going to work and can't hear the despair and hate for the work in my voice. In the end I have to make my own decisions, or be a whore.

Print this last bit out and read it to yourself about 1 AM.

All may be well in your finances, but your personal life is definitely driving across a rusty bridge.

Ha

 

[MBAustin]

+1 to all the comments that you are FI and good to ER.

There are lots of threads out on the boards about setting things up to minimize perceived risk (even at the cost of some return) by doing things like keeping x (3-5) years of your spending needs in cash or cash equivalents so you don't need to sell equities when the market is down. Perhaps putting together a strategy like that with your real $$ would help with her comfort factor?

Also you could approach it from the angle of "WIIFH" (what's in it for her) if you ER. You could work on this through the year and perhaps after you find out the details of your 2014 health insurance costs based on Obamacare (probably October?), that would eliminate one big worrisome variable and help her over the threshold.

Good luck!

 

[rodi]

Welcome.

My husband is distrustful of equities, like your wife. So I count his money in the fixed/bonds category of our combined asset allocation. I invest my money heavier weighted forwards equities. So if his retirement accounts are 30% of our combined retirement accounts - I skew my retirement accounts heavily towards equities,,, with a smaller portion in bonds and cash to compensate for his conservative approach. I control the taxable accounts so they are following our overall asset allocation.

The difference is that we've been married longer so the risks of divorce are less imminent. (But never zero)

 

[growing_older]

Sorry about the 100K loss in 2000. Even more sorry to hear that she gave up probably a $1 million or more by staying on the sidelines for the last few years of gains.

 

[jclarksnakes]

Retirement is a big change in your life. Do not even think about retiring until after you and your DW come to an agreement about how the two of you want to spend the rest of your life.

 

[Texas Proud]

Reading this makes me wonder....

Why did you get married Seems that you two have very different outlooks in life...

Also, you are in Texas... do you have a prenup? Are you keeping ALL separate assets separate at all times? if not, it is a bit harder to say who owns what... not impossible, just harder....


Good luck going forward....

 

[chris2008]

In your shoes, I might ask DW:
Is it fair that you want me to work till I am 60 but you are already retired at 58?
Is it fair that you see me financially unfit to retire while you retired with less assets than I have?
If I'll stay in the workforce till 60 I would appreciate if you take a job, too.

 

[W2R]

Welcome to the Early Retirement Forum!

It is tough when partners/spouses/SO's have different spending and investing philosophies. I do not have any magical solution to that for a married couple.

My beloved companion Frank, and I, have different spending and investing philosophies as well, although we chose not to marry. We have worked it out by living separately and keeping our money entirely separate. This works for us, but is probably not realistic for a married couple.

I wonder if it would be possible to find your way to retirement, by dividing your money into his, hers, and ours, for both spending and investing? Sounds pretty confusing, though, so that probably isn't practical.

 

[Grigori]

+1 to all the comments that you are FI and good to ER.

There are lots of threads out on the boards about setting things up to minimize perceived risk (even at the cost of some return) by doing things like keeping x (3-5) years of your spending needs in cash or cash equivalents so you don't need to sell equities when the market is down. Perhaps putting together a strategy like that with your real $$ would help with her comfort factor?

Also you could approach it from the angle of "WIIFH" (what's in it for her) if you ER. You could work on this through the year and perhaps after you find out the details of your 2014 health insurance costs based on Obamacare (probably October?), that would eliminate one big worrisome variable and help her over the threshold.

Good luck!

She has asked some of these same questions.

I think if I show her how we will pay for living costs, and we can pin down what Obamacare is going to cost us, we'll be in better shape.

 

[Grigori]

Welcome.

I skew my retirement accounts heavily towards equities,,, with a smaller portion in bonds and cash to compensate for his conservative approach.

I'm glad to see some else is handling a similar situation with the money - I think I will have to handle the equities part, and she most of the cash just like you are doing.

 

[Grigori]

With a 2 year marriage and just different ways of looking at things if I was you I would also want to run my numbers based upon what happens if, well, your marriage didn't work out and you ended up being single again.

It sounds like by any reasonable measure you could certainly retire. It is always easy to want the other spouse to keep working.

It is a short marriage, at 2 years, although it is my second, and longest so far. I think I'm going to have to have a little faith, and assume we'll be able to handle things. And I'm going to do whatever I can to try to make the marriage strong and a good one. I need to be more positive, and less cynical about marriage in general.

We just went to a friend's marriage today - he was 72 and she was 77, the third marriage for each, and they'd only known each other for two months. I went there a little cynical, however their marriage made a big statement to me about hope.

And that's why I was single all these years, and got married at 56. I wanted a companion, and wanted love, just like my friend Charles. I've seen lots of married couples who are opposites on many things, and yet they work it out and are happy. I got together with DW so that I'd have a best friend, and someone to do stuff with.

If I retire before I have a bucket more money that would be all my own to support retirement, and the marriage should break up, I'd be close but perhaps need to go back to work full time or contract, or come up with some other plan B like moving to Equador and living on the beach for $2000 a month, or getting a little manufactured home, or a cheap condo. I think I'd seriously consider these other plans. They'd probably be fun.

 

[Grigori]

Retirement is a big change in your life. Do not even think about retiring until after you and your DW come to an agreement about how the two of you want to spend the rest of your life.

What would you suggest?

Financially, we need to come up with a plan we both like.

Non financially, As we've talk about it these past months, she's said that she plans to keep spending most of the days at her parents preparing food, and talking care of her aging folks. She's a little concerned, maybe guilty sounding, about leaving me alone during the day.

We'll do the same things at night we currently do. Eat, watch movies, walk together.

During the day, while she's gone, I plan to go to pursue hobbies and interests. Yoga classes, vegan cooking. Study all those classics books I never had time for in engineering school. Do meditation practice. Go to bible study at church. Go on long bike rides. Do some journalling and creative writing. Help some people learn English as a second language. Grow herbs and vegetables.

We'll take a couple of trips a year just like we do now.

The ideas I'm mentioning here are as about as detailed as we've gotten.

We talk about moving some day, but we don't have a definite plan. We might like San Antonio, Las Cruces, Tuscon, or N. Florida. However, she tends toward the desert, and I towards the water.

 

[jclarksnakes]

What would I suggest? Make sure your marriage is on track, and that can only happen if you have similar goals before you make the decision to retire.

 

[Lagniappe]

If I read this correctly, you can easily meet your expenses using only your numbers. Your wife's funds are not needed to fund your (individual or combined) retirement.

You said you have $1.86 million in investable assets. Your current expenses are $60K per year. Add an additional $10K per year for health insurance. Using a fairly conservative 3.3% withdrawal rate (IIRC this was the 100% success rate for a 40 year retirement), you can withdraw just over $60K a year from your portfolio. In five years, you will get SS of $22 thousand per year, and in eight years a pension of $17 thousand per year, and once you are over 65, your medical insurance costs should decrease.

So why not set aside $50K from your portfolio to cover medical expenses for the next 5 years, withdraw 3.3% of your remaining assets for your expenses ($60K). Once SS and pensions start, you will have an extra $22K - $40K or so a year to enjoy.

The fact that your wife has substantial assets, social security and a pension means that life should be easier for the two of you together. But being able to support your lifestyle alone if you retired today would give me the confidence to go ahead and do it.

 

[Grigori]

So why not set aside $50K from your portfolio to cover medical expenses for the next 5 years, withdraw 3.3% of your remaining assets for your expenses ($60K). Once SS and pensions start, you will have an extra $22K - $40K or so a year to enjoy.

The fact that your wife has substantial assets, social security and a pension means that life should be easier for the two of you together. But being able to support your lifestyle alone if you retired today would give me the confidence to go ahead and do it.

Thanks - I had my blinders on. I been looking at how to get my wife to my way of thinking, when she obviously has her own already. It's not very satisfying for personal or marital happiness. When I put all the numbers into Firecalc and RIP it looks like my assets alone along with both pensions and social securities support our lifestyle at 100% success to 95. There's a bit of margin over the 3.3% you are quoting - the initial spending rate from Firecalc and RIP is more like 5.1% of the assets, because pension and social security streams are added on. This always scares me a little to see those high initial withdrawal rates, since I suppose it makes the portfolio more vulnerable to a stock market armageddon in the first few years of retirement. So it does look like I could take the financial decision, and ER on my own, if I wanted to, and I think I will have to do that anyway at some point.

However, I understand as people are kindly pointing out that I need to make sure my wife and I have a solid marriage and are on the same page about plans for the future. I doubt many couples are clones, and that's unfortunate sometimes, since you have to negotiate, and you're spouse won't act like your robot. We have a lot of things we enjoy together, but we have some battlefields too. We certainly need to agree on a "safe" budget, but here again, it may be a case of "her", "my", and "our" money. I can already tell that she wants a lower budget than I do, and will probably be scared about every new hobby or activity I take up that isn't absolutely free. We both worked for our money, and have definite opinions.


There is never going to be a day when another year of having me w*rk would not add to the portfolio. I suppose the safest retirement of all would be for me to work until age 80, have 6 or 8 MM$ or so, and spend it all the very next year before dying at age 81. Doesn't that sound like fun?

 

[Grigori]

Reading this makes me wonder....

Why did you get married Seems that you two have very different outlooks in life...

Also, you are in Texas... do you have a prenup? Are you keeping ALL separate assets separate at all times? if not, it is a bit harder to say who owns what... not impossible, just harder....


Good luck going forward....

We got married for love and companionship. We've been together for 7n years. She's shown me a lot of love. Probably I've been obsessing too much on this money stuff and forget that, and see only the friction over this money crap. Yes we have quite different outlooks in life. Opposites attract, no?

Unfortunately, or maybe fortunately since it will make me work harder at it, and I do think marriage is valuable, we don't have a prenup so I guess that means a 50 - 50 split in case things go south. It's too late to go back now, and I should have thought of it. I'd have to write some kind of big check since I have a larger kitty, but I'm determined to work this out, she sounds positive, and think we can. We do keep all the assets separate, and won't comingle since we have opposite styles of investing money, and each want to keep control of our own separate piles of money.


Thanks for the good luck.