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Nearing ER in New England - your thoughts?
Old 08-17-2017, 05:41 PM   #1
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Nearing ER in New England - your thoughts?

Hi all,

After reading this forum for awhile now, I've come to appreciate the unique tone of the discourse here - generally thoughtful, reasonable, well-considered, well-informed, courteous - and with a healthy dose of humor. I'd be interested to hear your thoughts on our situation and plans.

Current situation:
  • DW and I are in good health. I'm in my early 50s; DW is in her late 60s.
  • I work at a financial firm in New England, income in the low 6 figures. DW is retired.
  • Our investable assets are about 43x expenses, i.e. roughly around a 2.3% WR, when estimated realistically and on the side of caution.
    Being more conservative, by increasing discretionary spending and contingency estimates, would take assets down to 37x expenses - i.e. around a 2.7% WR.
  • We have no debt. House is paid off. DD is on her own, successful and independent.
  • Our asset allocation needs a bit of tidying up - too much in cash - but that is in process. If / when I FIRE, will put asset allocation in order.
Retirement plan:
  • FIRECalc yields results consistently at 100% or very near it. Adding in assumptions for unfortunate scenarios drops the rate to 95%.
  • Like many folks here, I also do fairly extensive spreadsheet modeling, which substantiates the notion that, barring black swans, we are likely to be all right - even if I were to pull the plug immediately.
  • Still need to run i-orp, Fidelity RIP, etc.
  • Right now, DW is on my health insurance. If I FIRE, then my wife would be on Medicare + Medigap, and I would purchase a health insurance plan through the state exchange, since I would have no health benefits from my firm unless I wait until 55, and even then, it is only access to group exchange rates, unsubsidized. A good silver tier plan, through the state health exchange, runs around $8,000 / year, with a $2,000 deductible and $5,500 estimated out of pocket expenses.
  • We would stay in our current house. It's paid off and we're comfortable here. Amortized major expenses for the house, and for other big ticket items like auto purchases, are in the projected expenses.
  • We would travel, probably 2 or 3 big trips a year, with smaller excursions, for as long as we're able. All this is in the projected expenses.
  • Neither of us has a pension, but DW has SSI of around $24k / year. I'll likely wait to claim until age 67.
  • I've considered the possibility of significant health care expenses - e.g. if we need for a period of time to move together to assisted living, and then transition to memory care (more on this below), while keeping our current house. Even if we plan on additional expenses of $100,000 / year for 5-10 years, FIRECalc yields 95%+ success.
  • I'm considering giving notice before EOY, mainly for 2 reasons - and here's where there's a twist on the usual scenarios posted here:
  1. Mitigating safety risk. DW is in the early stages of early-onset Alzheimer's. She is still fairly lucid; the variant of the disease she has affects mainly memory so far - severely, but largely sparing cognition and other faculties. Still, the risk of safety issues is increasing.
  2. Having a last few years - or however long it is - of at least somewhat normal life together. Right now, we can still do activities together - museums, movies, travel, hiking - even if her comprehension is slightly diminished, and I can keep our lives going administratively, albeit with a good bit of effort. Once she enters the moderate stage, though, all that will likely be over, and I'll be a full-time caregiver.
    So, we have a trade-off - Do I work until it's no longer feasible, meaning we give up these last few years of somewhat normal life together, or do we opt for some time for us to spend more time together, before night falls. We're leaning toward the latter.
So, on the face of it, we look to be in reasonable shape. Where I would welcome the collective wisdom of you folks is on a few points:

The questions:

1 - Most generally - is anything missing in our thinking?
I have a nagging sense that I am missing some key considerations, but can't put my finger on it. Probably many of you are familiar with this black crow of risk analysis that rides around on one's shoulder, and caws at inopportune moments, as one scans the road ahead...
2 - Any thoughts on how best to estimate taxes in retirement?
I've searched the forum, and the web, for information on this topic, and have found some useful points to consider - but this seems to be an important topic which, curiously, gets comparatively little attention. Maybe an avoidance reaction when we all think about taxes...
3 - And finally - where in your calculus does your obligation to yourself and your family outweigh your obligation to others?
This is personal and subjective, of course, but I'd be interested in your thoughts. I don't have any sense of owing the firm anything - but when my wife's condition became more severe, I called upon the collective good will of connections at the firm to negotiate a position (at reduced salary and responsibility) which would allow me to work from home far more often to take care of my wife. I have no illusions of being indispensable, but it's hard to get past the sense that the optics of my leaving the firm after that kind of assistance would be unfortunate for the people who helped in a pinch.
Thank you all in advance for your thoughts.
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Old 08-17-2017, 06:53 PM   #2
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First, I'm sorry for your wife's condition. IMO your time with her is precious. My MIL has Alzheimer's and DW's step mother has dementia and Parkinson's disease. From our experience with both of them, home care became too much and assisted living and memory care became necessary. They are 82 and 90 respectively, so are likely older than your DW. Just realize the day will come that it may be beyond your ability to care for them on your own. My mother in law started showing symptoms about eleven years ago. Other than the Alzheimer's, she's fit as a fiddle. We just get to hear the same stories over and over again every five minutes or so. We love her very much and it's hard to see this happen, but we stay cheerful about it. She seems happy in her memory care home and is hesitant to leave it, even for lunch. My FIL lives with us, but spends each day with his wife in assisted living. We can see the toll it's taking on him. But he loves her very much and will never leave her side until she passes.
I don't want to sound depressing, but you need to understand what may lie ahead. I'm financially independent, and would spend every valuable second with my wife if I knew this kind of thing was in the future. God Bless you and your wife.
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Old 08-17-2017, 06:56 PM   #3
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Even though I only introduced myself on here a few days ago and I have no expertise on retiring early (still working), I am still going to take a shot at answers.

First the money stuff:
Someone will probably point at the Questions to Ask Before You Retire thread (I haven't checked out how to post links, yet).
Someone will also say that one way to estimate taxes is to basically fill out a tax form(s) with your projected numbers and see what the taxes calculate to.

Now the important stuff:
While your situation with the DW is a tough situation, the good news is that it seems you are in a position to make the best of it. The numbers sure seem to be good (only you can figure out if the actual numbers have enough pad to keep you from worrying about what you might have missed). Your concern about leaving your job is noble, but unless they're complete @ssholes, they would not want you to stay if you were able to go. I believe if you explained it to them just as you've written it here, they will be honored to help you. Since they treated you so well, I suspect they are not @ssholes, and I suspect that if you ever needed/wanted to go back, they'd try to work that out. Your life is yours; the business will survive without you and it looks like you'll survive without the business.

You've been given the blessing of a warning that DW's time may not be "enjoyable" for the number of years we all hope for, and your hard work and planning have given you the means to add a lot of extra joy to those good years. I'd say don't try too hard to find reasons to keep working; there will always be money left on the table, but the merciless clock keeps spinning.

Good Luck in whatever you decide.
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Old 08-17-2017, 10:06 PM   #4
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Welcome TimeMeasure. You seem to be in great shape financially to retire and given your DW's health challenges sooner would be better than later, but you know all that.

One base you should cover, but I think you will be fine, is to see if your finances hold up under scenarios where either you pass right away or your DW passes right away.

On your tax question, it is pretty easy and as OnIslandTime suggested, just do a pro forma return for a year as if you were retired. You can either use TurboTax or something more broad based tool like TaxCaster.

On the last part, the truth is helpful... your wife needs you and family is paramount, so you have decided to retire early to spend more time with your and that you are thankful to the firm for the way they have supported you ... if they can't see the wisdom in that then to hell with them.
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Old 08-17-2017, 10:38 PM   #5
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Quote:
Originally Posted by TimeMeasure View Post
Hi all,

...........

The questions:

1 - Most generally - is anything missing in our thinking?
I have a nagging sense that I am missing some key considerations, but can't put my finger on it. Probably many of you are familiar with this black crow of risk analysis that rides around on one's shoulder, and caws at inopportune moments, as one scans the road ahead...

You likely have missed some small things (I can't think of anything material), but looks like you have the the big ones covered. You appear to have the resources to deal with whatever comes up. In my case the things I missed in my planning have been offset by the items I ended up over-budgeting for.

2 - Any thoughts on how best to estimate taxes in retirement?
Got a good answer above, but I use a bar napkin

[/INDENT]3 - And finally - where in your calculus does your obligation to yourself and your family outweigh your obligation to others?
This is personal and subjective, of course, but I'd be interested in your thoughts. I don't have any sense of owing the firm anything - but when my wife's condition became more severe, I called upon the collective good will of connections at the firm to negotiate a position (at reduced salary and responsibility) which would allow me to work from home far more often to take care of my wife. I have no illusions of being indispensable, but it's hard to get past the sense that the optics of my leaving the firm after that kind of assistance would be unfortunate for the people who helped in a pinch.

After my late wife's terminal cancer diagnosis, I too was the beneficiary of a gracious employer who adjusted my workload to allow me to tend to her and our kids. 4+ years later, I am still appreciative of the accommodations during her care and after she passed.

That said, it soon became clear my kids needed me more than my employer. I had a good 20+ year run with that company and I left comfortable that both sides got a fair deal.

With the cushion you have, I'd submit my resignation tomorrow and make the most of the remaining time you have together.


Thank you all in advance for your thoughts.
My compliments on your foresight and dedication to her, and my best wishes for the time ahead
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Old 08-17-2017, 10:59 PM   #6
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Let me just touch the edge of this very special situation. The word Alzheimer's is so often used when the situation is really vascular dementia. They're two different diseases, and we recently saw maybe 7-8 years of Alzheimers in the death of Glen Campbell.

I had an aunt with dementia problems that died at 99 3/4 years of age--after about 15 years of memory problems. She'd been in assisted living 9 years and full nursing home care about 2 years. What really got her was simply old age--and running out of energy.

If the DW in this case truly has Alzheimers, I would think her long term prognosis doesn't approach the years my aunt had memory problems. It's so noble of a husband to step up and be the primary caregiver. But when it's time, specialized care may be required and it's priced like full nursing home care. After all, it's taking care of ourselves in old age is why we saved money in our working years.

My older sister just turned 70 years old, and she's showing memory problems. It's almost like her husband and 2 children have ignored there's a problem to this point, and the subject's not been discussed with us. What's so hard is imagining the prognosis and what the future holds for individuals affected by memory problems.

You are obviously a very analytical person. My suggestion is to take every day as it comes. It's great that you've saved for your future and are able to ER. Working longer is going to be a tough decision for you. Good luck to you.
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Old 08-18-2017, 04:09 AM   #7
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You have been very thorough. It is time for you to RE.
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Old 08-18-2017, 06:19 AM   #8
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Another thing to consider is what happens to your funds if something happens to you first. We've set up provisions in our trust to make sure funds are available to care for DW's parents and step mother, with any remainder going back to the kids.
You'll want a trustee you trust to ensure your wife is properly cared for if you're gone and she is no longer competent to handle her affairs.
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Old 08-18-2017, 07:53 AM   #9
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My heart goes out to you & your DW. This is a not the ending we all hope for.

Now, one observation. We leave this world with exactly what we came into it with; nothing. The only thing we truly own while we're here is the time we're given. And there is no account statement we can check to see how much of that we've got left.

All we can do is choose how we spend that time. Spend it wisely.

No-one who understands the tough decisions you have to make will hold them against you.
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Old 08-18-2017, 08:59 AM   #10
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In sickness and in health...

Your first two questions have objective answers which others have already supplied, so I'll skip to Question 3.

Your obligation to your wife supersedes any obligation to anybody else on the planet.

I wouldn't worry about your employers. They sound like decent human beings. If they were understanding enough to grant you accommodations already, they won't be surprised when you tell them your wife's advancing condition now requires your full attention.

Sorry about your DW's illness, but welcome to the forum.
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Old 08-18-2017, 11:35 AM   #11
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Dear OP,

You seem to have covered all your bases. Put your resignation in and spend all the moments you can together while you can.

You and your wife will be in my prayers. You have very hard tasks ahead of you. Blessings in all you do and the decisions you are making.
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Old 08-18-2017, 03:52 PM   #12
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As a one time "New Englander" 1936 to 1967, your post caught my eye.

You've done your homework well, and I can see myself going thru the same process, some 28 years ago. I can also relate to the situation with AZ, having had friends go thru the difficult times, now living in a CCRC ourselves with a closer touch to people with this inexplicable "disease"... and now going thru the beginnings myself over the past two years.

I would direct you to a separate post in a much longer thread, that covers one possibility of dealing with the dollar effects of long term care for Alzheimers. I discusses a friend whose wife suffered for years in a nursing home, and caused him some financial distress. I'm not likening this to your case because it looks like you have the wherewith-all to handle a normal memory care situation, but just as something to consider.

Part of my own retirement planning was to break down the cost of living into three categories of budgeting. Optimum, Nominal and Austerity. Psychologically speaking, it provided a mental safety cushion for any necessary fallback during the earliest years of retirement.

Here's the link to the post... part of a very long thread that you'd fall asleep reading.
Sharing 23 years of Frugal Retirement

I do wish you and your Dear Wife well... hopefully you'll have many years of happiness together. Have a GREAT retirement!
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Old 08-18-2017, 04:03 PM   #13
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Welcome. You certainly have prepared financially as well as possible. There comes a time when you have to make the leap and proceed to enjoy your life. None of us knows what's left in the tank but take it day by day. Far too often we try to control and prepare for every eventuality and some other factor hits us.
Best wishes and keep us posted.
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Thanks - to all
Old 08-19-2017, 02:31 PM   #14
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Thanks - to all

There have been so many helpful, thoughtful and kind replies that it's hard to thank everyone properly or individually - but I do appreciate everyone's thoughts.

Dash man - appreciate your affirmation and good wishes. Yes, the situation is a bit like you describe with your MIL. DW is fit, in good spirits - but a lot of repetition due to the memory loss.

pb4uski - Good thoughts from you and On Island Time about doing a pro forma tax return as a way of estimating taxes in ER. Will do that. And you raise an important point about whether "finances hold up under scenarios where either you pass right away or your DW passes right away." Those scenarios are easy to overlook.
If I pass away first, DW will be as fine as possible. Although DD would not be able or willing to give DW the same standard of care I do, she would try, and if worst comes to worst, the assets will cover care in the best facility possible.
If DW passes away in the near term, I will be a bit pinched, as some of the assets will flow to DD in that case, but it is a risk that at some point I need to take, in order to properly care for DW, and for us to have a last few good years together. If DW lives another 5 - 20 years, which is more likely, than financial position will be more comfortable for me by that point, if only because I'll be nearer to claiming social security.

FlaGator - Sorry for the loss of your wife. My condolences. And appreciate your blunt good wishes - "With the cushion you have, I'd submit my resignation tomorrow and make the most of the remaining time you have together." It may not be tomorrow - but I am leaning toward this year.
Bamaman - Good point about the various flavors of dementia. In this case, we're pretty sure it's not vascular dementia, based on a cerebrospinal fluid test last year, but it's a good thought.

CaptTom - I liked this: "No-one who understands the tough decisions you have to make will hold them against you." Very true. The only folks in the family who have been antagonistic so far are less mature ones who really don't understand having to deal with serious health conditions and the resulting difficult balancing and choices.

kimcdougc - Thank you for your kindness.

imoldernu - I so value the thoughts from someone who has lived through similar times, and a long time already, from the sound of it. My sympathy that you are going through the beginnings of this yourself, the past couple years.
I like the idea you described of categorizing cost of living as optimal, nominal and austerity. So often the thought process in these decisions becomes easier if one can just get the categories of thinking right.
I've begun reading that longer post you linked to - and will read it through to the end! No danger of falling asleep. The thoughtful, intelligent commentary in these threads is fascinating to read. Usually one of the first things I do over morning coffee is to start the iPad and read through subscribed threads - and that will be one of them.

Although I haven't thanked everyone by name - I do appreciate all of your helpful thoughts!
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an update
Old 09-17-2017, 05:57 AM   #15
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an update

Thought I'd post an update, since many of you were kind enough to share your thoughts. Plus, sometimes it's just interesting to read others' stories.

So, spurred on by the affirmations from folks here... combined with FIREcalc and other analyses pointing to the feasibility of FIRE... and the other reasons in the original post... along with the realization that, if the markets tank hard enough and long enough to put a retirement plan at fundamental risk, then any job one has is not likely to provide much incremental security at that point anyway... I let the firm know that I planned to retire, several months down the road. After the concessions they've made, it seemed fair to give advance notice.

Surprisingly, the firm suggested then looking into options for part-time work. Knowing that anyone is imminently replaceable in an organization of sufficient size, had not anticipated this. Hearing that suggestion, thought process then ran like this:

One the one hand, if it's feasible and justified to retire completely, then the sudden prospect of being able to switch to part-time doesn't change that fact, nor the original reasons to retire. Part-time then just becomes a "one more month" variant of the "one more year" syndrome.

On the other hand, the allure of cheaper health insurance and padding the nest egg just that little bit more is always there. We see it in posts here all the time, because the benefits are so indisputable.

Netting it all out, decided at least to look into intermittent FMLA as a way to switch to a 3-day work week. In the process of getting that paperwork finalized.

Because FMLA only covers 12 weeks (60 business days) in a 12-month period, 2 FMLA days per week will only last a little more than half a year. At that point, after half a year, if the firm is willing to either offer a true part-time position going forward, or willing to cover it via unpaid leave... and if the part-time position, like the current one, continues to be almost completely remote work... and if that position is meaningful work that will actually make a difference and be of some interest... then I'd consider continuing part time.

However, that is stacking up a lot of "ifs"... and if one of those "ifs" doesn't hold true... or if there is some other material change of circumstances... then I simply retire, when FMLA runs out, having netted a little incremental benefit to health coverage and the nest egg.

And as a smaller consideration, at that point it would be early summer. There's another thread going here recently about the best time of the year to retire. All else being equal, there's something appealing about retiring at the start of a season when one can open the windows, and let the breeze and the smell of growing things into the house. Here in New England, retiring at the start of the dark cold half of the year, when one is effectively cooped up in the house for a number of months, sounds less than encouraging. Am expecting retiring to be a big adjustment, not some ecstatic burst of freedom - and so making all the surrounding conditions as positive as possible seems valuable.

That's the latest. Thanks again, everyone, for all your earlier comments on the original post.
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Old 09-17-2017, 08:00 PM   #16
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Thanks for the update. This gives you a chance to plump up the savings a bit while also spending more time with DW and exploring your options.
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