New start with a new retirement plan!

[timo2]

Hello! I'm starting over here. I have been mostly absent while I've spent the time from my initial 'hello' post in 2011. Two things have changed since I initially looked into ER from the 'can I afford to retire early' viewpoint: 1) now it is my wife who will be retiring early, not me . This happened because I was finally able to engage her into the planning process. 2) I recalculated the entire plan to get my wife the largest survivor benefits should I pass first.

Consequently, the DW will go at age 56 (in 1.5 years). I'm looking at going at a couple days past my 65th birthday (5 years from now). She makes less than me (and also less than any male doing the same work as her), so I will work longer to sock away more money. She would quit now, but if she can stand another 1.5 years, she gets paid for half of her unused sick leave. She has a 401a and a 457, but no social security or pension (she is employed by a City government). She will have about 290K in her retirement plans when she retires. I do get social security and a pension (FERS), but the pension is cut by 50% for the survivor benefit, so I do not want apply for social security until I'm 70 so my wife will have a larger survivor benefit from that. At age 65, my pension should be about 3K per month, and if I wait for social security at 70, that should be about 3K per month also. That leaves DW about $4,500 per month in survivor benefits.

So what to do for income in the 9 years between when she retires and my age 70? I'll try to work for half the period, and then I do get the pension after that. Then there is her retirement savings. The current plan is to drain her retirement accounts over that 9 years. That is the only way we can afford to put off social security until I'm 70. and, she is concerned that wall street will crash the economy again (with no bailouts next time, so all the accounts would disappear), and wants to get her money into FDIC accounts ASAP after retiring. Then, if I can work to 65, I will have 230K in my retirement account for when we are over 70.

Tim

 

[martyb]

I'm assuming you mean the amount of her benefit under your survivor's benefit option would be 50% of your total. I'm CSRS, not FERS, but generally, the cost for the survivor's benefit should be around 10% of your total, not 50%. The amount she would receive would be 50% of what you were receiving.

Under CSRS, it will cost me approx. 10% of my gross pension, but wife will receive 55% of my total.

 

[timo2]

Yes, I meant the amount of her benefit under my survivor's benefit option would be 50% of my total.

 

[obgyn65]

Welcome, Tim.

 

[rodi]

Welcome.

I had to laugh that when she got engaged in the planning, she's the one retiring sooner. I think I'd like her if I met her... sounds like something I would do (if the math backed it.)

Wasn't an issue in our case- DH is already older than I will be when I retire. And I'll retire within a year or two (calendar) of when he does - but at a younger age.

 

[timo2]

I've read several retirement studies that one of the biggest problems couples have regarding retirement is not really discussing retirement schedules or finances with each other. They follow assumptions, and then when someone wants to retire, the stuff hits the fan. I think people just get to working and get in a routine and get busy with life, and don't look that far down the road. So I sought to avoid that, and it took a long time of looking at various pieces of the possibilities from different angles until the whole picture presented itself. The numbers looked good for her to retire early. So she jumped on that. Smart woman, my DW.