Retire Early to Fish in Florida

[TightLines]

We’re hoping to retire early (and fish ) and would like some advice on how to best use our assets until we are eligible for our retirement accounts. Here is our current situation:

--I'm 55, DW is 52.
--2 Kids in college.
--No loans or debt. We pay off everything monthly

Combined 401ks and individual IRA - $1.2M (all pre-tax)
Combined Roth IRAs - $165K
Brokerage Account - $510k (all individual stocks)
Mutual Funds - $129K
Cash - $120K
College fund – $85k which should cover all remaining college costs
FHA (Future Health Account) – $30k (must be used for health insurance)

We also have annuity payments coming due in 2 years of 15k, in 3 years of 60k, in 6 years of 18k and in 7 years of 18k.

Anticipated expenses are at about $85k a year (taken from a 2 year running average) and include health insurance for the whole family.

Questions:
- We’d like to live off of cash, stock sales (Brokerage account) and
annuity income until we are eligible for our 401k. We plan on managing our
income so we pay 0% on the long term capital gains. I figure this to be
about $95K a year and with the standard deductions, kid deductions, and
minor 1099 income, we fall below the $78750 income limit for 0% capital
gains taxes….but still cover all our expenses. I know you can’t time the
market but if/when the market corrects, I think this plan is very risky with
the possibility of losing a lot of equity in the stocks. Should we sell some
stock now to have more cash on hand to get us thru the first 5 years?

- If the above makes sense, I think our income would be low enough (using
just cash and long term capital gains) to qualify for affordable health care
for a family of 4. In my above expenses, I include health care through my
current employer which would be significantly more expensive than ACA.
Does long term capital gains count towards income for ACA? Is this a good
idea?

I would appreciate any feedback or comments…thanks, TightLines

 

[Mdlerth]

Don't delay another minute: Weigh anchor today!

I don't have any suggestions, only a question. What do annuity payments coming due in years 2,3,6,& 7 mean? Are those one-time payments, or does it mean that once the annuity payment starts, it recurs each year? (That's what I thought annuity meant.)

If each of those 4 annuities begins in its designated year, and then continues for life, then you're not just golden, you're an idol.

 

[Dtail]

Long term cap gains do count towards MAGI income.
See below for the rules.
http://laborcenter.berkeley.edu/pdf/2019/magi.pdf

 

[TightLines]

I wish I was an idol . The annuities are just one time payments.

Thanks Dtail, even with capital gains included in MAGI, we should still be able to manage our income so we could qualify for ACA.

 

[Vacation4us]

Essentially I see $749k you have access to until your 59.5yo (4 plus years away).

Your income needs are 95k

Total assets 2.1 not including annuity or 529.

4% on 2.1 is $84960. Your certainly close with your annuity payments but are you ok with your drawn down of after tax savings before access to the rest of your assets?

 

[MRG]

You know about the Rule of 55 in regards to the 401k?

 

[mystang52]

One thing to factor into your decision process: unusually large expenses, such as major home repair, replacement car, etc.

 

[TightLines]

Thanks for the replies. I think I'll rethink a more 'distributed' draw down method including my 401k (which does fall under the Rule of 55).

I expect my expenses to be significantly less once my kids are off our insurance and out of college so I will be more comfortable with the 4%.

 

[LRDave]

We got your financial questions sorted in 8 posts.

Now the REAL controversy will be where in FL to move and, in fact, why would you ever want to do such a thing....

(I keed - multiple and nearly endless threads on the whys-and-wheres of FL.)

 

[MRG]

We got your financial questions sorted in 8 posts.

Now the REAL controversy will be where in FL to move and, in fact, why would you ever want to do such a thing....

(I keed - multiple and nearly endless threads on the whys-and-wheres of FL.)

What kind of fishing? That is what determines where you live.[emoji111]

 

[Sunset]

OP - Are you a catch and release kind of guy, or will you eat what you catch which could reduce your food costs

 

[bigcmagor]

Fishing in SW Florida has been sketchy at best this year. Recent algae and red tide blooms have decimated the in-shore fishery, I'm afraid. Used to stay busy catching snapper and snook off the dock and that has dried up too. Fortunately, watching swaying palm trees and soaking up sunshine while dressed in shorts and flip flops makes slow fishing completely acceptable. It was really a bummer to have to put long pants and shoes on to go north for Thanksgiving. The finances look fine, come on down!

 

[ckelly78z]

It sounds like you have the world by the nads with your investments, so no worries there.

I have a daughter who just got married last month, and a son, who graduated in June, but still living at home, so I feel your pain. Maybe next year, I can get a realistic budget figured out. I would love to join you in the sun slowly fishing...good luck !

 

[Red Badger]

Nothing else to off on the finances. However, are your beer drinking skills sufficient for the fishing commitment that you plan?

 

[TightLines]

Thanks for all the comic relief I actually already live in south Florida (Lighthouse Point on the east coast) and have access to the water. The problem has been having enough time to actually go fishing.

I'm primarily an off-shore fisherman and I agree, it has been slow this year. I can't complain though, I've caught my fair share and I only keep what I'll eat in 1 or 2 days. It doesn't reduce my food bill much because I still have 2 teenage kids who eat constantly

 

[bolt]

I was reluctant to reply. Your primary consideration is TIME*.
I know folks that started to build retirement spots on the seas edge in FLA in the 70s/80s/90s. Then the sea itself left them near broke.(5-7Hurricanes & erosion , & such). I've known waters edge properties declared uninsurable.



One could research "Little Conch Key" near mm 62 overseas hwy. Fla.
Its value direction has been disappointing.
Like "Timeshares" you cannot give somethings away.
Theres really only one thing you can do.
Save, invest, Save, speculate and educate-update yourself constantly on FLA laws leading to ur retirement.
Hopefully this story helps your insights.

 

[targatom2019]

LOL, I retired at 50 just so I could fish more but I live in Socal. Heading to Puerto Vallarta Mexico in couple days for cow yellow fin tuna.

Congrats

 

[CaptTom]

There are so many options, it's hard to know where to start to give advice.

Where in Florida do you plan to fish? Salt water or fresh? For sport or eating?

I can't even advise as to what type of boat to buy until you answer these basic questions!

 

[targatom2019]

There are so many options, it's hard to know where to start to give advice.

Where in Florida do you plan to fish? Salt water or fresh? For sport or eating?

I can't even advise as to what type of boat to buy until you answer these basic questions!

where in Florida for off shore wahoo, tuna and yellow tail ?

 

[TightLines]

I actually already have the boat and my fishing spot...though I may move to have more fishing options. No real inshore opportunities near Lighthouse Point unless you trailer your boat north or south.

We catch wahoo, blackfin tuna and yellowtail snapper where I am...no yellowtail tuna though

I'm just hoping to retire early (before 60) to have more time to fish. Most of our money is in retirement funds so was just looking for advice on how best to budget the 5 or so years before taping into the retirement funds.

2 kids at home and health care are my biggest concerns. I'm thinking to save some cash so we can use that and qualify for ACA.