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retired at 62, husband at 63
Old 04-17-2016, 09:13 PM   #1
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retired at 62, husband at 63

Hi, my name is Janis... I retired May 28, 2015 as a school teacher of 16 years. My husband is planning to retire Jan. 31 2017. I am already getting nervous about this journey into our next life. Even though I have a small pension1,500 a month, he will not be able to get his pension of 3,800 a month until he turns 65 so we about 22 months of a bridge years to deal with before we get his pension plus ssi...
We are going to have to pull about 40,000 from our IRA each year to live on (IRA savings is 850,000) for retirement.

We have NO Debt, own 2 houses, 450,000 and 200,00 own a sailboat worth 95,000. We pay off our credit cards every month. Today we live on about 100,000 after tax money. When my husband retires in January we will be living on about 50,000 after tax money. In October 2018 he will receive his pension of 45,600 a year and then two years later another 31,200 from ssi........... so the deal is that 22 month window to get us through until the other moneys come in. Our budget a month is around 6,000 and when we retire it should be around 4,500 a month. I know that we can do it but it all makes me very nervous... I use mint.com which helps me stay on a budget but still... the thought of not having his income and being on a tight budget makes me nervous...... Hopefully I can hear from others in there bridge years before there pension kicks in.
....... looking forward to the group.
Janis
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Old 04-17-2016, 09:55 PM   #2
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Hi Janis -

Have you tried firecalc? (Linked at the bottom of the page.) It has several tabs that need to be filled out - but does a good job of modeling a situation that has different income streams coming online at different times... as well as a retirement in the future (your husband).

The spending on the first page is GROSS - so you need to include taxes, health insurance, etc... Make sure you also address the various tabs - included asset allocation... it defaults to 75% equities/25% fixed income... which may not match your asset allocation.

If you're a quicken user - their lifetime planner (comes with Quicken deluxe and higher) is excellent for modelling. That one you input your net spending - but also fill out your expected tax rate, etc.

I know I ran every calculator I could get my hands on before I started getting confident. Firecalc, Quicken Lifetime planner, cFiresim, i-orp, Fidelity retirement income planner, financial engines (free if you have vanguard), etc... They all work differently - and fleshed out (uncovered problems) in my plan that I needed to address.
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Old 04-17-2016, 09:58 PM   #3
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One more thing about firecalc... It assumes a low expense ratio for your investments. Your other post mentions wealthfront - so you'll need to adjust the expense ratio up to reflect that.
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Old 04-17-2016, 10:12 PM   #4
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Quote:
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One more thing about firecalc... It assumes a low expense ratio for your investments. Your other post mentions wealthfront - so you'll need to adjust the expense ratio up to reflect that.
Thanks I am running everything now, I will try firecalc again and will try to understand it.. I ran the calulator at wealthfront on what investments to have which was much different than Vanguard.... I think that I am going to look into quicken... I have been using mint.com for budget and it has been great. I really like doing this stuff myself.. I like to know what is going on. I do all our investments and bills.. I am the money person in the family

I just want to feel good about husband retirement and that we can make it without working a job.

thanks for the input
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Old 04-17-2016, 10:30 PM   #5
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It's definitely scary taking the leap. It sounds like you guys have decent income streams coming online soon - but also have a significant spending level. Only you can decide if you're ready.

Just to put it in comparison... I retired almost 2 years ago. Assets were a bit higher, and we have rental income. DH is on SS. We have 2 kids at home. Our spending is 84k gross. (Actually, a bit less in practice - but that was the number I budgeted with.) I approached the spending number from 2 directions - top down and bottom up. For top down I took gross pay, subtracted our 401k contributions, SS taxes and medicare taxes, and added in health care. For the bottom up I tallied up bills and spending. I used the higher of the two numbers.
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Old 04-18-2016, 05:53 AM   #6
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It's definitely scary taking the leap. It sounds like you guys have decent income streams coming online soon - but also have a significant spending level. Only you can decide if you're ready.

Just to put it in comparison... I retired almost 2 years ago. Assets were a bit higher, and we have rental income. DH is on SS. We have 2 kids at home. Our spending is 84k gross. (Actually, a bit less in practice - but that was the number I budgeted with.) I approached the spending number from 2 directions - top down and bottom up. For top down I took gross pay, subtracted our 401k contributions, SS taxes and medicare taxes, and added in health care. For the bottom up I tallied up bills and spending. I used the higher of the two numbers.
I am trying to get our spending down... I am going keep working it.. how old did you say that you were?
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Old 04-18-2016, 01:18 PM   #7
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It looks like once you are past those 22 months you will have enough income to cover your expenses.
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Old 04-18-2016, 01:41 PM   #8
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I am trying to get our spending down... I am going keep working it.. how old did you say that you were?
I was 52 when I retired. But DH is almost 10 years older than me. So he took early SS at 62 - that provides some income. And we have rental income. These provide 1/2 of our budgeted spend... I have a (very) small pension coming online later this year - which will also reduce the spend. And DH goes on Medicare next year - which will reduce the health insurance costs (which are significant).

As I said before - I modeled it every way I could, using every calculator, as well as spread sheet projections to make sure we were ok. Especially since I had 10(or more) years till *I* could take SS....
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Old 04-19-2016, 02:51 PM   #9
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This looks like a very short term problem (for which you have good reserves). Once his pension and SS start, it sounds like you'll have more than enough each month. Of course it never hurts to be a little extra frugal just for comfort, but it sounds like you're positioned well and don't have any need to worry.
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Old 04-19-2016, 05:33 PM   #10
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I figured out that if I take the pension when he retires... we will lose $450.. or if I wait a year it is only 200. I like the idea of pulling from our savings the first year of retirement then kicking in the pension with only a 200 lose.

Husband wants to sail down the Intercoastal waterway ICW with a group starting in Oct 2017 so that would work out that 3 months later we will get his pension going..... Just love hearing from your guys. thanks JWR
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Old 04-19-2016, 07:14 PM   #11
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One thing I found useful is to make a spread sheet that has all your income and expenses listed on a single line, year by year. The Fidelity RIP programs does this automatically, if you input when various income sources start and stop as well as expenses into the initial questionnaire.

This helps me visualize where my money is coming from year over year, including withdrawals from investments. It also shows life events like beginning RMDs.
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Old 04-19-2016, 08:52 PM   #12
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thanks.. I will look at it
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