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Retired in May; scared in October!
Old 10-17-2008, 11:27 PM   #1
Confused about dryer sheets
Join Date: Oct 2008
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Retired in May; scared in October!

Thanks for having this forum! Retirement really is awesome especially when you still have your health! Here is our story........

In a short history, dh retired at 59 1/2 in May with a pension and a 401k. We had been planning for 10 years to sell our home of 15 years and move to our property (all paid for), live in our shop and build our dream home! Well, we are doin' it right now! However, we THOUGHT we would make more off the sale of our house to pay for our new build.....WRONG! We have a construction loan but have been using our "sale proceeds" first then start borrowing on the loan. We also THOUGHT we would not have a mortgage but we will have about a $200k mortgage. Of course our 401k is now in an IRA which is a 40/30/30 split of stocks,bonds,etc. which is taking a huge hit so dh wants to pull it all out, pay off the house when it's finished and then that would leave us with about nothing!!! Does this make any sense? I think we need to see a financial planner and quick!!! Any ideas?

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Old 10-17-2008, 11:53 PM   #2
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Have you tried using FireCalc (at the bottom of this page)? Running your numbers through this calculator could certainly help you.

Can you cut back on the cost of the house? Do you feel comfortable that the pension is safe? Does the pension have survivor benefits? Will the both of you be able to collect SS? Have you kept a spreadsheet on your expenses and know how much you would like to live on? Have you figured a bare bones budget?

I know these are a lot of questions to answer, but knowing and understanding them are vital IMO.

By the way, welcome to the forum!

There's no need to complicate, our time is short..
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Old 10-18-2008, 12:18 AM   #3
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As bbbamI said, we need to know more about your financial situation. For example: could your husband's pension easily cover your regular living expenses plus the payments on a $200K mortgage for a few years or would it be a struggle? If it could, then it would buy you some time to allow the stock market to recover. You could then have more money to repay the mortgage either in part or in full and have some money left in the IRA.
42 y/o, married, retirement portfolio = 43 x annual expenses
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Old 10-18-2008, 07:19 AM   #4
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It's fundamentally a tough time to retire, especially if you also have a house to sell in order for the plan to work. That's where we will be in the not-too-distant future (house is fully owned but we'd love to downsize closer to kids, grandkids). Because we're generally pretty content where we are (house and job) we are holding a wait and see position for now. In better times, I'm sure we'd be chomping at the bit.

I hope you can avoid selling off your IRA stocks. You'll need your nest egg to last a lot of years.
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
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Old 10-18-2008, 07:57 AM   #5
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Welcome to the Early Retirement Forum!

It is not clear to me whether or not you are committed to building a house this expensive. From what you are saying, it sounds like you are not entirely sure that you can afford this house at this stage of your retirement, given the present economic downturn.

Pulling money out of your 401K would involve not only a big tax hit, but also you would be locking in stock fund losses. So, I think you have some genuine concerns.

Moreover - - beyond taxes, budgets, and funding sources for the home - - will the experience of living in this house be fulfilling enough to make up for the worries of having to pay off this house at the expense of your retirement savings or taking on a mortgage in retirement? It wouldn't for me, but maybe it would for you.

Some other concerns to think about would include your financial security if (heaven forbid) one of you passed away; or whether or not you have enough of an emergency fund; and finally, whether or not your financial plan is sufficiently diversified (or are you putting all your eggs in one basket).
"You can never cross the ocean until you have the courage to lose sight of the shore." - - - C. Columbus
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Old 10-18-2008, 08:21 AM   #6
Confused about dryer sheets
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Thanks for all the suggestions! Sometimes just reading what I have posted seems to make things more clear. I think we are mistaken to take from our IRA because we will be fine just on the pension; it is just the mortgage that concerns me now.

want2retire, we have an IRA not a 401k and the house we are building is very modest; one story, 1650sq.ft. in a very rural area but not far from a big city. We are on a "cost-plus" contract with our builder and have alot of "power" to effect the budget so we just need to be vigilant. Anyway, gotta run......thanks again
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Old 10-19-2008, 03:23 PM   #7
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welcome KG!

Enjoy the pension (many of us don't have one). Don't worry be happy! The best is yet to come... promise.

In a panamax down by the river.
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