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Would like review on our modest retirement plan
Old 05-11-2019, 10:00 PM   #1
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Would like review on our modest retirement plan

Hi all,

After years of reading and learning from this forum, I am hopeful that DH and I are in a position to retire, but I would appreciate input from the forum members. DH is 67 and I am 62 next week; DH has been retired for two years, and I would like to retire in December 2019 when I am 62.5. DH has health concerns that will likely affect his longevity, which is a significant motivation for retiring now instead of a few years from now.

As far as income and assets, our income sources will include a non-COLA pension ($21K with survivor benefit), $48K in social security (total for both with DH already receiving SS and me taking it at 63.5), and $11K net income from a condo we own with no mortgage, for a total retirement income of about $80K/year before taxes. The rental condo has more than kept pace with inflation over the 12 years we have owned it, and has always rented immediately. The market value of the condo is about $270K.

Aside from the assured income streams, we have about $930K in other assets, and own our home with no mortgage. No other debt. Based on current spending, we will spend between $85K-$95K/year inretirement, including health insurance and taxes. DH is on Medicare, and I have health insurance through my state retirement system at a rate that should not change much between now and Medicare age. No LTC insurance, but our home is worth >$500K, and if necessary, we could sell if one of us needs assisted care, while the other moves into the condo. (Both are in the same city.)

The $930K is divided between Roth ($210K) and traditional IRA ($140K) with the remainder in taxable brokerage accounts. The accounts are a mix of equity index funds, bond index funds and a few stocks that I will convert to index funds over the next year or so. In addition, we will have $30-$40K in cash/CDs. I expect we will draw $20-25K/year from the retirement accounts, although there may be years when we take less.

Compared to some on this forum, we will have a more modest retirement, but I think we our assets will provide for all of our needs and many wants. I am interested to hear whether others think this plan looks workable. Comments welcome, and if I have missed something important, I'd rather address it now than after I've left my job.

Thanks!
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Old 05-11-2019, 10:23 PM   #2
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Your plan looks very solid.
The 930K at 4% withdrawal would provide $37,200 /yr.
So the "retirement income of about $80K/year" + $37,200 is more than your $85->$95K spending by $22,200 at a minimum (more if you only spend $85K in a year).

Moneywise you are fine.

Are you tracking your spending so you are iron clad sure about the $85->$95K ?

Regarding the rental, sounds like you are planning to keep it for now, how do you do maintenance on it ?

It's true some folks here are super rich, other's are not, and some I think spend to impress, and others take pleasure in getting bargains. But as long as you can do what you need and want, then you are set.

Last year we spent ~$75K including taxes, so a plan of about $90K sounds very good.
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Old 05-11-2019, 10:43 PM   #3
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Thanks, Sunset. Yes, I have been tracking expenses over the past couple of years, although I have had to separate out money spent on remodeling projects to get a better sense of regular expenditures. We remodeled two rental properties that we subsequently sold, remodeled the rental condo that we are keeping, and did some remodeling on our own residence.

Major expenses include healthcare (my insurance premiums, DH Medicare and Medicare/drug supplement plans plus DH medications are ~$20K/year) and property taxes (total for both properties is about $6,000/year). Healthcare costs for me will drop about $6K once I reach Medicare age.

The rental condo got a major remodel last summer, so it should be good for another 10-12 years.
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Old 05-12-2019, 12:39 AM   #4
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Looks solid. Id consider using VPW if you want to maximize spending! Retire at will!!!
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Old 05-12-2019, 02:32 AM   #5
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Looks like you are good to go. Since DH appears to have some medical issues, you both should enjoy a nice retirement as soon as possible.
The spending vs. assets invested works.
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Old 05-12-2019, 03:04 AM   #6
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Welcome.
Yep, some rich people here. Some others are retired/semi-retired on less than 1M invest able assets and no pension.

Cash flow and spending amounts are the name of the game. Good luck.
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Old 05-12-2019, 06:56 AM   #7
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If your spending number is pretax as you say, you're in great shape as your guaranteed income just about covers your target spending. Even a 3% withdrawal on the other 930k generates another $27K of gross income. Given your longevity comments, 3% might be un-necessarily conservative.

Best of luck!
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Old 05-12-2019, 07:21 AM   #8
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It sounds like you have wiggle room with your paid off house and condo. Things look good, for a little minor tweaking I might suggest managing your income for ACA until you turn 65. Maybe delay your SS until you are FRA as your DH took his early. This would result in a bigger check/survivor benefit when the first of you passes away.

You could covert some of the after tax holdings to cash this year. If you can keep your taxable income under the cliff you would get some pretty cheap insurance. It depends how much income your taxable accounts throw off every year. This gives your SS a chance to grow bigger and cuts down on your own HI costs. Maybe get an ACA plan with an HSA option.
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Old 05-12-2019, 08:34 AM   #9
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Originally Posted by ivinsfan View Post
It sounds like you have wiggle room with your paid off house and condo. Things look good, for a little minor tweaking I might suggest managing your income for ACA until you turn 65. Maybe delay your SS until you are FRA as your DH took his early. This would result in a bigger check/survivor benefit when the first of you passes away.

You could covert some of the after tax holdings to cash this year. If you can keep your taxable income under the cliff you would get some pretty cheap insurance. It depends how much income your taxable accounts throw off every year. This gives your SS a chance to grow bigger and cuts down on your own HI costs. Maybe get an ACA plan with an HSA option.
ivansfan, DH took his SS at FRA (66 for him) and he has the larger benefit. My pension has a survivor benefit, so each of us is protected to some degree.

Our basic income, even without my SS, is pretty close to the limit for an ACA HI policy. When I ran a calculator for 2019, it showed my cost would be >$6,000/year for a silver plan on our income w/o my SS. I'm paying >$9K/year now in the state retirement system, but it is a plan with no deductible that is slightly subsidized as a retirement benefit. However, if that changes I will look at an ACA plan for a couple of years. Healthcare really is the wild card in retirement.
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Old 05-12-2019, 08:42 AM   #10
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Do it now.
30 years later with much less.

Sharing 23 years of Frugal Retirement
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Old 05-12-2019, 08:43 AM   #11
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Why wait till December? Is there an incentive to stay?
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Old 05-12-2019, 08:50 AM   #12
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OP Not that Modest. Folk, some here even live on a lot less.
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Old 05-12-2019, 08:51 AM   #13
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If husband has medical issues, you should retire now. You have more than enough assets given your spending. Enjoy each other while you can. We all have limited “good years” left. Jmho
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Old 05-12-2019, 09:00 AM   #14
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Why wait till December? Is there an incentive to stay?
My position is a director level, and the employer for whom I have worked has been very accommodative to allow some work flexibility. They do not want to see me go (originally suggested I work until 70) but understand my situation, so I gave a year's notice and have been training my replacement. The last 6 months of my time there will be at 0.5 as my successor gradually takes over. My successor's other work obligations prevent her from taking over before then.
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Old 05-12-2019, 09:05 AM   #15
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OP Not that Modest. Folk, some here even live on a lot less.
I know that is true, although the asset levels described here are often eye-popping.
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Old 05-12-2019, 09:12 AM   #16
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ivansfan, DH took his SS at FRA (66 for him) and he has the larger benefit. My pension has a survivor benefit, so each of us is protected to some degree.

Our basic income, even without my SS, is pretty close to the limit for an ACA HI policy. When I ran a calculator for 2019, it showed my cost would be >$6,000/year for a silver plan on our income w/o my SS. I'm paying >$9K/year now in the state retirement system, but it is a plan with no deductible that is slightly subsidized as a retirement benefit. However, if that changes I will look at an ACA plan for a couple of years. Healthcare really is the wild card in retirement.
That's a hard one because an unusual capital gain could throw you over the cliff and cost you lots of money. I'd probably stick will the plan from work. And I also know from personal experience when it's only one of a couple on ACA the savings are not as significant.
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Old 05-12-2019, 11:13 AM   #17
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I know that is true, although the asset levels described here are often eye-popping.
Your Pensions and SS are more than a lot of ours too.
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Old 05-12-2019, 11:48 AM   #18
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It’s good that you are retiring soon so you two can enjoy your time together.
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Old 05-12-2019, 11:51 AM   #19
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My position is a director level, and the employer for whom I have worked has been very accommodative to allow some work flexibility. They do not want to see me go (originally suggested I work until 70) but understand my situation, so I gave a year's notice and have been training my replacement. The last 6 months of my time there will be at 0.5 as my successor gradually takes over. My successor's other work obligations prevent her from taking over before then.
Makes sense, but your reference to your DH's health issues in the OP give me pause.... between your boss and your direct reports can they step-up during that last 6 months and fill the voids until your successor is available full-time? Might be a good time for the team to come together for the greater good.
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Old 05-12-2019, 12:45 PM   #20
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Makes sense, but your reference to your DH's health issues in the OP give me pause.... between your boss and your direct reports can they step-up during that last 6 months and fill the voids until your successor is available full-time? Might be a good time for the team to come together for the greater good.
My boss understands that DH is my first priority, and when I have needed to take time for him, they have been, and continue to be very supportive. DH has long-standing cardiac problems, but is not in imminent danger. To his credit, he has defied the odds for years. I'm just thinking sooner rather than later is the right way to go with retirement.
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