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Old 10-09-2016, 09:23 AM   #1
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Your feedback welcome - tired of working, want to do my own thing!

Greetings.
I was a member many years ago and today decided to reconnect.

I'm 57, single, no kids, and eager to retire at age 60 (or sooner, but not sure that's doable), but a recent layoff in July has kind of messed up my plans. I am not as well off as many here seem to be, but I would be curious to receive your input as to my ability to retire in 3 years regardless of whether I find f/t employment or not, which I'm a little worried about given my age.

I bought my own home in 1995 and paid off the mortgage in 2012. My property taxes run about $6,000 annually. The car is also paid off and I have no other debt.

One significant expense now is paying $513 monthly under COBRA for my health insurance. I'll be investigating my state's healthcare exchange next month during open enrollment.

Until I was laid off I was making $83K. I'm a writer. That's the most I ever made. While employed, I was socking away 29% of salary into a Roth 401k.

At present, my assets look like this:
Cash: $42K
Fixed CDs (IRA): $44K
Traditional IRAs: $524K
Roth IRAs: $146K
Taxable investments: $99k
Est home value: $297K
Total: $1,152,017

I live fairly modestly though I would very much like to do some travel in retirement. I know from years of tracking my expenses that I can live on $43 to $45K annually, although that doesn't include funds for any big trips.

I hope to defer collecting SS until full retirement age at 66, so I would depend on my personal savings to live on between ages 60 and 66. I also would hope to work p/t for a few years starting at age 60, but with my current unemployment I am sort of doing that now on a limited scale.

The healthcare expenses concern me. I'm unsure whether I would remain in this home or possibly sell it and buy a somewhat smaller condo in the same area, same town.

A cursory input into FERC Calc resulted in 92% success rate based on retiring now and taking SS at age 67 and a 60/40% equity/income split in investable assets.
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Old 10-09-2016, 10:22 AM   #2
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Most of us don't include our home value in our net worth and at age 57, 4% withdrawal rate may be a stretch. Definitely do FIRECALC and other calculators like Fidelity's and get an objective answer. You'll need to provide accurate spending estimates to get a good answer.
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Old 10-09-2016, 10:54 AM   #3
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Thanks, travelover. I included my house value becus I thought it was important to note.

Right now my FIRCCalc is 91.2%, which factors in an extra $5,000 for travel annually from age 60 to 67, 33 years of retirement and a somewhat lower annual SS benefit compared to what their website indicates because their number assumes I will continue earning what I earned last year until I'm age 65, which is not the case. It also assumes I retire THIS year, not 3 years from now, because i honestly don't know when or if I will get another f/t job with salary comparable to what I earned before.
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Old 10-09-2016, 11:52 AM   #4
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Thoughts to consider:

You say you could live on 45K/yr , but that is quite a bit down from the 59K you had after subtracting your savings in the last year of working.

Right now, subtracting the home value from assets you have $855K which with a simple 4% withdrawal rate = $34,200 /yr quite a bit short of your goal and not a safe withdrawal rate due to starting early and being female (live longer).

The markets have had a pretty good run up in values for stocks and bonds, so everything is at a high point, meaning growth could be lacking over the next decade or the value of everything could sink a bit. Compare this to someone who had enough money to retire at the bottom of 2008 , even though they spent from savings everything went up.
What I'm trying to say, is if you are even on the edge of having enough $$$ to retire, it may be a false sense of security.

While it may be hard to find another job at 83K, even a $50K job will allow you to stop drawing down on your cash reserves.

Hopefully you are getting UI at least.

You do appear very financially responsible being debt free (IMHO).

Have you considered renting out a room, depending upon location you could easily get $600/mo ($7,200/yr). If you are near tourist type things, then things like AirBnb could be a way to rent a room less but for more $$.
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Old 10-09-2016, 11:54 AM   #5
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There is a calculator on the SS.gov website that lets you figure out what your SS benefit will be. You enter in the expected annual income going forward... so you can enter "0" if you plan to fully retire... or some part time income value if you plan on the part time option.

You can pretty safely withdraw about $30k/year (assuming your asset allocation is 60/40) - that's a 3.5% WR. (I didn't count your house). Withdrawing more while you're still young adds some risk to your plan. So, your plan to get a part time gig is a good one... If you can pull in another $15k to cover your 45k in expenses, you'd have a great plan.

Your other option is to optimize your spending. I found when I retired that there was some low hanging fruit to grab when it came to lowering my recurring bills. The obvious places to look are cellphone carriers (ATT and Verizon charge a lot more than some of the other carriers), cable and internet carriers, landline (if you still have one). I cut a few hundred dollars a month there... then some more when I stopped buying books and using the library, started shopping for myself and the kids at goodwill, and started pushing myself to cook from scratch more. I found I have a better quality of life, for less money, now that I'm retired... I didn't deprive myself of anything with these cost trimmings.
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Old 10-09-2016, 12:07 PM   #6
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Quote:
Originally Posted by fern View Post
Thanks, travelover. I included my house value becus I thought it was important to note.

Right now my FIRCCalc is 91.2%, which factors in an extra $5,000 for travel annually from age 60 to 67, 33 years of retirement and a somewhat lower annual SS benefit compared to what their website indicates because their number assumes I will continue earning what I earned last year until I'm age 65, which is not the case. It also assumes I retire THIS year, not 3 years from now, because i honestly don't know when or if I will get another f/t job with salary comparable to what I earned before.
You can using your SS statement, fill out their calculator using your actual earnings. You can insert 0 for next years earnings and it will use that value going forward until retirement age.
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Old 10-09-2016, 04:52 PM   #7
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Not sure what kind of writing you do, but have you looked into freelance/contract work? In her job, DD contracts with several writers to do blog posts on specific topics each week, and she also sometimes freelances an article for former colleagues. Doesn't pay a lot - usually less than $100, but if you do 2 or 3 a week that could be $1K/month which would give you some cushion.
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Old 10-09-2016, 05:34 PM   #8
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As others have suggested there is an SS calculator out there that will give you you SS if you no longer work.

Check out healthsherpa.com for health insurance plans. With your low income from now until SS you would likely get good subsidies and a low net cost of health insurance.

Also your property taxes are quite high. Given the reduction in income given your recent job loss, will you be eligible for any property tax relief? Would you consider moving to a lower cost of living area if you retired?

Finally, how does your success rate change if you start SS at age 62 vs 67?

How about some part-time work from now until SS?
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Old 10-10-2016, 06:26 PM   #9
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Sunset, I know for sure I can live on $43-45K because I track expenses religiously and I know this for a fact. The 29% I saved in my Roth 401k. I saved an additional $11k in taxable savings.

Thanks for the tip on the SS retirement calculator. While I could adjust income for 2017, it didn't let me indicate that while I would stop working at age 60 i would not begin collecting SS until age 66. Or do you know of a way to do that, Rodi/Sunset?

MB Austin, yes, i've often done freelance work and will continue to do so altho there are plenty of outfits that post online looking for writers willing to work for ridiculous sums like $20 a post for independently researched, original work. I wouldn't waste my time on that.

PB, I can't get property tax relief simply becus i'm unemployed. However, most towns in CT offer property tax relief once you turn 65, as an incentive to keep you living here rather than selling to a family that uses a lot of town services. Generally speaking, you can get as much as $2,000 off your taxes annually if your income doesn't exceed about $45K, which would be doable in my case. However, I was recently reading in the paper that they may also have an asset test, which could prove more problematic.
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Old 10-10-2016, 11:10 PM   #10
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Quote:
Originally Posted by fern View Post
Sunset, I know for sure I can live on $43-45K because I track expenses religiously and I know this for a fact. The 29% I saved in my Roth 401k. I saved an additional $11k in taxable savings.

Thanks for the tip on the SS retirement calculator. While I could adjust income for 2017, it didn't let me indicate that while I would stop working at age 60 i would not begin collecting SS until age 66. Or do you know of a way to do that, Rodi/Sunset?

.....

....... However, most towns in CT offer property tax relief once you turn 65, as an incentive to keep you living here rather than selling to a family that uses a lot of town services. .......
Great on the saving.
As for the SS calculator, you are correct, this is something they need to improve as right now it's pretty stupid assuming if you stop working before 62, that you would collect SS at 62.
As a rough estimate you could take the age 62 value and then increase by the yearly amounts until age 66, or maybe phone them and ask them to figure it out

I never thought of that property tax relief that way, very interesting concept vs the do-gooder lets help the old people view. It makes sense all very old folks I know are very light on city services.
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Old 10-10-2016, 11:22 PM   #11
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I just left a message for SS to improve the calculator, but splitting out the age of stopping work from the age of collecting SS.
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Old 10-11-2016, 05:44 AM   #12
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Originally Posted by fern View Post
Thanks, travelover. I included my house value becus I thought it was important to note.
It's really only an important consideration in retirement planning if you plan to downsize to a smaller/cheaper home in retirement.

If you lived in a $400K home and you planned to live in a smaller home in a place with lower housing costs (say $150K), you could probably include about $200K (the difference in value minus selling expenses and a fudge factor) in what you would likely have available to generate retirement income. But I'd only do that if I were fairly certain of my plans to move, and you never know what the respective housing markets will do in the meantime. If your current market fell while your planned market gets hot, all bets are off. Of course, that's really not a lot different than the stock market tanking just before you retire, except that it can take months or more to sell a home, particularly in a crummy local market.
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Old 10-11-2016, 07:17 AM   #13
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If you're curious, here are some more details about the property tax relief program for seniors that many/most CT towns offer. The rules are a bit more stringent than I remembered:
What requirements must I meet to receive Elderly Homeowner Tax Relief Benefits?
a) Must have been sixty-five years of age at the close of the previous calendar year.
b) Must own and be a resident of XXX as of October 1st.
c) The 2015 income limit for individuals that are single is $35,200 and $42,900 for married individuals. (This income includes Social Security Benefits)
d) Bring in a copy of your tax return and your SSA-1099 Social Security Income Report. If you are not required to file a tax return, please bring in all documents pertaining to taxable income, along with your SSA-1099 form.

A $35K income limit would be fairly restrictive. Unless I had a cash stockpile somewhere. Although I read in the local paper recently they are thinking of tinkering with the eligibility requirements and making them less stringent as they noticed a downtick in the number of seniors applying for the program even as they got more money to fund the program.

As far as downsizing goes, I have been thinking for years of maybe selling the house and getting a 2 bedroom condo, preferably in the same town I'm in. I would save a few thousand annually in property taxes and maybe pocket a small profit of $25K post-sale. But looking at monthly common charges plus the property taxes of area condos, I wouldn't necessarily be saving much at all on an ongoing basis. I'm very up in the air about it. The main thing I don't like about my house is the outdoor maintenance. After 17 years of mowing 1.5 acres myself with a push mower, I've begun paying someone else to mow. It comes out to about $1200. I've also always shoveled the driveway myself. Just had a new driveway done, the top half in new pavers, so a little wary of a careless plow driver digging up or damaging my driveway.
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Old 10-14-2016, 10:53 AM   #14
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The ssa.gov site has a downloadable calculator that runs under Windows or MacOS. It's called the "social security detailed calculator". It allows you to do the calculation where you stop working some years before filing for SS. Also, the projected shortfall in SS means you'll probably get 75% of the calculated value by 2035, unless Congress changes the law.
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Old 10-14-2016, 11:26 AM   #15
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The ssa.gov site has a downloadable calculator that runs under Windows or MacOS. It's called the "social security detailed calculator". It allows you to do the calculation where you stop working some years before filing for SS. Also, the projected shortfall in SS means you'll probably get 75% of the calculated value by 2035, unless Congress changes the law.
Here is the page from which OP can grab the anypia calculator: https://www.ssa.gov/oact/anypia/download.html
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Old 10-14-2016, 02:06 PM   #16
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The Retirement Estimator calculator allows you to estimate SS if you retire early without entering all your salary history although it requires a few manipulations. The calculator can assess your SS account data unless you have a credit block. Once you complete the initial input to include SSN and DOB, it provides your SS amount at 62 or 66 - I don't remember which.

Once you complete that step, there is another block in the middle of the page with lines around it that you can click on which allows estimates if you retire before 62 (e.g., most people ignore this block). You have to enter when you plan to quit working and your estimated average yearly earnings until that date. The output will be the expected SS at age 62 and you can add 6% a year to age 66 and then 8% a year to age 70 to estimate SS beyond age 62.



https://secure.ssa.gov/acu/ACU_KBA/m...ocale=en&LVL=4
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