How do I know if we have enough to retire?

[Happily Retired2019]

63 and want to pull the trigger on work/recent takeover/with company 34 years/My financial guy tells me we will be ok-but I am nervous-need health insurance for the years 63-65-any suggestions? What is the average amount to have in a 401K (besides owning house) that is a "good enough" amount to retire. We are homebodies. Help.

 

[racy]

The short answer for 401k amount: at a minimum, 25 times annual expenses (for a 4% withdrawal rate).

 

[brucethebroker]

Research ACA premiums (in your locale) as they relate to income, and MAGI for IRS purposes. Determine if you can control your income to stay within the ACA guidelines.

Also, get a premium for non-ACA subsidized premium insurance (this will be your worst case senario-but it is only for a couple of years until Medicare).

Any time spent on research in this area will be well rewarded.

 

[Dtail]

As for medical coverage, have you looked into gaining coverage through the ACA process, which could provide tax subsidies if taxable income is kept below 400% of the Federal Poverty Levels (FPL).
The below links will provide some information on medical costs in various areas.
healthcare.gov
healthsherpa.com

Additionally the below link provides the calculation of MAGI for potential tax subsidies in the ACA coverage.
http://laborcenter.berkeley.edu/pdf/2013/MAGI_summary13.pdf

 

[Col. Klink]

Run your numbers through FireCalc. ACA is often used for insurance before Medicare eligibility. It may be your largest expense.

Do a budget for your projected spending. Plenty of templates to do a budget are available online. Perhaps sit down with your "financial guy" after doing the budget and FireCalc. Ensure your DW is comfortable with your decision. I had my DW sit down with my "financial guy" so she had an expert opinion as well as mine.

25x annual expenses (in all accounts not just the 401K) is a quick guide. However, everyone's situation, spending, and aspirations for retirement are different. This is why you should thoroughly review your situation and plan accordingly.

 

[flintnational]

Have you run your numbers through FIRECalc? As Racy indicated the rule of thumb is about 4%. FIRECalc will also include your SS and any pension income. Both could lower the amount needed to retire. Finally, you mention a FA. Is he fee only? Some of the percent of AUM guys can get pricey. You need to include any FA fees/costs in the budget plugged into FIRECalc.

 

[badatmath]

If you wait until 63.5 you can use cobra to medicare. Note it may be too expensive so you would need to check into it. My state has horrible aca options currently.

 

[Tiger8693]

The “25X” rule seems way too simplistic. It could imply that amount required in 401k alone. So, a $100k budget would need $2.5MM in 401K, not taking in to account that a couples SS might provide $50k of that budget....

Review through Firecalc or other assessment tools is 100% the way to go!

 

[OHjosh]

The short answer for 401k amount: at a minimum, 25 times annual expenses (for a 4% withdrawal rate).

You add in what you think you would get for SS over your life into that estimate, yes? Otherwise I left too early!

 

[mrfeh]

Run your numbers through FireCalc. ACA is often used for insurance before Medicare eligibility. It may be your largest expense.

Do a budget for your projected spending. Plenty of templates to do a budget are available online. Perhaps sit down with your "financial guy" after doing the budget and FireCalc. Ensure your DW is comfortable with your decision.

^^^^ this

OP - you need to determine what your expenses will be. That's step 1, and absolutely necessary. Don't do it on the back of an envelope; you need accurate, detailed numbers.

Then enter your portfolio details into firecalc.com and see what it says.

 

[REWahoo]

waiting2retire, if you haven't already done so, be sure to check this out: http://www.early-retirement.org/for...-answer-before-asking-can-i-retire-69999.html

 

[HI Bill]

OVER-SIMPLIFIED ANSWER:
1) Look up health insurance costs with and without the ACA in your location, as it may or may not dissapear. Probably between $1K-$2.5K per month for a couple.
2) Determine your annual spending rate with the insurance costs added in.
3) Either use FIRECALC to do the calculations (preferred), or take your annual income requirement, subtract out what pensions/SS will pay, and multiply the remainder by 25.

Example: If your income requirments (annual budget) is $75K, and your SS/pensions provides $35K, you need to cover the shortfall of $40K annually with 25x$40K, or $1M in the 401(k).

 

[joeea]

63 and want to pull the trigger on work/recent takeover/with company 34 years/My financial guy tells me we will be ok-but I am nervous-need health insurance for the years 63-65-any suggestions? What is the average amount to have in a 401K (besides owning house) that is a "good enough" amount to retire. We are homebodies. Help.

If you don't trust the analysis from your "financial guy", then you need a different adviser - one you can trust.

There's no magic "amount to have in a 401k".

You need to compare what you have in spendable assets, what your future sources of income will be, what your expected longevity is, and what your future expenses will be. Only then can you assess your readiness.

If you aren't able to do that on your own, find an adviser you can trust to do it for you.

 

[Mdlerth]

Surround yourself with smart people who'll argue with you

If you don't trust the analysis from your "financial guy", then you need a different adviser - one you can trust.

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