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PLAN B Numbers from HERE WE ARE....
Old 07-16-2016, 09:01 AM   #1
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PLAN B Numbers from HERE WE ARE....

Our nestegg is as follows:

CASH $650,516
DH 401K $365,799
DW 401K $269,367
DH/DW IRA's $154,234
Joint MF $135,345

Tax Deferred Amount = $789,400
Taxable Amount = $785,861

AA is Cash 41.27%, Fixed 5% return 20.46, MF stock index 24.17%, MF bond index 14.10%
All MF are VG Index Funds. The guaranteed 5% is DH 401k and earns that rate as long as its not touched.

The UHC insurance can be extended after employment ends and is 2 party, $600/per deductible, Max out of pocket/per is $3000 annual. We would keep this in the budget for 3 years @ $15K annual. After that the DH turns 65 and DW needs a policy.

Our Initial Projected Income Annual:

DH SS Income Annual (age 62) $17172
DW & DH PTJ Earnings $25000
Additional funds $32000 $74172 TOTAL

Pre Tax Amounts, and we still need to use tax estimators recommended here to determine net annual income that covers our 60K budget needs.
The additional funds could come from taxable or tax deferred accounts.
The guaranteed 5% earnings on DH 401K is $16K every year and so only $16 Kadditional is needed from nestegg every year to match the $32K needed additional funds. If that works, what is our WR?

Home sale $160K - $250K Home purchase will reduce nest by $90K.

Questions:

Should we post our initial budget for Phoenix area?
We run our numbers in FireCalc and Flexible Retirement Planner and they look good to us. Should we use more calculators?
Should we look at using cash and delaying DH SS to age 66?
I did not allow for emergency expenses or much of a cushion. ??

Thanks So Much
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Old 07-16-2016, 09:28 AM   #2
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SS should (in my mind) always be delayed to full retirement age for the spouse with the higher SS earnings, and especially for cases where the other spouse has low or no SS earnings.
Benefit beyond higher spouse survivor benefits are that the delay of SS gives you a larger SS benefit for the rest of your life.
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Old 07-16-2016, 09:41 AM   #3
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When you say CASH $650,516 is that really cash not earning anything ?

Also, you are the folks wanting to move to AZ soon and work to earn 25K/yr for 4 years. Do you have a job lined up ?

You should make up 2 budgets, one with a 25K job and one without the job, so you can see what will you do if you find it hard to find a job in a new location with all the competition from other retired/unemployed/students who know the area and have connections.

The worst thing would be to delude yourselves that you will magically get part time jobs earning 25K and then find yourself really short of money.
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Old 07-16-2016, 10:28 AM   #4
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Yes, all cash but earning 0.75%. Recent real estate transaction, but I am not buying investments at these market high's. We have thought of the difficulty and competition of part time work and that would be just another hurdle to secure jobs before the move. Yes this is the couple that would give up jobs we have both had for 35 years and can actually walk to work and get away from the tornadoes and ice and hail and snow,
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Old 07-16-2016, 01:23 PM   #5
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You might rethink walking to and from work when it's 118 degrees...

Speaking of market highs, have you checked the real estate prices in Phoenix recently? Unless you are moving to an outer suburb, you aren't going to get much house for $250k.
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Old 07-16-2016, 01:44 PM   #6
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We have looked at SE Valley and now looking West (Goodyear, Estrella, Buckeye, etc.) Many homes for $250K CASH!!! We walk to work now where we live! I was just giving some insight about how we live now where we live now. I know we have to commute if/when we relocate.
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Old 07-16-2016, 02:14 PM   #7
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In RONDAVE original post, I must have missed something. How can you have an IRA "named" DH/DW with $154,234? IRA = "individual retirement account".
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Old 07-16-2016, 02:36 PM   #8
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To be short and to the point, its a total of Husband and Wife Traditional IRA's invested @ 60/40. Anybody?
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Old 07-16-2016, 03:24 PM   #9
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Yep, if you are willing to commute in what is fast becoming LA-style traffic, you can get a decent house for $250k in the West Valley. In Goodyear, south of the freeway, you should be able to get a very nice one-story that is relatively new for that price. Estrella Mountain Ranch means another half hour of commute time - 15 minutes each way - and a drive for stores, restaurants, and other amenities. I would be a little cautious about Buckeye, especially south of the freeway. If you have to drive across town during commute hours, I would consider less house closer in.

I would not consider Queen Creek or San Tan Valley. The transportation infrastructure is grossly inadequate and there is no comprehensive plan to improve it. East Mesa has 60 and 202, but $250k is not going to buy a nice, newer house of any size.

One other thing to consider is the air quality, which is also becoming more LA-like. Ozone alerts are frequent, often lasting for days. Phoenix was a great place to live 20 years ago, not so much today.
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Old 07-16-2016, 03:41 PM   #10
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Just our last visit a month ago ruled out STV and Queen Creek and Vistancia as well since they closed the freeway for a movie. It sound like you are a resident of or around Phoenix? PM?
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Old 07-16-2016, 03:53 PM   #11
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If it were me I probably would not move to a place where my budget counted on having two part-time jobs but we did not have either job lined up. I would probably get at least one full-time job for one spouse lined up first (or online work that was not location dependent) and also rent, then if we liked the area, transition toward buying and part-time work.

Phoenix has a really different climate and culture than many other parts of the U.S. Many people love it but it is not a good fit for everyone.
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Old 07-17-2016, 04:01 PM   #12
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Does it look or sound like we have never been to AZ before?
I usually rely on the citi-data forums for specific location information. Job and house hunting are specific to the target area and I expect financial experts in this forum to introduce their qualifications in climate and demographics so we can weed them out.
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Old 07-17-2016, 04:20 PM   #13
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Quote:
Originally Posted by RHONDAVE View Post
Does it look or sound like we have never been to AZ before?
I usually rely on the citi-data forums for specific location information. Job and house hunting are specific to the target area and I expect financial experts in this forum to introduce their qualifications in climate and demographics so we can weed them out.
Remember the old saying about free advice - you get what you pay for.
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Old 07-17-2016, 04:34 PM   #14
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Quote:
Originally Posted by RHONDAVE View Post
Yes, all cash but earning 0.75%. Recent real estate transaction, but I am not buying investments at these market high's. We have thought of the difficulty and competition of part time work and that would be just another hurdle to secure jobs before the move. Yes this is the couple that would give up jobs we have both had for 35 years and can actually walk to work and get away from the tornadoes and ice and hail and snow,
I get it about the house transaction money, I'm pretty sure you can find a market entry point easily at 5% less than today, and possibly 10%, maybe you want to enter stocks vs bonds at different times.

So from your other posts it seems you understand the job finding issue will be a problem, can you make it without a job ?

Often folks suggest renting in a new city prior to buying as it gives you time to figure out the pros & cons of the various areas and how it fits to your lifestyle, that is my plan if/when we move.
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Old 07-17-2016, 05:39 PM   #15
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Amazon pays around $12 an hour if you can hack packing boxes for 9 hours a day. They use a lot of seasonal help through their staffing service. Phoenix is a big warehouse area for them and they have several in the West Valley. Plenty of low wage retail and service jobs as well. Desk jobs at a university or government agency are a bit more competitive, but anything under $30k is likely to have openings now. Unemployment is low.
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Old 07-29-2016, 12:35 PM   #16
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I've probably gotten a bit confused by reading your plan A and plan B as well as the feedback so far. Just to make it real simple (back of envelope is often as good as measuring with a micrometer when you will cut with an axe), what does FireCalc say about your chances of success if you simply withdraw from your nest egg to meet your new proposed expense level? I believe there is a place to enter projected SS income for future dates. Here is where I am coming from. Your total nest egg following move and house swap will be in the $1.5 mil range. 4% of that would be $60K. Proper withdrawal strategy should make your Fed taxes virtually zero. Don't know about Az state tax. If you need a little more than $60K, you could go as high a 5% ($75k) and spend down as much of your qualified money as it takes to stay in the 10 - 15% tax range. I'm a big believer in getting "rid" of more qualified money earlier to avoid the RMDs later on - but that's just me. Letting your SS ride as long as possible can dramatically increase your draw later which allows you to drop back to a much lower withdrawal rate.

Bottom line, my gut tells me you are in good shape without looking for a job. If you happen to find jobs, then not taking SS right away is also a good move as pointed out by other responders. If you end up at some point a bit short, you could start SS then. Keeping your SS powder dry would be my first priority. Second priority would be to spend down some qualified money (or - better yet if it makes sense - convert to Roth if the tax bite works for you).

Having said all this, you have to find a comfort level that suits you. Barring that, you may be better off playing the one-more-year game as long as you can stand it.

My personal preference has always been to have back-ups to my back-ups (belt and suspenders and elastic.) In our case, we moved to Hawaii and our back up No. 1 would be to cut expenses there (no cars - use THE BUS, don't eat out, cut back on gifting to kids/charities.) Back up No. 2 is move back to mainland - mid west which would likely cut expenses 25 to 33%. Back up No. 3 would be to live in a really low cost area (think Mississippi). So far, even surviving the downturn of 08, we are way ahead of our plan and our back ups remain just that. I think you just need to decide if you want to pull the trigger or not. Hope all works well for you. Keep in mind that YMMV.
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Old 07-29-2016, 01:56 PM   #17
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Running the SSanalyse calc on SS it says there is a net present value of $1,199,299 if I wait to 70 or $954,771 if I go at 62.

Toying with idea of $300K for house instead of $250K, Phoenix is way up!

Running Firecalc again for both of us at age 66 still looks good. I feel I need to really study the inputs further to match my current AA.

Thanks for your post.
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Old 07-29-2016, 02:17 PM   #18
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If i were in your shoes, I'd be out!
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Old 07-29-2016, 02:24 PM   #19
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My guess is "out" is same as "gone", 'retired', doin' it, 'living the dream'. After following the SWR thread and losing count after 9 pages, I just want a plan down on paper where I can track the debits and credits. THANKS
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