Ready or Not

[augam]

Would like to get some feedback from other FIRE members on whether or not I am ready to FIRE myself and if not how far away I might be.

Me - 58

D.W. - 52

1.5M pretax save

Small mortgage approximately 7 yrs to go 900/month

Zero debt other than the mortgage.

Expenses - tracked monthly - meticulously

Amount to 5100/month

Very modest cost of living and lifestyle.

No Megacorp health insurance so ACA

What say FIRE folks

Edit:

D.W. part time job generates 10k/yr

Me not opposed to working at something to offset any healthcare costs needed. D.W.s income more than likely be dedicated to ACA .

 

[pb4uski]

You have more work to do. How much is your and your DW SS? How much will ACA health insurance cost you? What does FIRECalc say?

 

[augam]

Firecalc unless I am mistaken - have run it endlessly says it’s a go.

SS for me @ 62 2000/mo

Have maxed out FICA for 30+ yrs

D.W. would be half of course

 

[Retiree_Having_Fun]

Expenses - tracked monthly - meticulously

Amount to 5100/month

Does the monthly expenses of $5100 include health care? Are all of your income items taxable? Make sure you investigate what you can do to lower your MAGI - see https://www.kff.org/interactive/subsidy-calculator/

 

[augam]

Expenses do not reflect HC. Estimates would be 800/mo Silver plan with subsidy’s for this zip code.

 

[Golden sunsets]

How about income taxes? If your funds are all Pretax, you'll have to give Uncle Sam his share on the $60,000 you pull out every year.

 

[Aerides]

You'll want to give some wiggle to the HC costs - and remember that's just premiums. Annual deductibles usually come with some hefty out of pocket (mine is 6k and that's not bad for my state).

Your 5100 monthly v. 1.5 is at about a 4% SWR and that's before HI, so, you are going to be in a range that would leave most of us uncomfortable.

Since all your savings appear to be pre-tax, that means you'll be paying taxes on your conversions, and I'm not sure if those are also included in your expenses?

If expenses already included HI and taxes, given your short runway till SS, I'd say you're good, but as is there are still a few questions.

 

[augam]

How about income taxes? If your funds are all Pretax, you'll have to give Uncle Sam his share on the $60,000 you pull out every year.

With a 24k deduction from new tax plan taxes would be reduced accordingly.

Plan A would be to adjust income to receive subsidy for ACA.

 

[augam]

Ok used the Kaiser Site linked above and found Silver Plan prices - worst case scenario $1200/mo.

Then I calculated it with my youngest boys who’s freshman in college and price dropped to < 700 mo family. These are Silver Plan prices for premiums only.

Note these are estimates based on 18’ rates since 19’ rates have not been posted as of yet.

 

[FI_RElater]

not quite there yet...

You'll want to give some wiggle to the HC costs - and remember that's just premiums. Annual deductibles usually come with some hefty out of pocket (mine is 6k and that's not bad for my state).

Your 5100 monthly v. 1.5 is at about a 4% SWR and that's before HI, so, you are going to be in a range that would leave most of us uncomfortable.

Since all your savings appear to be pre-tax, that means you'll be paying taxes on your conversions, and I'm not sure if those are also included in your expenses?

If expenses already included HI and taxes, given your short runway till SS, I'd say you're good, but as is there are still a few questions.

I’d say that you’d be better off if you take SS at FRA and not at 62... you don’t take the hit on SS reduction, SS isn’t taxed at most states so more income not taxed, and higher numbers for surviving spouse

...as for your plan: with 4% WR before health insurance (and especially before adding in copay/max OOP costs) your plan has a reasonably high chance for failure _____danger, will robinson

(60k/year doesn’t seem unreasonable, though. rather than just have spouse bring in 10k from PT, just suck it up and stay full time for a couple more years and build up more. At 60, put two to three years into CD ladder for expenses for those years....then see what your remaining portfolio kicks off at about 3.5%. your numbers are low enough that your medicare costs won’t be at the premium rates, so no issue there. )

 

[Dtail]

Is your pre tax in TIRA or 401k? If 401k, do you have access to it at 58 yo?
If TIRA, where would the withdrawals be until 59.5?

 

[Rianne]

Only a suggestion: Examine bronze plans in ACA. Max OOP is key. Our silver plan premiums were > $500/month for 2017. Lowest bronze plan $7.95/month with $6000 deductible/OOP max. We opened an HSI as this is a qualified high deductible plan. Saved approx $7000 so far this year. That includes co-pays because we paid only the insurance reduced cost for DR visits and yearly blood tests. For instance with Silver Plan in 2017, a co pay for a DR visit, $50. The insurance reduced cost was $30-$40 in 2018. My point, look closely at the plans. In 2018 we had an insurance broker help us and she pointed out the benefits to a high deductible plan.

 

[augam]

Is your pre tax in TIRA or 401k? If 401k, do you have access to it at 58 yo?
If TIRA, where would the withdrawals be until 59.5?

After 55 you can access your 401k from employer plan without penalty.

 

[augam]

Only a suggestion: Examine bronze plans in ACA. Max OOP is key. Our silver plan premiums were > $500/month for 2017. Lowest bronze plan $7.95/month with $6000 deductible/OOP max. We opened an HSI as this is a qualified high deductible plan. Saved approx $7000 so far this year. That includes co-pays because we paid only the insurance reduced cost for DR visits and yearly blood tests. For instance with Silver Plan in 2017, a co pay for a DR visit, $50. The insurance reduced cost was $30-$40 in 2018. My point, look closely at the plans. In 2018 we had an insurance broker help us and she pointed out the benefits to a high deductible plan.

Once new rates are posted for 19' I will research the Bronze Plans as well.

Using a broker is an excellent idea.


Thanks