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Someone please confirm that I can retire!!!
Old 03-13-2012, 08:56 AM   #1
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Someone please confirm that I can retire!!!

55 years old with 31 years of service in the corporate world. Wife 43, kids 16, 15, 12 &10. Megacorp family insurance plan that I can keep in retirement for about $200 a month. I also have access to VA healthcare, and the wife and kids have CHAMPVA as secondary.

Got about $500K in lump sum retirement, plus another $530K in company sponsored 401K (Total portfolio of just over $1M).

I receive a $43K per year VA pension (tax free), will start receiving Army Reserve retired pay at 60 ($800/Month), and qualify for SS at 62 ($1500/Month) . (All COLA'd).

Kids will all receive college scholorships through the VA (current value is about $1K per month, per child.

Exempt from real estate and personal property taxes.

Now the bad part,..... wife want's a new house !

Should I stay or should I go??
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Old 03-13-2012, 09:02 AM   #2
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Missing information: what will your annual expenses be once you are retired (other than the cost of a new house)?

Once you have that, I suggest you run FIRECalc to see what it tells you.
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Old 03-13-2012, 09:02 AM   #3
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What do you want more -- retirement or a new house?

Seriously, if it was me I'd have been out the door yesterday. Even if you assumed only a 3% withdrawal rate on your investment portfolio, that and the VA pension would bring in close to $75K a year, and over half of that is tax-free income. That's *before* any additional income come in at 60 and 62, at which time you'd be around $100K most likely -- all COLA'd, more or less.

Can you comfortably live on that, with or without the new house? Would your wife want a new house bad enough to keep earning income to support it?
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Old 03-13-2012, 10:20 AM   #4
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Congratulations! As long as your spending needs are around $80k/yr or less, you are golden! I would feel free to start the next phase of my life and pull the cord right away.
Run Firecalc to build your confidence!
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Old 03-13-2012, 10:30 AM   #5
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Is your wife working? Tell her she can have a new house if she pays for it.
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Old 03-13-2012, 10:49 AM   #6
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With that tax free VA pension and 31 years in the corporate world I am guessing that you have overcome some serious adversities in your life. If so you have my thanks for your service and my admiration for your ability to soldier on. The numbers look like you can retire. The bigger question is whether your wife is ready for you to retire. If mama ain't happy ain't nobody gonna be happy.
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Old 03-13-2012, 10:59 AM   #7
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Sell the old house, buy a Class A, and retire. Your overall numbers are close to mine and I'm leaving in January (waiting will qualify me for for a $56K cash benefit plus some other financial benefits equalling about another $70k).

I'm just trying to figure how you qualify for VA pension and Army retirement - even a reserve retirement? I must be missing something...

But yes, you can retire, unless you're planning to pay the extra money needed for each child's college. Even take a mortgage if it's a modest one. Wouldn't recommend the mortgage though.
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Old 03-13-2012, 11:22 AM   #8
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The big unknowns here are the housing situation and the children. I say you and your wife could have a comfortable retirement with annual spending around $80k now, going up to $110k after 62, projecting 4% growth and 3% inflation. But if you have to put 4 kids through college and buy an extra home you must be sure those costs won't break the annual spending levels I gave.
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Old 03-13-2012, 12:00 PM   #9
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No, you can't retire. You can't stay home and live with your wife in a house that your wife doesn't like.

Financially, it looks like you've got $70k of inflation adjusted, mostly tax-free income at 62. Between now and then, you can spend down $175k of your $1 million nest egg to supplement your VA pension for 5-7 years. That still leaves you with $800k for expenses above the $70k.

So you've got to compare the $70k to what your're currently spending, and what you'd want to add/delete after retiring. That means a serious talk with the wife about financial goals and risk tolerance.

She might feel that one more year of work is worth it for the house upgrade. She might need the security of a regular wage. You might feel that it's time for you to stay home with the kids while she gets the paying job. etc.
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Old 03-13-2012, 12:09 PM   #10
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One of the "x" factors is your wife. You didnt mention if she is mentally at the point in her life to live on a fixed income ( though it is a very nice one). She is only in her early 40's. Does she work or plan to work? You mentioned she wanted a new house which I assume means costlier. Does it also mean it would need to be newly furnished, too? Make sure she is on the same retirement wavelength you are. My GF is about the same age, and I have only recently got her thinking more long term concerning her future and retirement money.
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Old 03-13-2012, 12:21 PM   #11
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Another thing about the new house your wife wants: I see your kids range in age from 10 to 16. If they go to college far from home or otherwise live on or near campus, in eight years you could go from a household of 6 to a household of 2. I don't think I'd want to buy "more home" if my household size was going to shrink that quickly by 2020, but maybe it's just me.
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Old 03-13-2012, 12:43 PM   #12
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I agree that you should look at your current/proposed spending. Everything seems in line assuming your spending is in the ~$70-80k range/year. It's great that you have such good benefits such as the college for kids, and inexpensive health care. Good luck.
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Old 03-13-2012, 01:32 PM   #13
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Teenagers can significantly impact your spending in many ways besides college savings.

But to the OP's question: Shoot yeah, I'd jump if I were you.
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Old 03-13-2012, 02:34 PM   #14
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Thanks to all of you for your input. To answer a few or your questions,... we spend about 60K per year now. My wife doesn't currently work, and she actually says she wants me to retire. And of course, I'll tell her that the experts on this site have all recommended that she go to work as soon as possible, or no new house!
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Old 03-13-2012, 02:41 PM   #15
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Yes, you can definitely retire and buy a new house given your wife's new job, which she will work at until the new house is paid off free and clear.
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Old 03-13-2012, 02:42 PM   #16
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After over 19 years of military service (2 active, 17 reserve) I hurt my back while on duty and this led to the development of severe bilateral deep vein thrombosis (VA Pension). I was close enough to retirement that they let me hang around (on crutches) and finish out my 20 years (Reserve Retirement).
Anyway, I thank you for responding to my post!
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Old 03-13-2012, 02:44 PM   #17
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Yes, you can definitely retire and buy a new house given your wife's new job, which she will work at until the new house is paid off free and clear.
Yes! And heck,.. if she's working hard enough I might be able to buy me a new truck too!
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Old 03-13-2012, 02:48 PM   #18
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I'd say there are too many unknowns in future spending to retire just yet. The children and the house prevent you from being able to make spending projections with any degree of certainty.
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Old 03-13-2012, 03:22 PM   #19
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I would discuss with your wife if /a/ she's interested in going out to w*rk, /b/ she's interested in you taking over the majority of the "family duties", and /c/ if you're interested in taking over the majority of the "family duties". Much will depend on what you plan to do every day, but she may not appreciate it if you sit around while she gets on with running the home. On the other hand, if you do a good job of the being-Dad-to-teenagers thing, she may feel more comfortable not being around, plus contributing to the overall household budget, without the pressure of needing to find an especially well-paid or full-time j*b.

YMMV enormously, of course. These are just the first things I thought of.
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Old 03-13-2012, 05:15 PM   #20
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Another thing about the new house your wife wants: I see your kids range in age from 10 to 16. If they go to college far from home or otherwise live on or near campus, in eight years you could go from a household of 6 to a household of 2. I don't think I'd want to buy "more home" if my household size was going to shrink that quickly by 2020, but maybe it's just me.
I used to say the same thing, and we didn't upgrade. But, we've come close to boomerang kids (which would have been okay with me, given the circumstances), and it would sure be nice to have the extra room when the kids, grandkids, an pets come to visit.
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