56 and ready to do my own thing

[domebardo]

I am 56 and would like to retire now. My 401K has $1,300,000 in 40% Stocks and 60% money market accouts. I earn $100,000 per year. I am married with 4 grown children and 5 wonderful grand kids. My house is paid off and we will live here in Brookhaven, Mississippi.

 

[Meadbh]

Welcome to the board. What are your expenses now, and how will they change after you retire? That is the key question.

 

[heeyy_joe]

Welcome, and well done with the savings! Enjoy those grandchildren!

 

[omni550]

Welcome, domebardo. Once you've figured out your pre/post retirement expenses...here's a great calculator to run your numbers through FIRECalc: A different kind of retirement calculator

There are some knowledgeable folks on this board, so don't hesitate to post any question you might have.

omni

 

[BigE]

Welcome domebardo. For those who aren't familiar with Brookhaven, MS, it's a nice small town with about as low a cost of living as they come. Would have to ditto the importance of knowing your retirement expenses. You mention your house is paid for, but do you have other assets such as land, etc, that could be used as a plan B? Could you go back and work in your field if you had to go back in a few years?

 

[pb4uski]

First, welcome and congratulations on your nice nestegg. One issue I see in your situation absent any more information is what will you live on from now until you are 59 1/2. If your 401k plan allows penalty free withdrawals if your terminate after age 55 then you can use that nestegg for your living expenses for the next few years. If not, then you might have a problem unless you are willing to pay the additional 10% penalty which IMO is not a good option.

In addition to Firecalc, Quicken Lifetime Planner is a easy-to-use, intuitive retirement planner. It is part of Quicken Deluxe or higher.

As others have mentioned, the key question is how much do you need to live?

I am 56 and would like to retire now. My 401K has $1,300,000 in 40% Stocks and 60% money market accouts. I earn $100,000 per year. I am married with 4 grown children and 5 wonderful grand kids. My house is paid off and we will live here in Brookhaven, Mississippi.

 

[obgyn65]

Welcome to the forum, domebardo.

 

[domebardo]

Thanks to all for the quick replies...
As for expenses, we presently average $4K/mo. I expect it to stay the same after retirement or even go up to 5K/mo. due to having to purchase a family health insurance plan.
Other assets…We own two other properties. We have 100 acres with an old house and two ponds. My folks were raising cattle on it for years. Presently it is semi vacant as my folks moved close to us on my other property. It is a small 2 acre track with a nice little house on it. I intend to use it as a rental property in the future. I may sell the 100 acre track one day depending on the market.
The property we live on now is a 10 acre track. I actually can’t wait to plant a nice vegetable garden and maybe raise a couple of calves some goats and chickens. (I work offshore and am gone from a home a lot)
I have two major concerns about retirement.
1. How much will it cost for private health insurance.
2. How to invest my nest egg with this crazy stock market.
I have researched a lot on health care and am wondering how Obama-Care will affect the prices I am presently looking at.
I am contemplating a semi-retirement just to keep my company insurance until age 59 ½. My early retirement really seems to hinge on the cost of health care.
Thanks again

 

[racy]

You can get some estimates of health insurance here: Health Insurance - Find Affordable Health Insurance Plans and Buy Medical Coverage Online

As for investing, you'll have to come to terms with the stock market: it's always been crazy and will continue to be so. I find these principles to be helpful: Bogleheads® investment philosophy - Bogleheads

Good luck!

 

[domebardo]

Thanks for the info. I've been checking out the health insurance. Very expensive for coverage like I have now with my job. My figures come out between 15 to 20k a year. Even Obamacare will cost me in that range.
As for the investments, I now have 60% money market, 20% US large cap stocks, 20% foreign stocks. I am still waiting for a correction in the market so I can get back in on my company stock. I was 100% in company stock for the last 15 years and it has served me well. The outlook is good for it to continue moving up. Check out OII.

 

[Live And Learn]

I've been using the Kaiser Obamacare cost / subsidy calculator to estimate the cost of healthcare. Scary numbers, but I feel I shouldn't retire until I can cover those scary numbers. If actual healthcare costs come in less than I will treat it as a bonus and put half back into savings and perhaps buy a little something here and there with the other half.

Subsidy Calculator | The Henry J. Kaiser Family Foundation

If you are only spending 60k a year then you might be able to keep your MAGI below the threshold for a subsidy. You might need some non-tax deferred accounts (savings, brokerage account, proceeds from land sale, etc) to do that, since all withdrawals from the 401k will be taxable.