Golden sunsets
Thinks s/he gets paid by the post
- Joined
- Jun 3, 2013
- Messages
- 2,524
Hello all; I discovered this site a few days ago and feel like I have found a community of like minded enthusiasts. There is one part of this forum focus though that I do not fit into and that is the early retirement focus. I hope that this fact does not disqualify me from contributing. Please comment if you all feel that I don't fit in. Facts are as follows:
I am 64.5, DH is 66.5. DH retired 5 years ago from the Federal Government, 4 months before his 62nd birthday. FEP health insurance covered as primary until our 65's b-days and then as supplemental after Medicare kicks in at a reasonable cost ($299/mo presently). I am self employed. I have not worked a forty hour week however for 6 or 7 years. Some weeks I work 10 hours and some closer to 30 hours. I feel blessed that I have had the opportunity to experience this glide path toward retirement, from a 40-50 hour work week, to a 20+/- hour work week. I have been able to avoid the precipice of going from full throttle work to zero work and am happy with this scenario, as I don't hate my job. I can manage my job from anywhere and am able to spend the winter months in a warm climate in a rental condo and also can travel abroad for a few weeks each year. As long as I have internet access and a cell phone, I can work from anywhere. Can't complain about that right!!!
Stats:
DH's annuities/pension/SS with COLA = $115,000/year
Current expenses $130,000/year (exclusive of extraordinary items) not including federal and state taxes which will decline when my income ceases. We have not tapped our investments yet and have continued to save roughly 22-25% or our income since DH retired. We have spent $ on extraordinary items in the past few years such as automobiles, home renovations and repairs, etc. hoping to avoid those sorts of items in the future when our income is less.
My income fluctuates between $150,000/year and $200,000/year, but I do anticipate that it will drop to zero within the next 1-2 years, with full retirement. I've been saying this for 5 years but I really do expect the income to stop within the next 12-18 months.
My pension/SS will be limited to SS, either $22,000/year if I stop work and draw it starting at 66, or $30,000 if I wait until I am 70, which our FA has advised us to do.
With all of this income it does seem as though we should have saved more, as we have always been LBOM folks, but with 2 private college/grad school educations for DD and DS and being in a high tax bracket, the numbers are not that impressive. Assets as of today: IRA's/401K's = $1,825,000, Taxable Investments = $1,000,000, No Debt, Home Equity = $500,000 +/-. AA is 55% Equities, 35% FI and 10% cash. DH and I are both Econ majors and DIY investors, invested primarily in exchange traded funds with a few hundred thousand in dividend yielding stocks, presently being reinvested.
DS and DD both out of the home with good degrees, although we have contributed to their retirement accounts and I have much to queery the forum members on with respect to how to manage ongoing support as we can afford quite a bit, but don't want to undermine their own self-sufficiency. This is a question of "give it to them now" or "give it to them later", which I am interested in feed back on.
We have been advised to gradually convert our IRA's to Roth's using tax strategies to avoid RMD's over and above what we need, over the course of several years, which will elevate our taxes while we are doing this. Assuming we limit the withdrawals to keep us in a 25% tax bracket or lower, our cash w/d rate would need to be $50,000 per year until I reach 70 and start drawing SS, or roughly 2% WR.
I feel blessed and would like to learn/contribute to this forum.
Do any of the forum members see cause for concern in our comfort with our situation?
Thanks for listening.
I am 64.5, DH is 66.5. DH retired 5 years ago from the Federal Government, 4 months before his 62nd birthday. FEP health insurance covered as primary until our 65's b-days and then as supplemental after Medicare kicks in at a reasonable cost ($299/mo presently). I am self employed. I have not worked a forty hour week however for 6 or 7 years. Some weeks I work 10 hours and some closer to 30 hours. I feel blessed that I have had the opportunity to experience this glide path toward retirement, from a 40-50 hour work week, to a 20+/- hour work week. I have been able to avoid the precipice of going from full throttle work to zero work and am happy with this scenario, as I don't hate my job. I can manage my job from anywhere and am able to spend the winter months in a warm climate in a rental condo and also can travel abroad for a few weeks each year. As long as I have internet access and a cell phone, I can work from anywhere. Can't complain about that right!!!
Stats:
DH's annuities/pension/SS with COLA = $115,000/year
Current expenses $130,000/year (exclusive of extraordinary items) not including federal and state taxes which will decline when my income ceases. We have not tapped our investments yet and have continued to save roughly 22-25% or our income since DH retired. We have spent $ on extraordinary items in the past few years such as automobiles, home renovations and repairs, etc. hoping to avoid those sorts of items in the future when our income is less.
My income fluctuates between $150,000/year and $200,000/year, but I do anticipate that it will drop to zero within the next 1-2 years, with full retirement. I've been saying this for 5 years but I really do expect the income to stop within the next 12-18 months.
My pension/SS will be limited to SS, either $22,000/year if I stop work and draw it starting at 66, or $30,000 if I wait until I am 70, which our FA has advised us to do.
With all of this income it does seem as though we should have saved more, as we have always been LBOM folks, but with 2 private college/grad school educations for DD and DS and being in a high tax bracket, the numbers are not that impressive. Assets as of today: IRA's/401K's = $1,825,000, Taxable Investments = $1,000,000, No Debt, Home Equity = $500,000 +/-. AA is 55% Equities, 35% FI and 10% cash. DH and I are both Econ majors and DIY investors, invested primarily in exchange traded funds with a few hundred thousand in dividend yielding stocks, presently being reinvested.
DS and DD both out of the home with good degrees, although we have contributed to their retirement accounts and I have much to queery the forum members on with respect to how to manage ongoing support as we can afford quite a bit, but don't want to undermine their own self-sufficiency. This is a question of "give it to them now" or "give it to them later", which I am interested in feed back on.
We have been advised to gradually convert our IRA's to Roth's using tax strategies to avoid RMD's over and above what we need, over the course of several years, which will elevate our taxes while we are doing this. Assuming we limit the withdrawals to keep us in a 25% tax bracket or lower, our cash w/d rate would need to be $50,000 per year until I reach 70 and start drawing SS, or roughly 2% WR.
I feel blessed and would like to learn/contribute to this forum.
Do any of the forum members see cause for concern in our comfort with our situation?
Thanks for listening.
Last edited:
I didn't realize this, but just located the applicable IRS rule. I could roll over funds beyond the RMD, but that would defeat the purpose and bump us to a higher tax bracket. I'm going to have to go back to the drawing board on this one. Perhaps we will convert greater amounts up to the 28% threshhold between now and our 70th birthdays and see if the case is as compelling. I HATE TAXES. 
