Living just on SS is not really fun, I know a fella that does and I can't say it's fun.
Yes, that's why I'm trying to figure out what the minimum amount needs to be to meet expenses.
Living just on SS is not really fun, I know a fella that does and I can't say it's fun.
I tried running a scenario as close to what info momoney gave us.
His SS $38,400, hers $17,200, both starting in 2036 and the pension of
$4,440 starting 2031 and I did assume it is inflation adjusted.
I get the minimum he should have as $1,050,000 for a 35 year retirement.
Living just on SS is not really fun, I know a fella that does and I can't say it's fun.
$62,000
35 years
I went with SS starting in 2038 and 2039 and pension in 2033 and NOT COLA.
I get $1,225,000.
The OP can spend taxable and the Roth contributions. If most of the money is in pre-tax, then something like 72T would be needed.
Lower pay and decent health benefits are pretty valuable.
The OP can spend taxable and the Roth contributions. If most of the money is in pre-tax, then something like 72T would be needed.
I am 52 (wife 52) and the scenario points to working until 57 or so, even if the pay is lower. Lower pay and decent health benefits are pretty valuable. The pension does make it doable. I don't see how much is available to spend vs pre-tax.
I am currently working in a lower paying career to be in coast mode. We aren't saving as much, but we are also not tapping into our taxable or Roth. My wife is working part time at a pre-school.
We have 250k taxable, 400k Roth and the balance ($1.7) is in Trad/401k. The pension is the big difference. We have no pensions.
I've looked into 72T and Roth Conversions. I would use taxable to pay the tax on Roth Conversions. I think we could make it work, but are not willing to spend down at this point.
I'm going to tough it out to 57 and see what happens.
If you just enjoy working another 5 years, go for it. I don't know what your current spending is, but you may be better off than you think if you quit now.
Say you currently make $100k a year combined (just a guess, I have no idea). You are probably only taking home $70k after taxes and contributions to your various Roth/401k. Of that $70k, maybe you are saving $10k more into your taxable. Thus perhaps you only need $60k to live on really.
If you think of all of your money in one big pot, you have a invested portfolio of $2.35 million. If you put half of that in 10 year treasuries at 5% it would generate $58,750 per year in interest income (put the other half in total stock market or S&P500 or similar). You would have about $28,000 in personal exemptions and considering if you were to do some financial maneuvering, you could tap into the Roth contributions tax free. You could get the $28,000 via a 72t, it is super easy, we did it last year. If it makes you feel good, you could even have the treasuries be in the 72t account so that it never goes down (goes up actually).
If you kept your combined MAGI around $30k to $35k, you would pay nearly zero taxes and zero for health insurance. The American dream!
It really depend on place where you live. In Santa Clara county (CA) with projected $25K MAGI I would have to pay $440 per month and $7K deductible for Blue Shield of CA HD PPO plan which is the only one PPO available to cover doctors I visit regularly. And even with this plan, one doctor is moving out of network in 2024.If you kept your combined MAGI around $30k to $35k, you would pay nearly zero taxes and zero for health insurance. The American dream!
It really depend on place where you live. In Santa Clara county (CA) with projected $25K MAGI I would have to pay $440 per month and $7K deductible for Blue Shield of CA HD PPO plan which is the only one PPO available to cover doctors I visit regularly. And even with this plan, one doctor is moving out of network in 2024.
Of course there are some $0 plans available but those are HMO like Kaiser which I would never sign up for since I have some chronic health issues.
This statement was about ACA only. With pretty much all employer sponsored plans I used to have during my career time all my doctors were ALWAYS in the network no matter which PPO plan has been offered by employer.You have to compare apples to apples here. I assume that you would not get to pick and choose which plan your employer chose, so even if a person continued working, they might not get a Blue Shield PPO plan.
You could get the $28,000 via a 72t, it is super easy, we did it last year. If it makes you feel good, you could even have the treasuries be in the 72t account so that it never goes down (goes up actually).
If you kept your combined MAGI around $30k to $35k, you would pay nearly zero taxes and zero for health insurance. The American dream!
Is it a better strategy for him to use up the cash first and then set up the 72t for the 5 years until 59.5? Or start the 72t now?
What would the number look like if you took SS at 62 ?? Why wait
I decided to start the 72t while we still had a big cash buffer such that the combined money from the 72t + cash equaled our spending needs while still keeping us at 0% tax and a health plan that costs 88 cents a month with a 600 per person max out of pocket.
What I mean is, after adding SS and Pension, I should be able to reduce the Portfolio amount and still get 100%. I can't, after adding SS and pension, if I reduce the portfolio below $1.74M the success rate drops below 100%. It is odd, I don't know what I am missing I have used Fircalc several dozen times and not had any problem.
Another day, I will try again.
OK, maybe I am just expecting to much change with the SS and pension.
First I set Portfolio at $1,250,000 and spending at $60,000 and 35 years.
The result is 72.0%.
Now in the "Other Income/Spending tab, I enter $38,400 and $17,200 SS to start 2036 and $4,440 pension to start 2031 and Highlighting the circle for Pension Income.
Then hit submit, I do get a tiny change up to a 73.7% success.
Now I run to see the minimum portfolio for 100% success with spending at $60k for 35 yrs, I get $1,740,000. Then I add SS of $38,400 and $17,200 in 2036 and pension of $4440 in 2031. I then can reduce the portfolio to $1,703,000 before not having 100% success.
I'm leery that having $60,040 additional income for 20 of the 35 years does not reduce the needed portfolio more.
Still confused, must be me, but I'm trying.
... FIRECalc looked at the 118 possible 35 year periods in the available data, starting with a portfolio of $1,136,936 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 118 cycles. The lowest and highest portfolio balance at the end of your retirement was $109 to $11,484,108, with an average at the end of $3,224,929. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 35 years. FIRECalc found that 0 cycles failed, for a success rate of 100.0%. ...
I lost my job and the job search is not going very well. (That's for another thread )
We have no debt.
I've calculated our expenses at:
$53,000 essential (with ACA healthcare).
$9,000 discretionary expenses.
Social security at 67:
Me: $3200
Wife: $900
$370 month pension at 62
FIREcalc is showing $1,750,000 has a 100% success for a 35 year retirement.
Wow! Is this a gold plan? It's still hard to believe the government does not penalize you for having a pile of cash.
I concur with a lot of what's being said in this thread. You need to reevaluate your yearly spending. In short, it's possible but adjust your expectations in how much you spend yearly. Maybe learn bout frugality more? You will have a reduction in expenses from not working, however no one can predict the future and anyone who can is lying. Imagine you only had 40k to spend, would you still be able to make it? you can do this, but build in a buffer. Take on work you LOVE doing later in life, and you will find money will find its way to you in retirement.
PM if you want to dig into this more, happy to help.
Congratulations on your success.
Assuming the spouse still gets 50% if taken at 62:
Reduced SS $26,316/yr =2033
Reduced SS $13,158/yr =2034
No COLA pension $4440/yr = 2033
$1,151,900 for 35 years = 100% success
$73,100 less than if taken at 67.
Not sure it's worth it if the spouse were to die early, the survivor will take a bigger hit on SS?
Because you can't have greater than a 100% chance of success?I'm not the OP, just the complainer! As I've said, I've ran it plain, $60k income, $1.74M nest egg and 35 yrs, no problem 100% success.
Then I add in the SS and pension on the "Other Income/Spending" Tab.
It doesn't change a thing. Why?