Greetings from a 59ish almost retiree

[Semi-Retyrd]

Hi All,

This is my first post after randomly finding this forum a few weeks ago and joining more recently.

My handle says it all in that while I have left the working-for-a-big-company life this January, I intend to work for myself (maybe in real estate, for sure in managing my portfolio of assets) for the forseeable future.

I'll be 59 1/2 near the end of this year, so I'll have access to my IRA if needed.

With no debt, no house payments (~$300K of home equity) and approx $950K in the IRA and $850K in a taxable account, I feel ok about the future. My plan is to keep this portfolio in approximately 60/40 equity/fixed income investments diversified 50/50 between domestic and foreign equities and for the moment overweight in large caps due to the long run of small-cap outperformance.

I expect to start converting the IRA into a Roth IRA in 2010 in partial steps to limit my income to the top end of the 15% bracket each year while I draw down my taxable account at a rate of $5K/mo until social security kicks in. I may take social security at 62 based on the expectation that I can achieve a greater return in my portfolio than the payment increase from taking it later.

My only issue now is that my wife is uncomfortable with the uncertainty of not having a regular paycheck.

I'm curious about how other members deal with the concerns of their better halfs when they take the big leap into retirement.

Regards, Dennis

 

[Rich_by_the_Bay]

Welcome aboard, Dennis. Sound like you are pretty thoughtful about your plans. Nice job with planning and saving.

Your wife's concerns are quite natural, and some here address that with either a "bucket" type approach or similar self-annuitizing strategy (not much support for most commercial annuities around here) where you take money off the table to last you 5 or more years at a time, then refill when near empty. Those 5+ year cushions provide a lot of reassurance for some.

Hope you enjoy your participation here.

Your

 

[Coach]

Dennis, welcome to the forum! It sounds like you have the financial side more than under control -- congratulations.

If you don't mind my asking, how have you covered the health insurance issue?

If you haven't yet, you might want to run your numbers through FIRECalc -- links at the top and bottom of the page. It might help convince your wife of the really solid financial condition you are in.

Coach

 

[jimnjana]

Dennis,

Hi, I'm new to the forum as well. You are in an enviable position, congratulations. A couple of ideas, first, the old saying past performance is no guarantee of future performance...You may want to be open to adjusting your allocation in foreign stocks. You're allocation is pretty agressive be mindful of a strengthening dollars impact on the relative performance of foreign stocks in your portfolio. Also, you may want to review some literature on when to begin/apply for social security benefits. With the size of your portfolio, you could postpone applying for benefits until you reach full retirement age. Most of us are gonna live alot longer than we think, unless health issues are a concern, postponing benefits if not needed financially makes more sense in the long run.

Jim

 

[Semi-Retyrd]

Thanks for all your replies. I really appreciate them.

Coach, your comment about health insurance is timely. I am trying to figure out the best way to go since I am quite a few years from Medicare coverage. I could use COBRA continuance for 18 months from my former employer's coverage, but the quote from Blue Cross of California is $1719/mo which seems very high to me. Especially since my wife and I are very healthy. I am thinking about some kind of catastrophic coverage with a high deductable, since I can handle routine costs and checkups from my savings. Any suggestions are welcome.

Jimnjana, I agree with your thought that the dollar cannot strengthen much further relative to certain foreign currencies. The fund I am mainly using for foreign exposure SGIIX, is partially hedged against the european currencies now and will likely increase their hedge. This fund is also defensively positioned with a gold position as an inflation hedge.

I have smaller positions in OAKBX and FAIRX which tend to focus on the US and are value driven funds that tend to exhibit above market (meaning S&P500) returns with below market volatility in flat to down markets.

Postponing Social Security is something I will continue to think about. My parents and grandparents on both sides lived a long time (parents to 80s and all grandparents to their 90s). So I am running the portfolio to last in perpetuity and will take less than 4% in down years if necessary.

I have downloaded the detailed Social security calculator from their website and will continue to run scenarios over the next three years as I watch the market play out.

Regards, Dennis

 

[freebird5825]

Hi All,


My only issue now is that my wife is uncomfortable with the uncertainty of not having a regular paycheck.

I'm curious about how other members deal with the concerns of their better halfs when they take the big leap into retirement.

Regards, Dennis

Hi and welcome

i am alsoa newcomer, just a few weeks. you found a great place. the advice here and the fun people have is amazing.

i can address the discomfort issue a little..my fiance and i have been together for almost 3 years. i'm widowed, he's recently divorced. we are a pair...LOL

prior to my resignation (FIRE) decision almost a year ago, we talked about it extensively. i put together a spending plan (income now, bills going out) and then projected the same situation with my proposed lesser income. i did it from scratch, but there are tons of budget templates out there to use.

i played with the numbers, figuring in some simulated disasters (car quits, furnace quits, stock market goes kerplunk, etc) just to see how we would fare.

when DH-to-be saw the numbers, he relaxed and said GO FOR IT! and looked forward to the promise of home cooked meals and less laundry for him. I had to sweeten the deal somehow. LOL

use your own income, budget, bills, put in some potential disasters that mean more money spent, and go from there.

i did this for about 3 months prior to writing the FIRE letter to my former employer. i made some adjustments to my dollar cost average investing to put more into tax exempt munis, just in case i would need the dividends as income. i am still investing in stock mutual funds to maintain portfolio growth. i am currently at a balanced 50-50 stock/bond ratio, a temporary measure until i see real numbers on how we are doing.

if in doubt or lost with this exercise, consult a fee only financial planner (not a commision based financial planner), and preferably a CFP, and see what they say. it will be money well spent.

good luck and post often.

 

[TromboneAl]

You've got to get the spouse on board if you want a happy retirement.

Definitely consider a high-deductible health insurance plan. I ran the numbers at one point and found that even if I had high medical expenses in a year, the lower premiums made it cheaper to have a high-deductible plan.

Since the wife is concerned about the uncertainty, that makes delaying SS more attractive. You can say "Even if we blow through 2.1 million dollars in the next 21 years (unlikely) we will still get x dollars per month from SS."