Late 50's, interested in financial strategies for retirement

[kavm]

OldShooter - Thank you! This is a very interesting point that we need to explore a bit. Gates Foundation is on the list, should we move due to where it is located. But good to see the broader list for us to consider.

 

[pb4uski]

.... If it happens, we'd need just need to travel back and forth for about 6 months while my wife finishes her semester and academic year commitment. The semester breaks, spring break, teaching 2 days / week give her some flexibility and should allow us to spend a good part of the week together.

My earlier advice against the new gig was based on an understanding that it would be years... if it is only 6 months apart then that is a horse of a different color.

But all of that said, retirement is so much better than working (and I enjoyed my work).

 

[kavm]

Indeed. I am sorry I did not make that clearer earlier. We really want to be together on a daily basis and are committed to not allow the transition to go any longer than that.

We spoke about it as late as last night and are comfortable with it. I only mentioned it on this thread to convey that we might need to keep two residences for some time - perhaps until retirement as our current residence is an option for retiring in place.

 

[Sojourner]

With that nice of a nestegg and no heirs, I think you're crazy not to retire as soon as possible.
...
With over $250k of annual retirement income available to you the world is your oyster.

+1000

You never know how long your health will hold out. If you have anything you want to do (travel, hobbies, fitness, etc.)...now is the best time. Deteriorating health will eventually inhibit your ability to do some things. People get sick, cancer, memory loss, etc. It's varied, and unpredictable.

+1000

What dollar amount qualifies to be "absolutely compelling" ?

This is exactly what I'm wondering. With a $6.5MM nest egg at the OP's stage of life, I can't imagine what would make a job offer so compelling that it would tempt one to sacrifice the most precious and limited resource—time—in exchange for a resource one already has in abundance—money.

OTOH, if OP truly can't think of a more exciting, fulfilling, and rewarding way to spend the next year or two, then by all means take the "absolutely compelling" job offer. Some people, even in their 60s and 70s, do seem extremely wedded to work, career, achievement, prestige, etc., so ultimately one should just do what brings the most happiness.

 

[kavm]

You forgot satisfaction

But, thanks! I think we got the message loud and clear from this thread. And, it is something we needed to hear. We will take our time to digest and incorporate it in our plans.

 

[dirtbiker]

Thank you for the comments! The feedback on this thread has been very useful. I and my wife read it together last night and discussed it. Will do so further as we go forward.

It does clarify some important things - and we need to digest them. As someone pointed out - we are ready to retire financially but not in other ways.

On the offer - I am committed to listening to it. That's all. Will only take it up if both I and my wife find it compelling. And, no - we would not love each other any less if we jointly decide to that I should pursue it. If it happens, we'd need just need to travel back and forth for about 6 months while my wife finishes her semester and academic year commitment. The semester breaks, spring break, teaching 2 days / week give her some flexibility and should allow us to spend a good part of the week together.

I thought you had said you would be gone for 6-8 years. I see that I misread that. Six months is a whole different story. And if it's close enough that you're talking about seeing your wife on a weekly basis, that also changes things quite a bit. It's not a traditional long distance relationship then. Still, given your net worth, it would have to be a very lucrative offer if I were in your shoes.

Good luck. Whatever you decide, you've got a lot of great options.

 

[OldShooter]

OldShooter - Thank you! This is a very interesting point that we need to explore a bit. Gates Foundation is on the list, should we move due to where it is located. But good to see the broader list for us to consider.

Oh, that is not even close to being a broad list. I'm sure there are thousands of organizations who would kill to get volunteers with your credentials and assets.

I'll bet your university libraries would have access to resources listing and describing major nonprofits with volunteer opportunities. Your personal networks and professional societies would probably also be a resource.

 

[Spock]

This thread went from: "optimizing the conversion/distribution from the tax-deferred plans"
and "Late life financial and care management plans for those without family members"
To: You should retire now.
Maybe need a separate thread to split the topics...

 

[kavm]

Definitely not where I was expecting to go with my post. But, it is good feedback. Although we are not retiring right now, it will have a good effect on how we approach things moving forward. That's why we read what people had posted together. Needless to add, I am very thankful.

The areas to learn about I mentioned in the intro remain of interest. I need to read the ongoing threads (I saw something relevant to the first point of interest: "optimizing the conversion/distribution from the tax-deferred plans").

I prefer to do my own financial analysis but am not knowledgeable in this domain (retirement stage taxes, rmds, medicare, relevant financial products, etc.) to be able to do so. Hoping to learn from the knowledgeable folks and threads here to get there.

 

[kgtest]

Retire. Don't bother working another day. You are financially independent, and the extra social stigma you get while continuing to work does not out weigh the limited time you have alive. Retire now.

 

[OldShooter]

@kavm, just to be clear: When I said "your credentials and your assets" I did not mean to imply that you would necessarily be donating to an organization. But your assets give you the flexibility to work for no salary.

As an example, we have friends who spent the last three academic years in Bratislava, Slovakia teaching English in a Lutheran high school there. My understanding is that they worked without salaries but were provided with a large apartment residence and a small stipend to help with living expenses.

 

[HI Bill]

Retire. Don't bother working another day. You are financially independent, and the extra social stigma you get while continuing to work does not out weigh the limited time you have alive. Retire now.

I think the lack of RE for the OP has to do with one word his post above: Satisfaction. Some folks get immense satisfaction out of their j$bs. While I may not be one of them, my mom was.

She was a first grade teacher, who was over 60, and qualified for full retirirement. At the urging of her then-husband, she transitioned from full to half-time w#rk. With her health, it was a good decision. But when her half-time teaching partner died in the middle of a school year, the district couldn't allow her to w$rk full time for half pay, so they laid her off! It nearly devastated her, as she lived for those kids!

If the OP has that kind of satisfaction, then by all means, keep at it; it not, consider what's most important in your life.

 

[kavm]

OldShooter: Thank you! I will definitely discuss this idea with my wife. Teaching English isn't likely to satisfy us much (and it is not a native language for either of us), but there might be other things.

HNL Bill: Thank you for highlighting this point. I do indeed find satisfaction in my work. It is satisfying for me to positively impact people's work life as well as my clients' bottom line. Sounds trite, but it is true. Don't get me wrong - there is perspiration involved in finding new clients, but once that's out of the way I actually like solving their problems and get both respect and remuneration for it. I learn new things about their businesses and industry, make new friends. If the client happens to be in a different country, one learns things about that a tourist simply can not and gets to know people on a personal level. I have worked in Japan, Belgium, Germany, UK, Turkey, South Africa and have friends to show for in most of these countries - on more than professional level. And, when I do not have clients - I have time to relax, exercise and so on. I will give it up sooner or later, but a big burden it is not.

 

[Spock]

A combo perspective on withdrawal strategies and "retire sooner".
One of the big whammies that hits tax plans and deferred savings withdrawal strategies is the Social Security "tax torpedo" (google it and/or see other threads on this forum).
In a nutshell, once you earn a rather small threshold (usually triggered by IRA/401K RMDs at age 70.5), up to 85% of your SS benefits are taxed as income. This can have dramatic impacts on your marginal tax rates.


A common strategy is to max out lower tax brackets doing Roth conversions before RMDs start.

So to combine these concepts into "retire earlier" (and making a dramatic statement just to get the point across): If you quit now, you have more years to convert your rather sizeable tax deferred bucket into Roths, reducing your future tax bills. The overly dramatic statement is: You could be working additional years for nothing (for those with smaller incomes or just a lot smaller paycheck than you think with a higher income) if you subtract out your higher tax bills.
You'll have to do your own tax bracket math to see if this applies to you or not.
The net is: Do you get enough satisfaction from your job that you would do it for alot less (insert actual tax number here)?

 

[dirtbiker]

OldShooter: Thank you! I will definitely discuss this idea with my wife. Teaching English isn't likely to satisfy us much (and it is not a native language for either of us), but there might be other things.

HNL Bill: Thank you for highlighting this point. I do indeed find satisfaction in my work. It is satisfying for me to positively impact people's work life as well as my clients' bottom line. Sounds trite, but it is true. Don't get me wrong - there is perspiration involved in finding new clients, but once that's out of the way I actually like solving their problems and get both respect and remuneration for it. I learn new things about their businesses and industry, make new friends. If the client happens to be in a different country, one learns things about that a tourist simply can not and gets to know people on a personal level. I have worked in Japan, Belgium, Germany, UK, Turkey, South Africa and have friends to show for in most of these countries - on more than professional level. And, when I do not have clients - I have time to relax, exercise and so on. I will give it up sooner or later, but a big burden it is not.

I might have missed it, but just curious, what do you do for a living?

 

[kavm]

Spock - Thanks for pointing it out. Conversion into Roth prior to RMDs is definitely something I need to evaluate - and partly what I had in mind when I wrote the introductory post. As far as the tax torpedo goes - I am expecting that our income will be too high to avoid paying taxes on 85% of our social security benefits. Only way that happens is if we can convert our tax deferred portfolio to Roth before social security benefits - and that seems unlikely without paying the highest marginal tax rate. So, unless I misunderstand something, the tax torpedo is something that we can't do anything about.

Dirtbiker - These days I alternate between software and consulting fields. While consulting traditionally rewards selling above quality - I have been able to differentiate based upon quality. Not as financially rewarding in comparison but more satisfying and impactful - and the financial rewards are not terrible either. And, I find it intellectually stimulating as well as satisfying. I have changed careers multiple time and have been a professor, management and analytics consultant, senior executive, software designer and creator. Enjoy change, find sameness boring...

 

[aubailey]

Do it Now!!!

If you or your wife really loves their job wait until you retire---you will really love it then!!! Volunteer for whatever suits your fancy. California would a definite no-go. Can't believe that would even be considered. We are in Hilton Head Island and love it. I am sure there are many other places with good weather that you would like. Don't agonize over this decision since you have enough money to make it happen. Don't die in 10 years with $5 million to leave to nephews---take cruises, buy a pool, give money to charity.

 

[youbet]

spouse has worked on social security exempt jobs - so will only receive the spousal benefit

She may not receive a spousal benefit due to the "GPO" provision. Have you taken that into account?

 

[DogGone]

Too bad you can’t quit 5 years ago and buy your time back.

This ^^^

I just FIRE’d early 50s with a little less. I’ve seen roughly a dozen friends not make it to 60 and these may be my best years (active, parents still alive, kids still home a few years, etc)

This also opens your eyes... odds of being Rich, Broke or just Dead.

https://engaging-data.com/will-money-last-retire-early/

 

[DawgMan]

This is my first post to introduce myself on this forum, share the outline of our situation and begin to learn from and interact with this community.

Facts:

• 59+; wife 58+
• I am working but in transition - waiting to find out about a position
• Spouse is a professor in a public university
• While no financial or tax background, I am financially fairly literate and capable of mathematical reasoning / research to analyze the decisions
• No children - leaving legacy to heirs not a significant consideration
• Approximately 4M in tax deferred retirement savings; approximately 2.5M in post-tax savings; condo paid for; no debt; max contributions to Social Security - so the benefit should be close to max for one of us; spouse has worked on social security exempt jobs - so will only receive the spousal benefit
• Overall, happy with our professional lives, so retiring early is not a goal. Neither is working very late in life.

Plans:

• Next 6-8 years - A bit unclear. The job situation I am waiting to materialize is in a different and expensive city (though in an income tax free state) - and will force us to live apart and maintain two residences for some time until resolved. But, it will compensate generously for the trouble, should it happen. Until that is resolved one-way or the other, it is hard to be clear about how we are spending the next 6-8 years.
• Retirement plans (beyond 6-8 years) are a bit unformed. Our ideas/options - to be examined a bit closer to retirement, include:
  1. Retire in place - We love where we live and our condo. There are retired folks living in the building and it is suitable for independent living in an older age.
  2. Retire to California - Seems like as one gets old, the weather becomes important. So, we have a tentative interest in living in coastal California. The main concern there is taxes, and housing cost.
  3. Retire to Germany - My wife is a dual citizen and is native of Germany. We like a lot of aspects of that. So, there is some thought of retiring there. That said, it is not the plan right now.

The key questions relating to the retirement that interest us are:

• Financial decision making, particularly optimizing the conversion/distribution from the tax-deferred plans, which are a very significant part of our portfolio. I saw some on-going threads on this topic that were discussing exactly this topic.
• Late life financial and care management plans for those without family members: As shared above, we have no children. And, since both of us are immigrants - we also do not have relatives that are nearby; foreign relatives are not familiar with the US financial system to be much help. So, the late retirement stage where one may lose some faculties and/or partner - the management of care and financial assets for us would need be third party, with little supervision. So, strategies for managing that are of interest - though we are still some distance away from this.

Hope to learn from the collective wisdom of this community and, where possible, contribute.

Sooo... the good news is you made it financially... congrats!

Now the real challenge, what next? I can relate as I have surpassed my financial objectives. One BIG difference... I have 4 kids and 1 grand child (suspect more will come) which makes things a little different (i.e. family legacy desires I never knew I would have). None the less, YOU need to search for what makes YOU (and your DW) tick. No 1 size fits all here despite your assets. In many ways the financial part is much easier than the mental part. Only "wisdom" I would employ is find your balance (i.e. work, play, give, live) and do it on YOUR terms. That's were I am. In my case the "master plan" played out better than expected, but I find my personality needs to be engaged in something with some meat on the bones... perhaps you do as well. My 2 cents... when you have the luxury of means, point your energy towards relationships (i.e. wife, friends, family). It will pay more dividends than... your dividends. You will find good insight on this site.