New here. Hi!

[marytaz]

I am a 56 y/o single female and I'm looking at retiring early (62). I have an opportunity whereby I could go into retirement living debt free, rent free, and mostly utility free. I'm not in the best health at this point and I want to enjoy life while I can. I know that no one has a crystal ball on life expectancy though. I "think" I can do this. Meeting with a financial planner who was highly recommended to me to sort some things out. A lot of things I have to consider. So glad I found this forum! Thanks! Mary

 

[MBAustin]

Welcome marytaz! You will find many folks here are wary of financial planners based on experience, so feel free to post details of what they recommend for feedback here. There are some excellent financial planners out there, but also some who are more interested in funding their own retirement than their clients'.

If you haven't seen them yet, there are two excellent resources here that might help you prepare to meet with the planner and also to start non-financial planning for your retirement:

http://www.early-retirement.org/forums/f47/some-important-questions-to-answer-before-asking-can-i-retire-69999.html

and

Early Retirement FAQs - Early Retirement & Financial Independence Community

We'll do our best to answer your questions also - lots of friendly and knowledgeable folks hang out here!

 

[Katiek]

Welcome! I agree with MBAustin's suggestion that you may want to come back with more details of what your financial planner recommends (especially if they recommend significant changes in your investments). There are a lot of people here with good experience and a willingness to help.

I hope your health turns out to be a non-issue, but in any event, it's always good to feel in control of your financial situation and to get more enjoyment out of life!

 

[marytaz]

Thanks! It's actually just a free consultation at this point. I've been putting together all of my financial papers, but I appreciate all the help I can get!

 

[Katiek]

One of the main things people worry about is financial plannerss who recommend funds with high expenses that pay a lot to the planner, but aren't a good deal for the investor. Or recommendations for complicated financial products that are often marketed as safe ways to guarantee "reasonable" rates of return without losses.

Those investments can be very expensive, so it can be helpful to get some disinterested viewpoints on any recommendations.

 

[marko]

Thanks! It's actually just a free consultation at this point. I've been putting together all of my financial papers, but I appreciate all the help I can get!

Actually, "putting together all you financial papers" can sometimes be a bit of an education in and of itself. Pay attention to what you're putting in the pile and try to understand as much of it as you can before your meeting.

 

[marytaz]

Thanks, Marko! It has been very much an education, looking at what I've been spending. I was advised by a friend to meet with at least 3 financial planners before making a decision. That might not be what I need, but I'm clueless about finances, portfolios and investments. Some of my questions are: should I invest in IPO stocks from my company which is going public soon, should I switch to an HSA instead of FSA, how would taxes affect me, and the biggest question of all....how much $ do I need (on top of SS). I'll have very little expenses, but still there's food, clothing, maintenance on home & car, health care (HUGE), pet care. It's a bit overwhelming. I guess I'm trying to educate myself as best I can. I appreciate all the help & advice I get! Thanks!

 

[hnzw_rui]

As far as I'm aware, FSA is a cafeteria plan. You lose it after you stop working. Definitely go HSA if that's an available option (requires you to have a high deductible health plan).

 

[rodi]

Welcome Marytaz!

One key thing to look at is an accurate spending plan. Include taxes, health insurance, OOP medical costs. If you under-estimate this it can make your "plan" worthless and send you scrambling for more income.

As far as portfolios go - we've got several camps here - but the unifying theme is low expense ratios. Some folks do the couch potato or lazy portfolio (a few broad index funds to reach your preferred asset allocation - then periodic (annual?) rebalancing. Other folks are interested in getting dividends - so their funds and stocks target that. And there are the stock pickers. No one size fits all - figure out what you're comfortable with.

For some easy reading I recommend The Millionaire Teacher, it's an easy read and available at most libraries.

Let us know what the financial advisers recommend.

 

[Katiek]

One thing I found helpful as I started planning is to keep a log of all my expenses. Some people here do elaborate spreadsheets with auto totals, but I just do a handwritten notebook and categories that I manually calculate. There are commercial programs that you can also use.

I had a good sense of my investments and income, but little handle on what I spent and where I spent it. I started tracking at the beginning of this year, and will continue for at least a few years to pick up various "one time" charges like repairs etc.

 

[marytaz]

I met with the Financial Planner this morning. She's going to crunch some #'s and put together a plan for me to retire at 62. Then I'll meet with her again. I feel hopeful. And it's being done pro-bono.

 

[MBAustin]

Sounds good, Mary. Keep us posted.

 

[Katiek]

I met with the Financial Planner this morning. She's going to crunch some #'s and put together a plan for me to retire at 62. Then I'll meet with her again. I feel hopeful. And it's being done pro-bono.

That's great, but be careful before implementing any changes in your portfolio - make sure you understand the fees, especially upfront charges.

 

[ImThinkin2019]

Hi Mary and welcome!! I can second everyone else when I say that this is the right place to come for good advice. One common thread here is that we all are careful with our $$.

What helped us a lot is to do really 2 things. Both are free and not hard. Here they are:
1. Connect our bank account (not investment accounts) and credit cards to Mint so that it collects every bit of $$ that comes in and goes out, excluding the investment accounts. We've done this for a couple of years and it helped us learn what we need to live on at our current living standard.
2. Use a number of online retirement planners to see whether we can retire. Ones that we trust are: firecalc, i-orp, ********, and then Fidelity's and Vanguards account members' retirement planners. These will tell you most everything you need to know.

We did meet with a Vanguard financial planner who was free due to our account size. We felt that he was nice, did not try to sell us, but also did not tell us anything we did not already know. Plus we felt he was too optimistic when estimating future returns.

Best wishes to you! If you stick around here you'll gather the tools you need to do this yourself.

 

[utrecht]

You can bet that the plan she comes up with will include you investing money thru her and into mutual funds with high expenses and/or funds with loads (basically her commission). What sounds free will not be free if you implement her plan.

Before you implement her plan, come back here and post the plan. I will guarantee you that there are dozens of people here with as much or more investment knowledge than she has and the people here have no financial incentive to help you invest your money the right way. The people here do it because they enjoy helping people.

 

[gauss]

You can bet that the plan she comes up with will include you investing money thru her and into mutual funds with high expenses and/or funds with loads (basically her commission). What sounds free will not be free if you implement her plan.

Before you implement her plan, come back here and post the plan. I will guarantee you that there are dozens of people here with as much or more investment knowledge than she has and the people here have no financial incentive to help you invest your money the right way. The people here do it because they enjoy helping people.

+1 (I agree with this)

What many Financial Planners are really trying to sell you on is "Peace of Mind". If they are good salespeople, they will make you feel good if you implement their plan.

Please beware that this "Peace of Mind" can come at incredible (hidden) financial cost to your net worth. This can range from 10s to 100's of thousands of dollars over time.

If you want to test me on this, then ask the Financial Planner what standard she will hold to with regards to your account. If she says "Fiducudiary Standard" and is willing to put this in writing, then she will be legally bound to put your interests ahead of hers. This will likely not be the case if you are not paying for her services by the hour.

If on the other hand, she mentions "Suitability Standard" or any other standard besides Fiduciary Standard, then she has no obligation to put your interests ahead of hers.

We have many new folks who come to this board with not much knowledge ahead of time like yourself. Sometimes they take our advice to stay here and we will help them learn. Many times they go the Financial Planner route instead. This is a valid choice when they understand the (hidden) costs involved such as high fees (anything beyond 0.1% is considered a high fee - that is one tenth of one percent).

-gauss

 

[Beardog]

Welcome! I really have nothing to add to the above posts, except to say that investing and retirement planning isn't rocket science. With some well directed reading (members here can readily recommend some easy to comprehend material), you can quickly grasp most of what you need to know, and then you won't need to "trust" someone who makes a living off of YOUR money.

 

[marytaz]

Okay, I met with the Financial Planner again. She didn't try to sell me anything. Basically, she said it was unrealistic to retire at 62, at 65 it was doable, but I should wait until I'm at FRE (67).

I'm looked at the cost of living where I will be, all my expenses over the past 3 years and estimated my expenses in the future. To me at least, I don't see why I couldn't retire at 62. I don't live extravagantly now and don't plan on it in retirement. I understand that I won't have medicare, but it looks like due to my earnings in retirement, I'll qualify for a tax credit. I know that many things can change between now and then however.

A couple of questions:
1) I started work 39 years ago and with (if I retire at 62) an additional 7 years to work, how does SS calculate my estimated benefits? Do they only average the 35 years prior to retirement? I can't seem to find it on the SS site.
2) On the SS site there is the regular calculation in today's dollars and the one for future inflated dollars. Which one should I use to estimate?

Thanks so much for all your help!!

 

[DEC-1982]

I am fairly sure about answer 1. Not as much for answer 2.

1) The highest 35 years income, not the last 35 years prior to retirement

2) I use Fidelity Retirement Income Planner (FIDO RIP). I discovered through trial and error that for that planner, I needed to use today's dollars, because FIDO RIP seemed to take my number and add 2.5% inflation for all the years from now till the year I will start taking Social Security. Does this vary from one financial planner software to another - I don't know.

 

[ivinsfan]

I am a 56 y/o single female and I'm looking at retiring early (62). I have an opportunity whereby I could go into retirement living debt free, rent free, and mostly utility free. I'm not in the best health at this point and I want to enjoy life while I can. I know that no one has a crystal ball on life expectancy though. I "think" I can do this. Meeting with a financial planner who was highly recommended to me to sort some things out. A lot of things I have to consider. So glad I found this forum! Thanks! Mary

Can you be sure the rent free, mostly utility free living situation will continue indefinitely? This might be the reason your FP is telling you that you need to continue working.

 

[marytaz]

No, I can't be completely certain of that. But in my calculations, I left in $ for rent/utilities. Not sure what else I have missed.

 

[Whisper66]

Marytaz - now that you have pulled together your financial information and gotten one person's view of your situation, would be good to run your own very simple analysis using something like firecalc (FIRECalc: A different kind of retirement calculator) and see if you come to the same conclusions. Can use the governments social security calculator ( Quick Calculator ) to estimate those benefits.

The above will probably bring more questions to mind that this good board may be able to answer for you.

Also good to get another one or two financial analysis by other sources. These are typically provided free by companies that are hoping you will let them manage your investments. I had 4 done (all free) by different people at various places I had accounts before I retired and learned a bit from each one.....no one was identical and some were very different. Bottom line is there is no one right answer so you will get different viewpoints by going to different folks.

 

[Senator]

It all depends on what type of lifestyle you want, and can, live if your plan fails. Worse case, what would you do?

What are the odds of success of the plan if you stop working at 62?

 

[ivinsfan]

What reasoning did your planner use to say that you were not ready, you haven't mentioned her objection in any detail.

 

[marytaz]

Thanks everyone! I've asked the planner to send me an itemized list of how she came to the $3,000 mo expenses. In the meantime, I'm going to do some more reading and investigating.

The answer she gave for it not being doable at 62 was that the numbers were just not there. That is entirely possible as she believes that when people retire, they tend to spend more money because they're bored. I don't believe that would be true in my case. But, I do need to look at everything I possibly can.

I'm not quite sure how to calculate the expense differences, but I guess I'll find that in my travels across the internet. The cost of living here is 97.20% higher than the US average and the place I'll be moving to is 15.80% lower than the US average.

When I calculated on FIRE is came out looking good for 62, which is why I wonder if I'm missing something somewhere. Going to keep reading here and learning.

Thanks,
Mary