Talk me off the ledge, please!

[RetiredHappy]

Regarding FA, as someone who has had one for the past 14 years and is finally going to self-manage our investments, it has cost us about $300K during the course of the past 14 years. We started with a small amount AUM while we were working and grew it more when I sold off several of my homes through time and added a little bit more before we retired. The real advantage by having our investments managed by someone else is that we haven't gotten knee-jerk reaction when the market goes down and sell when it is low. The disadvantage is also that we have little control on how they manage the account besides Asset Allocation etc.

The first firm who had it for 5 years before we moved to a 2nd firm was way underperforming and the second firm has been fine. It has come to a point where we want more control on how the funds are managed. We started with 1% AUM at the first and 2nd firm, and the 2nd firm dropped to .8% after a couple of years when we added more money. When we wanted to move our assets out a month ago, our FA offered to drop to .6% but the same issues remain that we have little control of how the investments are managed.

You can always try it for a year or two until you gain more stability after retirement. For us we were very busy working that we just had no time to look at our investments. We retired in 2016 and it still took us 5 years before we have gotten our retirement into a routine and decide now it is time for us to take care of our investments.

 

[someguy]

I'm going to second HarveyS a bit and challenge you on your expenses.

If you retire before the 3 years, you have $90K (60K + 30K) in non-discretionary expenses. That doesn't include any hobbies or vacations as you point out. What about lumpy expenses? You mentioned wanting to help a son with a first home purchase. Does the $60K include periodic car replacements, new roof/appliances/HVAC? What about expected taxes in retirement? Any further edu expenses for the kids?

Don't take this the wrong way, but taking account of your age, estimating what a C-suite IT leader would be making over several decades, and assuming only $60K/year in expenses, I'd expect a higher LNW, especially with the market being so up right now. A really good gut check is what were your average expenses over the last five or seven years?

Grilling aside, congrats -- you are in a great position regardless!

 

[EastWest Gal]

OP - I think you have enough to retire now, but since you want to wait until 12/31 , I'd like to point out an optimization , if you wait until end of Jan/Feb, the income you make from those 1 or 2 months will probably be tax free income, due to the low amount.

Of course if you get a large severance or payout of sick leave unused this will alter the numbers and may encourage you to work 1 day in the new year, so those payouts are for the new year, resulting in low income, rather than added to current year.

I am thinking you picked 12/31 as an arbitrary date because it's the end of the year rather than for some income based reason (bonus earnings, etc).

Also, in my former megamedical corp, health insurance carried through to the end of the month. That is why my last day was 5/2/19 and not 4/30/19.

Maybe pick groundhog day for your last day. Or 2/1/22. Then you get to repeat 2/2/22 over and over again. First day of freedom.

 

[kaudrey]

Go for it. Pay for the health care. My DH and I are in very similar circumstances as far as savings/assets, and I am retiring 12/31/2021. The biggest difference is that I am only 52, and my DH will be 65 when I retire. I'll be paying ACA for myself, and he just applied for Medicare.....I won't get subsidies because of my husband's pension, but, so what? We can afford it.

 

[DawgSavr]

I'm going to second HarveyS a bit and challenge you on your expenses.

HarveyS and Someguy. Appreciate your questions and expense challenges! I've lead IT Operational teams for a long time and it's always a network, server problem so I have been accustomed to being challenged and just work through the data and toss the emotions out the window. ... so no offense taken!

Over the last 15 years, I have been an officer at the VP Technical level. Funny as in college, I hated computers, degree is in Business/Finance...and my entire career has been in technology. Never have moved into the Executive/Senior VP or C-Suite official staff. Honestly, I thought my job was tough and I had to be always on, those folks I think never slept.

I thought we were doing pretty good with a $4.4MM NW, w/zero debt, considering our total income made through 2021 will be ~$5.35MM over a 36 year career. I have been using Quicken to track income and expense since 1988. Over the last 5 years our taxes have been ~25% (Fed, State, SS, Med, Med Sup, Local), Real Estate and Prop are included in our non-discretionary base. Our retirement and cash savings with "catch-ups" has been ~35-40% over that same time period. That leaves us ~35-40% disposable income.

Agree that medical, dental and vision are "non-discretionary", just pulled it out of the "base living" expense to illustrate how much we budgeted for in perpetuity which our plan goes through age 100, who knows?? Based on other forums, folks have allocated more during the tween years before Medicare and brought it down a bit as far as premium outlay 65 and beyond.

Yes, we have planned for big ticket home maintenance (roof, paint, HVAC, Water Heater(s), Windows, etc., cars (although we drive our cars for 10 to 15 years or until maintenance becomes too costly), wedding, etc.,. Other discretionary items like vacations, House DP Assistance if my son needs it, are figured in. Again, some of these costs are thumb in the air and I think I likely budgeted too much. Many of these costs are front loaded in years 1-20. When we hit 80's anticipate slowing down some as we have seen that with my DW's parents starting in their mid to late 70's, especially with travel and hobbies. My parents passed in their early 60's to lung cancer.

Inflation assumed to average 3% and honestly very conservative with investments at 6%.

Again, it's difficult to plan for 1 to 3 years, much less, 30-40. So like other forums where folks have spreadsheets and use other tools, we are no different. In the end, it's plan for the worst and hope for the best!

Thank you so much for taking time to read and offer your insight and experience. As a only being a member of this community for a couple of short months, I have learned a great deal and it has given me much to reflect on.

Regards.

 

[someguy]

I definitely didn't intend to insult your NW (which by definition takes account of your zero debt ;P). I had it in my head you were effectively a CIO and in your industry would have been expecting total career cash comp well into eight figures over 36 years. I retract that portion of my post.

If you're getting all those lumpy big-ticket items into your $60K base number along with regular ongoing expenses, you're doing great in terms of LBYM.

I thought we were doing pretty good with a $4.4MM NW, w/zero debt, considering our total income made through 2021 will be ~$5.35MM over a 36 year career. I have been using Quicken to track income and expense since 1988. Over the last 5 years our taxes have been ~25% (Fed, State, SS, Med, Med Sup, Local), Real Estate and Prop are included in our non-discretionary base. Our retirement and cash savings with "catch-ups" has been ~35-40% over that same time period. That leaves us ~35-40% disposable income.

Yes, we have planned for big ticket home maintenance (roof, paint, HVAC, Water Heater(s), Windows, etc., cars (although we drive our cars for 10 to 15 years or until maintenance becomes too costly), wedding, etc.,. Other discretionary items like vacations, House DP Assistance if my son needs it, are figured in. Again, some of these costs are thumb in the air and I think I likely budgeted too much. Many of these costs are front loaded in years 1-20. When we hit 80's anticipate slowing down some as we have seen that with my DW's parents starting in their mid to late 70's, especially with travel and hobbies. My parents passed in their early 60's to lung cancer.

 

[Koolau]

This is the only area you mentioned that you should be sure to do a thorough investigation. I worked long enough to get the subsidized retiree healthcare (including the option to subsidize future Medigap/Medicare Advantage premiums). In our case we would not be eligible for ACA subsidies, so the ACA policy premiums (more than double the subsidized) the and deductibles (5x the subsidized) were enormous compared to the subsidized health care. In addition, almost none of our doctors that we had built a history with accepted ACA policies, so it would have meant finding all new providers.

If these do not apply then you are likely good to go in my view. But given that medical will be the largest and most unknown uncontrollable retirement cost, for us it was worth me working long enough to be eligible for the Megacorp benefit).

I agree. Medical was the single most critical aspect for me to retire. Once my company health insurance supplement vested, I was golden. I did stay to enjoy the fruits of my l@bor, as mentioned elsewhere many times.

 

[DawgSavr]

I agree. Medical was the single most critical aspect for me to retire. Once my company health insurance supplement vested, I was golden. I did stay to enjoy the fruits of my l@bor, as mentioned elsewhere many times.

Thank you Koolau. Honestly it is mine as well!! As mentioned in my original post, I will have to stay an additional 3 years to be eligible for the supplemental healthcare options pre & post Medicare Eligibility @ 65 and stay in the dental and vision at group rates (unsubsidized) for both my DW and I. It is an excellent benefit and one I am not taking lightly. This is very difficult because it is a money vs time (sanity) decision. Thankfully, my wife and I are healthy but realize we are not getting any younger

I'm really getting tired of the politics that comes with my position. Like others have said, the BS bucket is overflowing but my "responsibility" personality trait is on my shoulder talking in one ear ... saying "gut it out" while in the other ear is this voice telling me You Only Live Once ... get out ... and start that bucket list of things you want to do and enjoy!

All the Best.

 

[Gumby]

I waited long enough so that the young wife and I became eligible for essentially free retiree healthcare benefits. That is tremendously valuable for us. Far more so than my puny pension.

But then I enjoyed my work, so it wasn't so bad to wait around a little longer that I originally planned. And the young wife was a teacher, so once the school year started in August, there was no way should would retire before the end of the school year in June (also no way would she be happy having me retired while she was still working).

It all worked out in the end and we are quite happy now.

 

[DawgSavr]

I am thinking you picked 12/31 as an arbitrary date because it's the end of the year rather than for some income based reason (bonus earnings, etc).

Sunset, I picked 12/31 because our year end incentive pay is paid out on 12/15 which corresponds to my service anniversary date as well. So no real reasoning other than that. Living in the midwest where the winters can stretch through March, even into April, I have also thought about making my date 4/1/22. My DW said, since we are cooped up in the house and you are able to work remote...you may as well work that 1Q. As always, she makes a good point.

Appreciate your thoughts!

Regards.

 

[MRG]

Sunset, I picked 12/31 because our year end incentive pay is paid out on 12/15 which corresponds to my service anniversary date as well. So no real reasoning other than that. Living in the midwest where the winters can stretch through March, even into April, I have also thought about making my date 4/1/22. My DW said, since we are cooped up in the house and you are able to work remote...you may as well work that 1Q. As always, she makes a good point.



Appreciate your thoughts!



Regards.

Nah go at the end of the year. Definitely don't stay in an operational environment for another year end. No way. You need to be able enjoy the holidays. Staying on till April is an invitation to OMYs, staying for health care benefits more tempting each passing quarter. But you'll be really frustrated by feeling like you have to stay. I remember how frustrating it was feeling like I had to stay OMY when Megacorp was restructuring itself for sale and I felt like we weren't quite ready financially. Look at subsidies for health care till Medicare.

I retired from technology in the Midwest in 2013 from being a development/support manager and it took me a while to learn how to sleep properly. Why stay in the sloppy Midwest for winter? Take DW on a well deserved holiday with the year end bonus and start to enjoy. You are only going to be 58 for a while longer; enjoy your success.

 

[steveark]

You are fine, retire now. Health insurance is 16k a year for you and your wife until Medicare when it will drop to about 8k. I retired at 60, similar situation, no problems. But just one thing, never borrow money to help your son do anything. In the first place, if you can't do it with cash, you can't afford it. Second, who helped you buy your house? I didn't think so.

 

[Conundrum]

You are smart in that you have something to retire to. Outdoor activities, cabinet maker, mentoring your son. Well done! That was a problem for me when I pulled the plug. Talk about a first world problem right!

Also, have you stress tested your portfolio? Could you take a 25% haircut, Batten down the hatches and ride it out? It’s anybody’s guess when a correction may occur but it’s nice to know you have the planning in place when things go sideways.

Best of luck to you

 

[Global Wizzo]

Congrats

From what I see, you have a plan for what you want to do.
I have a few things you might want to consider.

I’d give enough notice to use up any vacation or medical leave unless they will pay it out. Don’t take the pay out at the end of the year. It could bump you to a higher bracket. Offer your employer a 6 month consulting contract to work the transition at 150% of current Pre tax salary. If you do this, start after Jan 1, tax considerations drive this. You don’t want large overlapping incomes if avoidable.

I pulled the plug at 67. Used the cash on hand ( not investments) and money from vacation and med leave to cover expenses until just prior to 70. DW is 3 years younger she opted to start her SS at the same time. Delaying hers didn’t work for us. What this did was drop the income so Medicare costs are at the
minimum. Managing various income sources have kept us below the step up AGI. Fo us, no debt.

Expect to spend more. Our annual travel budget is 30K. With exception of 2020, we are hitting that or more. 20K in trips between now and Jan.

I have a couple hobbies. Those take time and some $$. Don’t let the hobbies or helping others turn into a.full time commitment unless that is what you want.

Just opted to redo a couple of bathrooms. Quick $25k. Plan for that new roof. Same numbers. One neighbor just spent 80K replacing his.

We kept a small house, lower taxes and maintenance. Easy to lock up and go. Even though value keeps going up, I don’t consider value of the house in NW or other calcs. It will just be a allocation change if that funds a condo or old folks village.

Two of us and we still keep three cars. Last replacement was no notice and a quick $50 gone for the utility van.

Replacing either of the others will be a lot more, but I keep cars 10+ years when I can.

Decide what you want, set the plan in motion and don’t look back. Enjoy every day. You may not get tomorrow.

 

[sroby2020]

Congratulations! You have done well.
I'm not sure whether I'm a realist or pessimist, but I would keep an eye on what Congress can screw up between now and year end. (taxes, health care, SSI) . We all have planned based upon current tax laws and projected benefits. Hopefully it's not a total shocker!

 

[a60dan]

With 30% post-tax money, you can manage your taxable income and qualify for ACA subsidy.

I chose 12/31 to keep any paid but unused vacation under the taxable income goal.

Be sure to use up your PTO and only give the notice you need to lest an early retirement incentive appear.

This year 12/31 is a Friday and the whole world will celebrate our last day of w*rk

Next Wednesday is “100 days to go”!

Congratulations!

 

[lem1955]

^^^ Yes. If she isn't entitled to any SS based on her own work record then she won't get anything until the OP files. Good time to spend some time with opensocialsecurity.com methinks.

I agree - use opensocialsecurity.com to verify the spousal amount. It's not always a simple 50% of the primary earner's amount. But even if the SS paycheck is less than $65K you will be okay!

 

[DawgSavr]

I agree - use opensocialsecurity.com to verify the spousal amount. It's not always a simple 50% of the primary earner's amount. But even if the SS paycheck is less than $65K you will be okay!

Thank you. I ran the numbers on opensocialsecurity.com and it came back with $62,327. I reduced this number by 25%, just to put in our planning based on the potential haircut by 2035.

 

[pacergal]

You look good to go--give your notice and start counting the days to freedom to do what you want every day!