1 1/2 years into an unexpected early retirement

[Fleur58]

Hey:
I'm 59.5, single. Retired when I turned 58 in 2016--unexpectedly due to a bad manager situation at work. I have about 1.4 Million in investment assets and cash. House is paid off. I'll get a pretty good SS check at 62 ($2000) and a teeny pension when I am 65 of $465 a month. I'm going to hold of on SS until I am 66 where the check will be north of $2600.
I pay $640 month for a no subsidy Bronze Health Plan.

My plan is to start converting 20K of Trad IRA money to Roth beginning this year when I will be in the 12% tax bracket. Hopefully, I'll also qualify for subsidized health care next year.

 

[24601NoMore]

If you don't mind us asking, what are your annual expenses? Hard to evaluate the situation without knowing that side of things..

 

[Mdlerth]

Welcome, Fleur58. I notice that you've been a member for a while, but only now posting. I hope you haven't found the forum inhospitable; sometimes the discussions grow heated, but I attribute that to members' passion rather than unfriendliness.

You've shared a reassuring $$ situation, so here's the more important question: How are you enjoying your unexpected 1.5 years of freedom? Finding plenty to do to fill your days, or just sort of drifting until your brain fully digests the concept of retirement?

 

[Fleur58]

$24,000 living expenses (2K month: All monthly bills, Healthcare, food, spending)
$4000 property tax
$800 Car Insurance
$900 home insurance
$3000 estimated State and federal taxes (20% of 15K)

No other debt
Taxable Income--15,000 investments

 

[24601NoMore]

$24,000 living expenses (2K month: All monthly bills, Healthcare, food, spending)
$4000 property tax
$800 Car Insurance
$900 home insurance
$3000 estimated State and federal taxes (20% of 15K)

No other debt
Taxable Income--15,000 investments

Wow - looks like you've got a better than average living expense down. Congrats..

If I'm reading this right, it looks like you're at $32,700 per year expenses. Is that about it?

When I put together my plan, the top thing I focused on is how to cover my expenses. Sadly, our expenses are a lot higher than yours..so even with $60K projected income from taxable investments, I still need to dip into savings to cover.

With $15K taxable income, looks like you only need to cover an additional $17.7K. Assuming I did the math right, that's 1.25%. Should be extremely doable so looks like you're golden..

 

[Fleur58]

Welcome, Fleur58. I notice that you've been a member for a while, but only now posting. I hope you haven't found the forum inhospitable; sometimes the discussions grow heated, but I attribute that to members' passion rather than unfriendliness.

You've shared a reassuring $$ situation, so here's the more important question: How are you enjoying your unexpected 1.5 years of freedom? Finding plenty to do to fill your days, or just sort of drifting until your brain fully digests the concept of retirement?

Thanks. I was in such shock for months after I first retired. Had to release anger and disappointment. I spent a bunch of money going away on exotic vacations. I began taking courses to be an English 2nd language teacher in 2017 and I'll graduate in May. My Cobra ran out in Dec 2017.

I get bored and lonely most days. I was filling some time tutoring English but my student recently transferred to classroom classes. I am working as a volunteer ESOL teacher assistant to fill time; and then I have homework to do.
It was a big change to go from an above average income and never worrying about money to no paycheck. I did not find this site inhospitable; in fact I know they can be quite rough judging from other forums where retirees post. I know there are people out there who just want to reprimand or belittle you.

 

[Fleur58]

Wow - looks like you've got a better than average living expense down. Congrats..

If I'm reading this right, it looks like you're at $32,700 per year expenses. Is that about it?

When I put together my plan, the top thing I focused on is how to cover my expenses. Sadly, our expenses are a lot higher than yours..so even with $60K projected income from taxable investments, I still need to dip into savings to cover.

With $15K taxable income, looks like you only need to cover an additional $17.7K. Assuming I did the math right, that's 1.25%. Should be extremely doable so looks like you're golden..

Thanks for your comments.

I would use the taxable income for vacations and to pay my taxes.
I've got enough in my liquid savings to last for 6 years to age 66 and social security. Then I also have my non retirement investments to draw from for at least another 4 years. I don't expect to need my 900K retirement money until at least age 70. I am frugal by nature so living on far less is doable for me.

Although my home is paid for with major repairs and updates done, I have toyed with the idea of moving to something far cheaper in a new state. My state taxes IRA conversions/withdrawals at 7.5%. The house is too big for me and my 2 married kids hardly come over (they are in different states).

 

[copyright1997reloaded]

I get bored and lonely most days. I was filling some time tutoring English but my student recently transferred to classroom classes. I am working as a volunteer ESOL teacher assistant to fill time; and then I have homework to do.
It was a big change to go from an above average income and never worrying about money to no paycheck. I did not find this site inhospitable; in fact I know they can be quite rough judging from other forums where retirees post. I know there are people out there who just want to reprimand or belittle you.

It is important to keep both your mind and body busy. A friend does tutoring for $, I think he uses this service: https://www.wyzant.com/

With a child in high school, I had DC use a tutor for Algebra last year...even though I could do his work in my sleep. (Sometimes you are just too close as a parent). What I found out is that tons of kids these days are using tutoring. So, you might want to consider doing something like this.

 

[joeea]

I would use the taxable income for vacations and to pay my taxes.
I've got enough in my liquid savings to last for 6 years to age 66 and social security. Then I also have my non retirement investments to draw from for at least another 4 years. I don't expect to need my 900K retirement money until at least age 70. I am frugal by nature so living on far less is doable for me.

Welcome!

You might consider delaying the start of your Social Security benefits until 70 when it will be over 3400 per month.

Unless you expect less than average longevity, it should be a net plus for you.

Do you have an ex that could figure into your benefits calculations?

 

[SnowBound]

Fleur58: What states are looking good to move to for keeping cost of living expenses down? Are there any drawbacks to the states with the lowest CoL? Thanks!

 

[Aerides]

You are an affluent single 59 year old man. Once you are past the anger part (sounds like you are getting there), I would focus on finding a way to enjoy yourself, erase that bored/lonely stuff, maybe with a partner?

 

[Fleur58]

Joeea--You are right, I rechecked my statement from SS, I made a mistake in my initial post: FWA is $2895 and at 70 it will be $3697. Its sounds too good to be true. With RMDs I'll be solidly in a high tax bracket at 70. I divorced years ago so no ex in the picture, if anything he would be looking to get my SS but we were married less than 10 years.

Snowbound: Thinking about Delaware and Pennsylvania. I do find Delaware not appealing all but my son and his family lives there. Property taxes are less and there is 12.5K state exclusion on retirement income. PA is adjacent to DE and has no state tax on retirement money--but higher Property taxes.

Aerides--I am female. I'm OK now, its a blessing to be out of a toxic work environment. I'm out of the dating game. Just need to make more friends and get out more. I have several friends I met while travelling and have scheduled trips with them again in single accommodation.
When you are alone--your job defines you and is the center of your life. When that is gone you have to find your identity again.

 

[street]

I see no problem either with your spending budget not to be successful retirement. I also hope that your retirement blues go away and find your way and happiness going forward. Remember not all can retire and have what you have in life.

There is more to life then that job and I do understand how hard it can be to leave something you did so long and had a passion for.

 

[brucethebroker]

Fleur58: What states are looking good to move to for keeping cost of living expenses down? Are there any drawbacks to the states with the lowest CoL? Thanks!

I would make an argument for the lower property tax states of the Midwest. Try some of the larger cities if that is important to you. Louisville, Cincinnati, Columbus, Indianapolis, etc. Plus they have good sized airports nearby.

My home state has a 1% property tax (plus a homestead exemption) and low assessed values. A nice 3 BR mid-century brick ranch will have a tax bill under $1,000 a year. Many home choices in the $150-200k range.

 

[gerntz]

Joeea--You are right, I rechecked my statement from SS, I made a mistake in my initial post: FWA is $2895 and at 70 it will be $3697.

You had one heck of a job. Those SS benefits are as big as the get.

 

[kcowan]

Have you considered taking an ESL foreign assignment? That might open up some interesting possibilities in the short term.

 

[ivinsfan]

Why are you paying so much for HI, that income level should qualify for some nice subsidies and cost sharing? That will add up to a lot of money before you are eligible for Medicare.

 

[Fleur58]

Ivinsfan:
I had a large capital gain in 2017 that bumped by my income. When I went to apply for the HI at the Health Exchange for the first time in Oct 2017, I realized my mistake. It also bumped me to the 25% tax bracket, and I owed a lot of taxes too. I'll never make that mistake again to not research the tax implications of selling an investment. My income will be drastically reduced this year. I'll have around 15K in investment income, plus the amount of the Roth conversion. Need to keep income below $37, 800 for the 12K tax bracket. Also, as a single, if it goes above approx 44 K I would not qualify for the HC subsidy.

ckowan: yes I have been researching a foreign ESOL assignment. Very hard to get at age 60.

gurntz--Yes I had a very good job. Made it that much more painful to part with.

street-- Thanks for the vote of confidence! Its no so bad living within a stringent budget. My consumer years are over.

brucethebroker--Thanks for giving me something to consider. Proximetry to an airport is important as I like to travel.

 

[ivinsfan]

Ivinsfan:
I had a large capital gain in 2017 that bumped by my income. When I went to apply for the HI at the Health Exchange for the first time in Oct 2017, I realized my mistake. It also bumped me to the 25% tax bracket, and I owed a lot of taxes too. I'll never make that mistake again to not research the tax implications of selling an investment. My income will be drastically reduced this year. I'll have around 15K in investment income, plus the amount of the Roth conversion. Need to keep income below $37, 800 for the 12K tax bracket. Also, as a single, if it goes above approx 44 K I would not qualify for the HC subsidy.

ckowan: yes I have been researching a foreign ESOL assignment. Very hard to get at age 60.

gurntz--Yes I had a very good job. Made it that much more painful to part with.

street-- Thanks for the vote of confidence! Its no so bad living within a stringent budget. My consumer years are over.

brucethebroker--Thanks for giving me something to consider. Proximetry to an airport is important as I like to travel.

This won't help you but might help others that want to use the exchange. For 2018 you report your estimated income for 18 not your income in 17...you would have qualified for greatly reduced premiums and maybe cost sharing. In fact if I was you I would check and see if you can adjust those premiums downward for the rest of the year due to exceptional changes outside the open enrollment period. I don't know the rules for that.If you enrolled thru the ACA exchange you should be eligible for a large refund of premium when you file you taxes next year, but would give up the cost sharing benefit. You could get this money back at tax filing time if you got your policy thru the exchange but would give up any possible cost sharing benefits for 18. but you need a sliver plan for the cost share.

 

[4legsgood]

This won't help you but might help others that want to use the exchange. For 2018 you report your estimated income for 18 not your income in 17...you would have qualified for greatly reduced premiums. In fact if I was you I would check and see if you can adjust those premiums downward for the rest of the year due to exceptional changes outside the open enrollment period. I don't know the rules for that.

No need to panic on this. ACA tax credit is refundable so if your actual 2018 income qualifies you for subsidy, you will get that subsidy back as a tax refund.

 

[Aerides]

Aerides--I am female. I'm OK now, its a blessing to be out of a toxic work environment. I'm out of the dating game. Just need to make more friends and get out more. I have several friends I met while travelling and have scheduled trips with them again in single accommodation.
When you are alone--your job defines you and is the center of your life. When that is gone you have to find your identity again.

Thanks, sorry not sure why I read "male" the first go around, other than that's the majority here it seems (so welcome to another female, more the merrier!).

And yes then my advice would have been different. It's a very different situation for a single 59 y/o female than male in the dating scene, and like you, if I were in that position I'd probably opt out unless it was something that happened organically.

It's clear you were financially ready to RE, but not actually planning for it for your lifestyle. Most of us that planned for it had to figure out what we'd be retiring To vs. From - that's the work ahead of you now. Best of luck, stick around!

 

[ivinsfan]

No need to panic on this. ACA tax credit is refundable so if your actual 2018 income qualifies you for subsidy, you will get that subsidy back as a tax refund.

I did edit my comment but this applies only if it was obtained thru the exchange.

 

[4legsgood]

OP, your bronze health insurance may be qualified for an HSA account. These are a great way to both put money aside for eventual medicare premiums and to lower MAGI for better ACA subsidy (for however long that is around).

 

[tmm99]

Welcome to the forum!

I can relate to you in some respects. I'm female too, and I retired when I was 56. It's been about 3 years. I wanted to work longer, but circumstances (along with a toxic work environment) made me decide to call it quits a little earlier. As Aerides said, some people retire from something, and some people retire to something, and I'm one of those people who retired from something. My work was pretty much my everything for a long time, so it took me a while to get my footing. I was so exhausted from the last wo*k, though that I actually enjoyed having my own time to do everything I had been putting off, so my first year was actually very good, but after that, I started becoming very restless and somewhat depressed. I really needed to reinvent myself somehow. Since then, I found a side job I enjoy (something completely different from what I used to do, making much less money, but it's an enjoyable, part-part freelancing thingie), so all I need to do now is to make some friends (I moved right after I retired, and I still don't have many friends in the new area.)

I think you'll be settled into your new life in due time.

With your spending habits, I think you will be totally fine.

 

[Fleur58]

I did edit my comment but this applies only if it was obtained thru the exchange.

I did obtain my HC insurance through the exchange.
I know my income will qualify me for 2018. In fact, another reason I'm going to take a Roth conversion is to add to my income if my investment income is far less than 15K. If its too low, then I would only be offered Medicaid. I don't want to take that.

This is good news!

Who knew retirement was so complicated. The tax man lurking at every corner....Need for financial planning and possibly advice......Hours to fill during the day.....healthcare issues.

tmm99--I'll get through it. The years go by so quickly know. I hoping to get a job next year. This year I'm volunteering and getting classroom experience (needed to get a pt job)
Re my spending habits--I bought a 2005 Honda Civic in 2009 for 14K cash. Has only 79K miles, looks good. Still driving it and no desire for a new car.