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2 POSSLQ DINKs, already 7/8 retired
Old 04-28-2019, 12:21 PM   #1
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2 POSSLQ DINKs, already 7/8 retired

Hello to everyone. We are 2 POSSLQ DINKs (Persons of Opposite Sex Sharing Living Quarters/Dual Income No Kids), aged 61/59 living in Michigan. For our working lives, we lived where we had to, worked fairly hard (very hard in her case), and were pretty conservative with spending. We’ve started to travel more over the last few years as her job has spooled down and ended. We tried the snowbird thing this winter and liked it, planning to do that again in 2020.

I say we’re 7/8 retired. DGF, (59 y/o) fully retired last Fall. I am currently enjoying a unique opportunity to work very little and still earn a pretty good wage but I can see that window will slowly close over the next year or two. So that’s ½ the couple fully retired and ½ the couple ¾ retired, which makes 7/8, amirite??

It’s probably appropriate to mention how grateful I am to be able/qualified to post in an “Early Retirement” Forum. Although we have worked hard, recovered from setbacks, and delayed gratification--many others are having a lot harder time of things. We are very lucky to have the “problems” we have.

I found this forum several months ago and have gotten a lot of value from it and so decided I should become a more active participant.
I won’t ask the “can we retire?” question…as we clearly can (details below). To run the list of things I’m supposed to mention in my introduction:

Expenses/Cashflow: We will be taking more of a deep dive together as the year progresses, but I estimate we jointly spent around 65 K last year. We are generally “cheap dates”. I hope to increase the spending in our 60-75 years so we can experience things while we are physically able to. My parents were a great role model in this respect. We have No Debt.

Health Care: I have Tricare and she is currently using the ACA.

Passive Income: Mil Pension for me, I will also get a pension from my second career when I bail. Neither is huge but combined, they should come close to covering our basic expenses. She will get a widows S/Secy in a year, I will likely delay filing for many years.

Investments: We have a “7 digit” assortment that includes conventional brokerage accounts, 401 K, Roth 401 K, IRA and Roth IRA—Oh yeah and a SEP too. A lot of it is VERY conservatively allocated (we have “won the game”..). Again, we’ll be taking a deeper dive in the following months (currently we’re in two separate places), but I punched in some numbers into FIRECALC for the purpose of this intro.

I over-rode the investment allocation to only 25% equity, and used a higher spending amount than we are currently using (recall that our basic spend should already be covered with two pensions and one S/Secy, so this entire number would just be “extra” spending). Even with the conservative allocation, we have 100% success to age 100. Hmmm.

A friend of mine recently said the only reason I’m still working is because I’m greedy. While I'm not sure that's it, when I look at the figures, it seems to me that I don't need to continue with work for financial reasons.

Why I’m here, what I’m hoping to learn about:

--Tax “problems”. I’m trying to wrap my hands around the gestalt of the tax situation. We have some big capital gains, when to withdraw (and from where), there is the whole “tax torpedo” thing… and we haven’t decided where we intend to live or what we want to be when we grow up yet! I’m not suggesting that avoiding taxes will be the driving factor, but I want to understand the options and make appropriate choices. These are great problems to have BTW, and I occasionally have to remind myself of that.

--Transition from Saving to Spending. I already found my way to the “blow your dough” thread! We have both been pretty frugal but really don’t need to be.

--Social aspects of retirement. Neither of us is especially social and our careers weren’t real conducive to expanding our social circle a lot. Never connected through kids (she had no kids, I say I have “none that I am currently aware of”, just to be safe..) We’ve been getting out a bit more, and we enjoyed meeting some of the retirees on our snowbird trip.

--Location. Another “problem”—we’re in a nice place right now, so there’s no great hurry to get out of here. We have also accumulated a lot of “stuff” over the decades. We remain open to a better situation including a winter/summer setup, but to justify the hassle and expense, it has to be clearly better than our current arrangement and that’s a reasonably high bar.

The good news, as I mentioned before is that these are good problems to have and we aren’t on a timeline. I’m looking forward to figuring this out and appreciate your taking the time to read this.
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Old 04-28-2019, 12:26 PM   #2
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Welcome to the board and Thanks for sharing details about yourself.

You are correct you have lots of time and energy to figure out how you want to spend the rest of your lives. I'm here in MN and have found out snow birding can be a wonderful option and feels like the best of both worlds.

I'll look forward to your posts as you navigate ER..
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Old 04-28-2019, 01:36 PM   #3
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Welcome to the Forum.

I have found a lot of help here with the "tax problem" you are grappling with. No definitive answers, but a LOT of collective wisdom to help negotiate this issue.

As you say, these are "good problems".

Good luck.
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Old 04-28-2019, 01:45 PM   #4
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Welcome aboard from another SE Michgander (well, snowbirding has me in FL for ~ 6months).

Sure sounds like you've won the game. Now you just need to figure out what you want to do when you grow up! And that can take the rest of your lives.

omni
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Old 04-29-2019, 07:14 PM   #5
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Welcome. Lots of useful info here and very helpful people. Your pensions are a nice base to your future.
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Old 04-30-2019, 05:27 AM   #6
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Welcome to our wonderful forum. Sounds like you are in a good place.
There are many postings here on ways to reduce the possible tax torpedo. In addition you have the sometimes conflicting aspect of managing your MAGI for the ACA tax subsidies.
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Old 04-30-2019, 05:36 AM   #7
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Nice first post. See below FWIW
Quote:
Originally Posted by Scusan View Post
Why I’m here, what I’m hoping to learn about:

--Tax “problems”. I’m trying to wrap my hands around the gestalt of the tax situation. We have some big capital gains, when to withdraw (and from where), there is the whole “tax torpedo” thing… and we haven’t decided where we intend to live or what we want to be when we grow up yet! I’m not suggesting that avoiding taxes will be the driving factor, but I want to understand the options and make appropriate choices. These are great problems to have BTW, and I occasionally have to remind myself of that.
I've found taxes (and healthcare) to be the most difficult spending categories to predict, and I've spent a lot of time trying to understand taxes better. But there's no way to predict what tax rates, cap gains, deductions, etc. will be in 5 years much less 20-30 years, though I would assume they won't decrease (inflation adjusted). Even if you could predict future taxes, to completely minimize lifetime taxes you'd have to use a tax attorney or devote quite a bit of time to learning and tracking your income and taxes - unlikely for many? So in broad terms, I've concluded keeping taxable income as close to constant (inflation adjusted) over the years will probably be pretty tax efficient. That means taking some capital gains in low spending years and avoiding spike taxable income years as much as possible. Many people here have tried to have their taxable income as close to the threshold where cap gains hit 15% (instead of 0%) year in and year out, that's almost a no brainer while some cap gains are at 0% IMO, unless your income will naturally fall below the thresholds every year. Deferring as much as possible feels good short term, but it seems likely that won't be as tax efficient. And Roth IRAs or conversions can be helpful too, but that's not automatically the best approach in all situations (it appears conversions are a wash tax wise for us, so why bother).

--Transition from Saving to Spending. I already found my way to the “blow your dough” thread! We have both been pretty frugal but really don’t need to be.

--Social aspects of retirement. Neither of us is especially social and our careers weren’t real conducive to expanding our social circle a lot. Never connected through kids (she had no kids, I say I have “none that I am currently aware of”, just to be safe..) We’ve been getting out a bit more, and we enjoyed meeting some of the retirees on our snowbird trip.
We're basically more introverts than extroverts too, but the answer has been pretty simple. We just join everything that sounds remotely interesting nowadays, where we were probably far too selective before. It's important to give new activities/people a chance, but if we don't like the activity we join, we just stop participating/quit. I volunteered for three years before I decided that volunteer work really wasn't for me. Even if the activity doesn't pan out, we meet people we may continue with, or learn about other related activities that we can join in on. There isn't much downside to trying new activities, if you like it great, if not what have you lost - it's not like you don't have time in retirement. We'd rather have 6-8 really good friends, than dozens or hundreds of sorta friends as many people seem to - those people who seem to know everyone.


--Location. Another “problem”—we’re in a nice place right now, so there’s no great hurry to get out of here. We have also accumulated a lot of “stuff” over the decades. We remain open to a better situation including a winter/summer setup, but to justify the hassle and expense, it has to be clearly better than our current arrangement and that’s a reasonably high bar.
From everything I've read, most retirees may move to a new house but they don't relocate far - it happens much less than people guess. Friends, family, familiarity, and/or inertia/resistance to change prevent most retirees from ultimately relocating even though many wish for better climate. We plan to move south 700+ miles, but we've moved around all our lives and we're used to starting over in a new location, and we're prepared for the disruption moving involves. We enjoy change, evidently most people don't at their core.

As for stuff. We accumulated lots of stuff over the years, but we got on a simplify our lives kick about 10 years ago and if anything it's made life more enjoyable. Over several years we sold off over a hundred items on eBay (made over $9K) and donated, gave away or tossed hundreds more items. We found decluttering to be surprisingly liberating, and we think twice about buying stuff any more. Often when I buy something now, I look for something to get rid of in kind. We won't buy more books than will fit in our one bookshelf (eBooks make that simple). I won't buy more clothes than will fit in my closet and dresser period. We don't miss ANYTHING we got rid of, and it will make moving that much easier (part of the reason we got rid of so much).

The good news, as I mentioned before is that these are good problems to have and we aren’t on a timeline. I’m looking forward to figuring this out and appreciate your taking the time to read this.
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Old 09-06-2020, 10:10 AM   #8
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Well, I thought I would provide an update, since I have been interested to read the stories of others who have traveled this path before me.

I did want to say I appreciate the inputs on my original post. This winter, we joined a few groups and tried to crawl out of our social shell and were generally happy with the results. We met some great people and hope we will be able see them again as well as meet others as the virus situation moderates.

With the virus-related slowing in my business, I was fortunate to be offered a “package” from Megacorp to clear out some deadwood. I had actually mentioned to DGF several months ago that if COVID really affected the economy that it could become the turning point to get me to fully retire.

At any rate, I accepted the package and will consider the time that it pays out as a transition period. I am now retired and have no intent of ever working for money again. Cool.

Now I can set about engineering the next phase of my life. I’m feeling a little impatient, like I should go out and buy another home, move, book some travel, maybe get a boat (OK, another boat), an RV, and the like….but have decided not to hurry. For now, I’m clearing out some of the remaining things from my past life (like neckties, dress shirts, shoes that require shining) and trying to be aware of other things that I can get rid of.

At the same time, I’m trying to change my internet habits—no more browsing career-related websites and information. Instead, I’ll try to do a MODERATE amount of surfing sites like this.

I have several hobbies that I have been involved in before retirement that I will spend more time with. I have also already found that my recliner has some kind of magnetic force field to it and if I sit down, getting out can become very difficult when I don’t have a “bookend” on my time.

I also have about a half-file-cabinet of stuff I printed off or tore out of magazines about retirement planning, finance and the like. The goal is to go through all of it and wind up with maybe one notebook worth of info. I want to come up with a retirement financial plan of attack/IPS that will free me from the tyranny of “more” and let me become comfortable with the concept of “enough” so that I can concentrate on enjoying my remaining time and not spend it fretting about the stock market. I can pretty much guarantee that I will wind up in the category of having to learn to get comfortable “blowing that dough”—not that I am wealthy, more that I will have some decisions about how to spend more than my basic subsistence “burn level” as well as when/where/if I should elect to do that.

Finally (at least finally for now), I am trying to become aware of the options available for where and how to live. We’re currently in a nice single family home so will stay here for a while. I think there is some prioritization to be considered though. I have seen people spend so many resources (time and money) on their home it almost becomes a prison, while other consider it merely a base of operations. Since we’ll have the resources (and motivation) to leave for the winters, there are decisions about buying/renting and where to go.

Again, and Importantly—these are the “problems” many people would LOVE to have…and I realize that I am truly fortunate to be dealing with them.
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Old 09-06-2020, 10:29 AM   #9
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You're in a great position. Congratulations.

One observation that may be relevant: There are many, many, threads here where posters are seeking the holy grail of a perfect withdrawal rate, a perfect 20 year plan, a perfect retirement location and home, etc. The old rule applies: "No plan survives first contact with the enemy."

From 17 years of retirement experience I have concluded that retirement is like driving your car. You're constantly making small corrections and adjustments based on the traffic and weather environments. Sometimes you are making bigger corrections because of mistakes or because of a change in planned destination. This is reality. You don't get to choose.

So ... as you do your planning don't go overboard. Close enough is good enough and, after a year or two you will be making corrections anyway. Make a plan, of course, but recognize that in major aspects it may well prove to be temporary.
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Old 09-06-2020, 10:42 AM   #10
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Nice update, and congratulations on your "full" retirement!
I agree with OldShooter, your plans will change. We are 4 years in, and I have adjusted our financials this past year. I actually started in December last year, just based on how things have been since we retired and a change in focus we did.
I like that statement "close enough is good enough"!
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Old 09-06-2020, 05:38 PM   #11
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Quote:
Originally Posted by omni550 View Post
Welcome aboard from another SE Michgander (well, snowbirding has me in FL for ~ 6months).

Sure sounds like you've won the game. Now you just need to figure out what you want to do when you grow up! And that can take the rest of your lives.

omni


Omni
Just curious, do you own in Fl or do you rent for the snow bird time? We are trying to figure that one out as well. Thanks
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Old 09-06-2020, 11:00 PM   #12
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I think we're all a little bit uncomfortable with having "enough" when we retire, and it's natural - for me, anyway - to think that planning a lot is the answer.

OldShooter is right. Make an approximate plan. It's vague outlines may survive but a lot of details will change, and probably more rapidly than you might expect. But in my case at least (only been FIREd four years, so a relative newbie), nearly all of the changes have been for the better.

For me, planning didn't get me to being comfortable with "enough", although intellectually I knew I had planned and measured and analyzed so much that I did have enough. The emotional comfort came after actually doing it for a few years and seeing it actually work out in practice - bills were paid, I was alive and doing what I wanted, and I still had money.

The fact that you're here, FIREcalc checks out, you have a POSSLQ you seem to like and is on board, and your grateful and relaxed attitude means you're going to be fine. Congrats.
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Old 09-07-2020, 05:21 AM   #13
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From now (ER) until you SS or pensions start, you will likely be in a low tax bracket. As a result, you'll be in a position to take advantage of the 0% LTCG rate that extends to $40,000 taxable income or $52,400 of total income for a single or low tax cost Roth conversions.

With the former, you save 15% under the current tax rules but it could be much more if preferential capital gains tax rates go away in the future. With the latter, you'll probably save ~10-12% (10-12% vs 22-24%). Either are fine, but at a minimum take advantage of your short time in a low tax bracket.
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Old 09-07-2020, 08:00 AM   #14
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I spent almost five years preparing for retirement. I was in a buyout situation for my business and used the runway time to plan as much as possible. I had many lists and spreadsheets and I thought I had it nailed.
Within two weeks of being retired, not much was really as I expected. I didn’t do much of what I thought I would. Did way more of things I never thought I would do at all. Got a part time “hobby” job at a winery. Many days end without me doing all I intended.
I love it and I am very happily retired. Spending is less than I thought. We have almost too many friends who are always asking to get together. The world gets big again when you have time and money.
The one thing so far that has been true from my earlier planning is that if you have a sense of purpose and that can be just a daily thing, some structure in your life and a community to be a part of, retirement is a blast.
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Old 09-07-2020, 03:06 PM   #15
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Wow. Thanks for the replies, there is some real wisdom in there.

A few comments:

--my review of all the papers I've saved, etc is kind of for two reasons as I think further about it:

1...to help me get more comfortable with the transition from saving to spending and figuring out what/where that's going to happen. I've seen some of that already. I find myself thinking "It's only 5 bucks, who cares?" and comparing the amount I'm considering spending to the value of my time, even if I'm just spending it goofing off. I wasn't like that 5 years ago and seem to be further evolving in whatever direction that is. I -do- still find myself thinking that if I don't spend XX, then I could use the money to retire sooner (but I am retired!! maybe it will take a few more weeks to internalize that). I can also remember reading that one of the big differences between a retirement budget and a working budget is that you no longer have to save for retirement. That's a significant difference in my case.

2..To know the rules and identify the "right time" for some things. For example, my tax rate WILL drop, some next year and some the year after. I'll look at where I might be able to take advantage of that. I only have a Roth IRA and have both Roth and regular 401 K balances. I believe I can change the Roth 401k to a Roth IRA and not have to do RMDs, so I will probably plan to do that later, but before 70.5 (or actually 72 now, I think?).

In the same topic, I am also looking at some of the things I'll need to know both to plan my estate as well as be the executor for my parents. They are both still around, but have been fading. I want to be prepared to do a good job in that role when it comes up.

The big review is NOT to determine the "optimal" way to do all that stuff. (There is another well known website that people spend a lot of time going into detail I can just hope over there and "cheat" by using their answers!.)

I'd say one of my errors in the past has been to over analyze and try to find the perfect plan which resulted in missed opportunities and a lot of time spent. I'm completely amenable to fine tuning and changing things, I just don't want to start out on the wrong foot without allowing some time to come to groups with not working and seeing what my new life is like.

DGF and I have kind of a code word to advise us to proceed with extreme caution when/if we are tempted to make a significant financial decision based on a shorter term enjoyable experience. It's "timeshare". Neither of us has one btw. So I guess I'm trying to avoid a mis-step more than find the Holy Grail. (BTW- I know some folks who have time shares and really like them, I think the key to that as with other things in life is to have things fit into your plan as opposed to fitting into someone else's plan.)

We also have a code for over-analyzing. We call it "planning your funeral", as in...."Hey I don't want to plan out our funerals yet, but do you think we should get another chair for the porch?"

SO I guess the key is to realize the threat in both directions and strive for some balance.

Nice to hear from others who took a while to ease into official retirement. I did have some pretty good "practice", but now there are a lot more options. For examples we took several long trips looking at places we might consider for our ultimate retirement adventure. (Boise and several areas in CO were on that list). We found several places that wouldn't work for us, as well as a bunch where we felt we'd be happy. DGF hit the nail on the head one day when she mentioned that before we got out boxes and started packing to move, we needed to be -completely- sure it was better than the setup we have now. So for a while anyway, we are going to see what it's like being here as retirees, travelling when that becomes OK again and hopefully snow birding before we make a big relocation.
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