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39 and mulling options
Old 12-05-2011, 01:50 PM   #1
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39 and mulling options

My wife and I (no kids) have been working and scrimping/saving for >18 years now. We were dirt poor in grad school and we never seemed to get out of that cheap way of living. Our annual expenses average ~18K/yr. We own our house (no mortgage), and cars ...
We've been maxing out 403/457 and roth IRA's since 1992. And have a little over 800K in those. We've also invested in CD's to about 400K (but many of those will mature this year and we're not sure how to invest that!). We have a lifetime annuity that will pay ~$500/month starting next year and growing at 2.5% per year until my wife dies (or at least 30 years if she dies early).
We're contemplating hanging up on full-time work next year. But I am terrified of healthcare/dental costs. We currently have insurance through our work. So I have no experience with private insurance. My wife was hit by a drunk driver 5 years ago and has some long term related issues (traumatic brain injury, leg fractures ...). She already had to drop to 3/4 time as her TBI issues were too severe for full time work.
I've worked with Tiaa-Cref and run a bunch of scenarios all indicating that we could pull ~35K/yr out (adjusting for inflation) and not run out of money.
We'd like to retire early (probably mixing part time for a while and racheting down). But with healthcare and our uncertain economic environment, I am very nervous. I'd hate to retire early and worry myself to death, or worse, run out of money and have to struggle through our elder years.
Anyway I'm looking for advice, others experiences/recommendations and anything else related to early retirement!
Anyone else mulling over I series bonds as a 5-10 year investment strategy?
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Old 12-05-2011, 04:03 PM   #2
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Welcome and congratulations. You sound like you'll fit in well with this group of savers and LBYMers.

How old are each of you? Have you priced out private health insurance? It will be expensive but the cost varies dramatically by state and your wife's preexisting conditions could be a problem depending on where you live.

From what you indicate it seems that you should be in good shape to dial down to part time or even retire, but I agree that you need to get a better handle on your health care costs before making a decision. The 35K a year is less than a 3% withdrawal rate and is a bit on the low side compared to many of us, but it is hard to say if it is too low without knowing what your overall asset allocation is.
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Old 12-05-2011, 05:02 PM   #3
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One of you would probably be wise to work a few more years to keep the insurance until the health-care changes get put into effect and you can see which way the insurance winds will blow. Otherwise, wow, you seem to be in great shape financially
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Old 12-13-2011, 01:47 PM   #4
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I agree with the below posts, and as for the I-bonds...IMO you should have some (even if only 10-20%) of money in some sort of growth asset for the long term. You've done an excellent job getting to where you are, keep it up!
"Live every day as if it were your last, and one day you'll be right" - unknown
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Old 12-13-2011, 06:35 PM   #5
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Welcome and good luck in your ER planning. Being fortunate to have a pension that I can live on, long term planning financially is not my expertise. But I did want to mention a thought or two on your comment about I Bonds. I decided that at this point in my life, I would like to build up money as a hedge against inflation with tax benefits. I Bonds will provide this. However, if you are starting at $0, it is going to take a lot of years to build up a meaningful amount in this area. Beginning January 1 st, you will only be able to buy $5 k per person through treasury direct. Until then you can buy 5k paper at the bank and 5k on TD. Many banks are starting to shut down the process. The only other way to buy more than 5k is to recieve up to 5k in paper form through your tax refund. If you are serious about starting to buy I Bonds, I would consider getting started quickly. Setting up TD account takes up to 10 days to activate and paper bonds options in ending in less than 3 weeks. I Bonds currently pay 3.06% for first 6 months if purchased before the end of April.
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