59 & Anxious

[nadnerb]

Turned 59 in June. Married with 3 adult offspring. My wife is 54 and stay-at-home mom/grandmother. Youngest child just graduated college and is back living with us while trying to find a job. Middle child & grandchild also live with us and my wife is childcare while daughter works. Currently work for mega-corp (33-yr. employee) $200K/year and a company car which would need to be replaced on retirement. Job changes/reorganization causing me to consider leaving – maybe retire, travel and volunteer or find a lower-paying/lower stress job locally to stay active and get healthcare. With the reorg, thinking of approaching management for an early retirement package.

Only debt is $133K left on a 30-yr. mortgage ($1500/mo. 14 years left). Current expenses $120K year including mortgage. Expenses going down since youngest graduated (no rent, school expenses, etc.) but likely to be offset or go up depending on healthcare costs. Retiree healthcare available $1700/mo to cover DW & dependents. $1100 for just self and DW.

401K is $1.6M and is invested 95% stocks plus pension current lump sum value is $1.07M for a total of $2.67M. $80K in cash/emergency fund. Equity in house estimated at $250K.

FIRE Calc score is 85% if I retired now and used 30-year timeframe. Haven’t chosen a financial planner yet. Considering Fisher Investments or local Edward Jones broker.

Questions:
Any concerns about asking for parachute?

What FIRE Calc score is needed to be comfortable in retirement decision?

Is Health Sharing a good option for healthcare until Medicare-eligible?

What do I need to consider if I took a lower-paying local job that included healthcare? Can I retire, pull from retirement and still work new job doesn't cover expenses?

Since DW is younger and healthy, how do I decide whether to take pension as a lump sum, or annuity with survivor option at 75% or 100%?

Any input on using a fiduciary like Fisher (no mutual funds) vs. broker?

Am I even close to being able to pull the plug?

 

[Dtail]

Welcome to our site.
A few questions.
Fire Calc - did you adjust for your mortgage only having 14 years left? You can put in the expense in the Pension area non inflation box unchecked and then put in "Pension Income for the same amount for 14 years later, non inflation box checked?
Have you put in any estimates for Social Security for you and DW? These estimates can have a large effect on the results.
Most folks who engage actively with Firecalc typically shoot for somewhere around a 95% success rate.
Investment Broker - you should give some consideration if comfortable do using a DIY approach for your investments. Many folks use this approach using low cost index fund investing, although some do use brokers.
The reputation in general of Fischer and Edward Jones is not really that great on this site, but let's see some other responses.
Heath Sharing - another area in which you might not find too many fans here. The issue is that if god forbid, one of you gets cancer for example, will the health ministry cover those large kinds of costs?

 

[WyomingLife]

Dear nadnerb:

Welcome aboard. You are doing a great job of taking care of family, including extended family. And it looks like you are still considering carrying HC costs for some of those folks. You have a lot on your shoulders.

My two cents.

General observations:

Your costs seem quite high ($120K). But then again, you are supporting a fairly large ecosystem beyond you and DW, so this isn't meant as criticism. By comparison, my wife and I are roughly your age, but our budget is about half of yours. We don't have a mortgage though, and our children have been out of the house for many years. Still, my sense is you are burning a lot of cash.

Questions:

"Any concerns about asking for parachute?"

I don't know how to answer that.

"What FIRE Calc score is needed to be comfortable in retirement decision?"

Some folks here would say 95% or higher. The older one is when an exit occurs might provide greater downside flexibility. You might want to also look at your withdrawal rate (WR).

"Is Health Sharing a good option for healthcare until Medicare-eligible?"

I'm unclear what this means. Is this the religious-based option? No views here from me on that, except I don't think health sharing is "insurance." It is more like "submit an invoice and hope they pay." Our back-up plan is the ACA.

"What do I need to consider if I took a lower-paying local job that included healthcare? Can I retire, pull from retirement and still work new job doesn't cover expenses?"

Others here may have views on this.

"Since DW is younger and healthy, how do I decide whether to take pension as a lump sum, or annuity with survivor option at 75% or 100%?"

Again, I don't know.

"Any input on using a fiduciary like Fisher (no mutual funds) vs. broker?"

I think you have the smarts to not need an advisor.

"Am I even close to being able to pull the plug?"

I wouldn't be comfortable at 85% success via FireCALC.

 

[rodi]

A few random thoughts on your post.

Be careful about asking for a retirement package. Some employers react badly to that (like my former employer, one of the directors decided to punish the employee that let it be known he'd welcome a package by 1) excluding him from layoffs and 2) giving him the least fun work.) Figure out ahead of time if your employer is open to this kind of frank discussion.

Do the $120k/year expenses include taxes. I take it they don't include health care. Use healthsherpa or the ACA website to price what your healthcare options/costs will be. These vary widely by location/state... so you'll have to do the research on this.

Is the $200k/year income net or gross? If it's gross - you're probably in better shape than you thought... medicare/ss taxes/ don't need to be paid when you are no longer earning income. You're not contributing to retirement when you retire.

As far as what firecalc score you need this group tends towards super conservative 100% with a lot of padding. Not everyone... Some are more comfortable with 75% or better...

 

[rodi]

Oh - on the lump sum vs pension subject.... Many opinions on this here.... You need to consider a few things:

- how solvent is the pension fund?
- Is it cost of living adjusted (COLAd)?
- What would it take to buy an equivalent single premium income annuity (SPIA)? If it costs less to buy an equivalent annuity - take the lump sum and either buy the annuity or invest it. If it costs a lot more to buy the equivalent annuity - take it as a pension.

There's also the philosophy of the 3 legged stool... 1 leg is savings, 1 leg is SS, and the third leg is pension. If you are fortunate enough to have all 3 - you have stability even if something happens to the market.... or SS.... or your pension. I have a tilted 3 legged stool - because my pensions are tiny.... but it provides a steady income that pays for a portion of my recurring expenses.

 

[nadnerb]

Welcome to our site.
A few questions.
Fire Calc - did you adjust for your mortgage only having 14 years left? You can put in the expense in the Pension area non inflation box unchecked and then put in "Pension Income for the same amount for 14 years later, non inflation box checked?
Have you put in any estimates for Social Security for you and DW? These estimates can have a large effect on the results.
Most folks who engage actively with Firecalc typically shoot for somewhere around a 95% success rate.
Investment Broker - you should give some consideration if comfortable do using a DIY approach for your investments. Many folks use this approach using low cost index fund investing, although some do use brokers.
The reputation in general of Fischer and Edward Jones is not really that great on this site, but let's see some other responses.
Heath Sharing - another area in which you might not find too many fans here. The issue is that if god forbid, one of you gets cancer for example, will the health ministry cover those large kinds of costs?

Thanks for the info on mortgage, pension and SS with FIRE Calc - I did not have anything in there for those. I will adjust and see what the outcome is. I basically took the lump sum present value of my pension and added it to my 401k balance.

My issue with DIY is that I have no better knowledge than the next schmo, and anything I read is already taken into account by the market. My 401k is basically all low-cost index funds and I have been doing it - basically tracking the market. I had a great first meeting with a Fisher VP, and their model of stocks only and no commissions and the heavy emphasis on research seemed like a good one to me. With brokerage accounts, you pay the commission plus the mutual fund fees.

Again, with some of the research that I've done, the health sharing ministries have covered catastrophic events like cancer. Two that I was reviewing were Solidarity and Medi-Share.

 

[nadnerb]

Dear nadnerb:

Welcome aboard. You are doing a great job of taking care of family, including extended family. And it looks like you are still considering carrying HC costs for some of those folks. You have a lot on your shoulders.

My two cents.

General observations:

Your costs seem quite high ($120K). But then again, you are supporting a fairly large ecosystem beyond you and DW, so this isn't meant as criticism. By comparison, my wife and I are roughly your age, but our budget is about half of yours. We don't have a mortgage though, and our children have been out of the house for many years. Still, my sense is you are burning a lot of cash.

Questions:

"Any concerns about asking for parachute?"

I don't know how to answer that.

"What FIRE Calc score is needed to be comfortable in retirement decision?"

Some folks here would say 95% or higher. The older one is when an exit occurs might provide greater downside flexibility. You might want to also look at your withdrawal rate (WR).

"Is Health Sharing a good option for healthcare until Medicare-eligible?"

I'm unclear what this means. Is this the religious-based option? No views here from me on that, except I don't think health sharing is "insurance." It is more like "submit an invoice and hope they pay." Our back-up plan is the ACA.

"What do I need to consider if I took a lower-paying local job that included healthcare? Can I retire, pull from retirement and still work new job doesn't cover expenses?"

Others here may have views on this.

"Since DW is younger and healthy, how do I decide whether to take pension as a lump sum, or annuity with survivor option at 75% or 100%?"

Again, I don't know.

"Any input on using a fiduciary like Fisher (no mutual funds) vs. broker?"

I think you have the smarts to not need an advisor.

"Am I even close to being able to pull the plug?"

I wouldn't be comfortable at 85% success via FireCALC.

Thanks for the reply - per my last response, I need to revise my FIRE Calc inputs and see where I stand. My expenses may be a bit overstated, and would likely come down. Presently feeding 4 adults and a 5-year-old. Plus currently donating over $1000/month to charity (that will come down by 1/3 at the end of the year after a commitment is met for church), doing some home improvement projects and some of the expenses are actually offset by kids paying them (cell phone, car insurance).

 

[nadnerb]

A few random thoughts on your post.

Be careful about asking for a retirement package. Some employers react badly to that (like my former employer, one of the directors decided to punish the employee that let it be known he'd welcome a package by 1) excluding him from layoffs and 2) giving him the least fun work.) Figure out ahead of time if your employer is open to this kind of frank discussion.

Do the $120k/year expenses include taxes. I take it they don't include health care. Use healthsherpa or the ACA website to price what your healthcare options/costs will be. These vary widely by location/state... so you'll have to do the research on this.

Is the $200k/year income net or gross? If it's gross - you're probably in better shape than you thought... medicare/ss taxes/ don't need to be paid when you are no longer earning income. You're not contributing to retirement when you retire.

As far as what firecalc score you need this group tends towards super conservative 100% with a lot of padding. Not everyone... Some are more comfortable with 75% or better...

Thanks for the reply. The expenses do not include taxes. $200K is gross. Taxable after deductions $168K. I will check the healthcare sites for sure. Great input.

 

[nadnerb]

A few random thoughts on your post.

Be careful about asking for a retirement package. Some employers react badly to that (like my former employer, one of the directors decided to punish the employee that let it be known he'd welcome a package by 1) excluding him from layoffs and 2) giving him the least fun work.) Figure out ahead of time if your employer is open to this kind of frank discussion.

Do the $120k/year expenses include taxes. I take it they don't include health care. Use healthsherpa or the ACA website to price what your healthcare options/costs will be. These vary widely by location/state... so you'll have to do the research on this.

Is the $200k/year income net or gross? If it's gross - you're probably in better shape than you thought... medicare/ss taxes/ don't need to be paid when you are no longer earning income. You're not contributing to retirement when you retire.

As far as what firecalc score you need this group tends towards super conservative 100% with a lot of padding. Not everyone... Some are more comfortable with 75% or better...

Oh - on the lump sum vs pension subject.... Many opinions on this here.... You need to consider a few things:

- how solvent is the pension fund?
- Is it cost of living adjusted (COLAd)?
- What would it take to buy an equivalent single premium income annuity (SPIA)? If it costs less to buy an equivalent annuity - take the lump sum and either buy the annuity or invest it. If it costs a lot more to buy the equivalent annuity - take it as a pension.

There's also the philosophy of the 3 legged stool... 1 leg is savings, 1 leg is SS, and the third leg is pension. If you are fortunate enough to have all 3 - you have stability even if something happens to the market.... or SS.... or your pension. I have a tilted 3 legged stool - because my pensions are tiny.... but it provides a steady income that pays for a portion of my recurring expenses.

I believe the pension is very solvent. Mega Corp is very, very solid financially. Is there a way to investigate this that you know of?

 

[nadnerb]

Actually, adjusting down expenses from $120K to $100K, removing the house expense in 14 years, and adding in my Social Security (not sure of DW's), the score jumped to 99.2% with one failure. I was not aware of the extra tabs that took input. Thanks folks!

 

[nadnerb]

The reputation in general of Fischer and Edward Jones is not really that great on this site, but let's see some other responses.

Where on the site is there information on Financial Advisors?

 

[rodi]

If you search the site (search box at the top of the webpage) for financial advisor, you'll get a boatload.

The majority of folks here are do-it-yourself types for investing. Some are stock pickers (separate sub forum just for this). Some are index fund types (raises hand - me, me).

Look into a lazy portfolio - where you have a few low expense ratio index funds (mutual fund or etf) and set an asset allocation... reallocating periodically as the market changes. Or if that's too much work go for a low expense ratio ACTIVE fund like Vanguard's wellesley or wellington... Set it and forget it.

When you use an advisor, they typically get a fee for assets under management (AUM)... often 1%, sometimes higher.. I'm too cheap to pay that when it takes me about 30 minutes a year to rebalance. I'd rather spend the money on travel, good food, or other things to blow-that dough.

 

[latexman]

When you use an advisor, they typically get a fee for assets under management (AUM)... often 1%, sometimes higher..

With a Safe Withdrawal Rate (SWR) of about 4%, a lot of folks here don’t want to give 25% of their hard earned “income”/cash flow to a FA.

 

[GoBears]

If you haven’t been there already, I suggest you spend time at Bogleheads.org. Lots of excellent advice on DIY investing, including the basic three-fund portfolio. Also, read what Bogleheads have to say about Edward Jones and Fisher.

You might also consider the Vanguard Personal Advisory Service if you really want an advisor. I believe their AUM fee is .3% rather than the 1+% typically charged by other advisors and Vanguard funds have very low expense ratios.

Finally, are you comfortable with 95% of your 401k in stocks? What happens if a bear market causes stocks to drop 40-50%?

 

[DrRoy]

85% from Firecalc would not be good enough for me.

Fisher Investments or local Edward Jones broker.

NO, NO, NO.

With a Safe Withdrawal Rate (SWR) of about 4%, a lot of folks here don’t want to give 25% of their hard earned “income”/cash flow to a FA.

Learn to self manage your $ and keep the relentless fees in your pocket.

 

[bmcgonig]

Some people just really want an adviser or money manager, for probably good reasons. If so then don't use ones like Edwards or Fisher that charge in excess of 1%. Lots of them out there like Rick Ferri etc who are somewhere in the .25% or .3%. or as mentioned above, Vanguard.

 

[EastWest Gal]

Rick Ferri founded Portfolio Solutions. I’ve used them for 5 years. 0.37% of assets under management. It’s a fair amount of money, but they have done a bang-up job.

One can be smart but not understand enough when it comes to money. I use a financial advisor for several reasons

Fisher Investments, Edward Jones-no! They spend money on advertising, their clients’ money.

Last, don’t count your equity in your home in your portfolio. You all need a place to live.

 

[Dtail]

Thanks for the info on mortgage, pension and SS with FIRE Calc - I did not have anything in there for those. I will adjust and see what the outcome is. I basically took the lump sum present value of my pension and added it to my 401k balance.

My issue with DIY is that I have no better knowledge than the next schmo, and anything I read is already taken into account by the market. My 401k is basically all low-cost index funds and I have been doing it - basically tracking the market. I had a great first meeting with a Fisher VP, and their model of stocks only and no commissions and the heavy emphasis on research seemed like a good one to me. With brokerage accounts, you pay the commission plus the mutual fund fees.

Again, with some of the research that I've done, the health sharing ministries have covered catastrophic events like cancer. Two that I was reviewing were Solidarity and Medi-Share.

In terms of Social Security, just make sure to add the yearly amount and not the monthly amount.
Taking the lump sum present value of your pension and adding it to your 401k balance is fine. My pension reference was related to how one can show the mortgage payment effect through using the Pension section in Firecalc as an income item to offset 14 years later the effect of using the expense line in the same pension section. Does that make sense?

 

[EastWest Gal]

Fisher charges over 1% annually. With a 2M portfolio that’s over $20K each year. Over 30 years, they’ll make $600K+ off of just one client. On top of that, if your portfolio is all pre-tax, you have to cough that up from your other cash flow-they cannot be paid out of your 401K or IRA.If all they are doing is managing index funds, you should go lower cost. They and Edward Jones are amongst the highest.

 

[Toocold]

Here is another way to think about it. It's a general rule that you can withdraw about 4% of your initial investments for 30 years without a material risk of running out of money. If you have $1M, you should be able to spend $40k a year (in real dollars).

Edward Jones or Fisher both charge between 1 to 1.5% AUM. So, If you go with them, you can spend 25-30k per year and give 10-15k per year to them.

Given that DIY is relatively easy to do -- as simple as buying 2 funds -- most bogleheads and those who are in this forum rather keep most of that money.

 

[jcretire77]

Fidelity is another option who may be able to look at your situation. When we retired I moved everything there. We met with the local rep a few times to go over strategies.
Zero cost. I like their website more then Vanguard (four years ago that is).

I liked Fidelity's planning tool also.
https://www.fidelity.com/calculators-tools/planning-guidance-center

 

[latexman]

Who is your 401(k) with now?

 

[Andre1969]

This might not be a popular viewpoint, but if you wanted to reduce your monthly bills, refinancing your mortgage might be an option. If you refinanced that $133K for a 15 year fixed @3%, it would drop your payment to about $918/mo, plus taxes/insurance. If you wanted to go with a 30 year fixed @3%, it would drop it to around $560/mo. And you might be able to get a rate lower than that. I'm in the process of refinancing a 30-year fixed, and they're supposed to be getting me 2.875%.

So, if that $1500/mo is just the principal/interest portion of your mortgage payment, refinancing could save you a pretty good chunk per month. And the 15-year wouldn't even push your repayment timeline out all that much.

 

[OldShooter]

...
Fisher Investments or local Edward Jones broker.

NO, NO, NO. ...

This.

We often have debates here about the wisdom of hiring a financial advisor, but I have never heard anyone advocating either one of these operations. I don't know Fisher but just based on the massive advertising I would avoid them. My experience with Fast Eddy is he screwed a good, but financially naive, friend of mine into buying four (!) high cost/high fee annuities.

@nadnerb, please, please buy and read this book: "The Coffee House Investor" by Bill Schultheis https://www.coffeehouseinvestor.com/

Then, if you resonate at all with Bill, read: "The Bogleheads Guide to Investing" by Taylor Larimore et al https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/0470067365

You will learn from these that investing is not difficult, despite the industry's constant efforts to sow FUD. If you still want to use an FA, you will be much better qualified to select one.

Here is a chart that I use in my Adult-Ed investing class:

​

 

[HI Bill]

Questions:
1. Any concerns about asking for parachute?

2. What FIRE Calc score is needed to be comfortable in retirement decision?

3. Any input on using a fiduciary like Fisher (no mutual funds) vs. broker?

4. Am I even close to being able to pull the plug?

1. Yes, if your company knows you would like to leave, the rest of your time there could be miserable. I made the mistake of letting my company know I planned to leave early, and it made my life as a project manager much more difficult. I'd suggest if you go down this route, be prepared to leave in 2 weeks if things go south. IF the company is considering handing you a golden parachute, and they know you want to leave, they may decide to let you leave voluntarily with nothing.

2. 100% for me.

3. Don't, just don't. A 1% AUM (assets under management fee) will reduce your spending by 25% if you're planning on a 4% withdrawal rate. You seem unhappy with 'just' obtaining market returns in retirement. Going down the managed assets path adds costs, risks, and definitely isn't guaranteed to beat the market. If you THINK you NEED to do this to make ER work, then it tells me that you don't have enough starting assets, and you're NOT READY TO ER. I'd suggest going with Vanguard's simple three-fund portfolio: Vanguard Total Stock ETF (VTI) Vanguard Total International Stock ETF (VXUS) Vanguard Total Bond Market ETF (BND). In the long run, you'll likely do better with this than paying fees to any advisor. A second best option would be to go with a target retirement date fund that auto-rebalances such as Vanguard Target Retirement 2020 Fund (VTWNX). Higher fees, but hands-off simple.

4. Close, but you need to do some more planning, and get your FIRECALC results to at least 95%, either by cutting spending, or increasing investments. Create multiple option budgets (retired supporting kids, retired without kids, retired one spouse only, etc.). Create a spending plan that takes into account taxes. Do the research on the pension options, and determine the best ages for you and your DW to take SS. I'm a little fuzzy on your income once your pension kicks in, and how much you'll need to supplement from the 401(k). In FIRECALC, you should be inputting the pension as an Pension income on the second tab, and not including it in the Portfolio value on the first tab.

Best wishes!