59 yr old ready to say "bye bye" at 62 or sooner!

[Alan]

The UK did an experiment that lasted some 25 years starting in the 1980s where anyone could “opt out” of the UK version of SS and invest half of the payroll taxes they and their employer were paying towards SS. My BIL was one of the ones who chose that route. The vast majority failed to invest well enough to do as well SS would have done, even though only government approved funds could be used. It now means the UK SS has its own version of WEP when folks start drawing it.

 

[The Cosmic Avenger]

The UK did an experiment that lasted some 25 years starting in the 1980s where anyone could “opt out” of the UK version of SS and invest half of the payroll taxes they and their employer were paying towards SS. My BIL was one of the ones who chose that route. The vast majority failed to invest well enough to do as well SS would have done, even though only government approved funds could be used. It now means the UK SS has its own version of WEP when folks start drawing it.

Exactly the issue. If it's supposed to be a social safety net for retirement, it has to be foolproof, reliable, and consistent. Individual investing is not that, and so it's not universally suitable for everyone. My friend's father drank most of his paycheck, then his pension and SS, and if he didn't have a pension and SS he probably would have been a burden to my friend after retirement.

 

[JohnRM]

I'm sure you know this, but you really have to watch out for inflation.

 

[Retired Expat]

Unless you intend to sell your house and rent, the value of the house is meaningless. For RE, all that matters is net income vs expenses. Having that age 62 as a target will be a great motivator for you. Use the 2+ year window, now, to finalize the plans and make sure you're on target.

I would disagree about the value of the house being meaningless. He sells his +/- $400k home and moves in Retirement to a LCOL area and buys an apartment for $200k and buys a 2nd apartment as a rental which might generate 6-10% return when you factor in the tax benefits. What I did anyway and that passive income is SWEET!

 

[steveark]

Hello Everyone!
My name is Mack and here are some of my particulars:
Age: 59 (60 in March)
Retirement portfolio = $982k in 401k (20% in Roth 401k)
Pension= $2.3k month (no cola)
Home = $380k (no mortgage)
Status = single
Income = $150k
Expenses = No major expenses or debts
Savings = $100k (brokerage and savings accounts)

Researching the possibly of retirement between now and 62. My main concern is the cost of funding my health care coverage for 3 to 5 years. Additionally, I would like to move into a new home. I would use proceeds from sale of current home plus possibly $25-50k from savings to cover purchase. After retirement, I plan to work sporadically and at my leisure doing consulting jobs.

Thoughts?

I can speak to the leisurely consulting side of things. I retired at 60 and my wife and I projected about $100K in annual pretax spending. I started light consulting the first day of retirement and for the next five years earned about $100K per year. I worked, on average, about eight hours a week. We just lived on what I earned without touching our savings and investments. Eventually I decided to replace my paid work with unpaid volunteering and no longer earn significant amounts but I still could if I wanted to. I found consulting to be a nice off ramp from a demanding job to full retirement. I would line up your clients/gigs in advance of pulling the trigger though. I have seen friends struggle to get consulting going. I had a massive network and an industry reputation as a true expert in three or four areas that were in demand. Your experience might be different or it might be better than mine. Good luck! Oh, and health insurance cost $16K a year for me and my wife combined, so it wasn't that bad. And we are waiting to age 70 to draw my Social Security since we have excess in savings to pull from.

 

[PappaChris]

Prepare for ACA

Not sure how much your contributing to 401k, looks like your dollars are going to Roth 401k (nice). I would limit your contributions to max out at the Co. Match level, then save as much as you can to your savings account. ACA subsidies are very generous the lower your taxable income is, at least in Ohio. May very from state to state.

 

[Wile E. Coyote]

You're right, not sure if I included it. SS projection @62 = 2167 @ FRA = 3077. However, I just learned that SS can reduce your payout if you also have the added benefit of a pension. I'm still trying to figure out how much of a reduction they can take. Doesn't seem fair that I'm penalized just because I'm blessed to find a job that also pays a pension.

I was reading on the SS website that if you have 30 years of earnings not including in your pension that did not withhold SS then WEP does not apply and you still get SS. I had 9 years where I paid into a pension plan, but, I rolled it over and never collected a "pension." and I have 30+ additional years (so far) where I did pay in (so, there is no hit for that 9 years other than it does not count in the calculation).

Another consideration may be this new proposed law "You Earned It You Keep It" that would make SS tax free on the federal level by increasing the amount of wages subject to SS to $250,000. It would extend the program's viability to 2054. It may take into 2025 to get it passed. So, it's not real yet. Obviously, if SS is tax free it would be good to maximize it.