At a crossroads

B

Blux

Dryer sheet wannabe
Joined
Feb 21, 2013
Messages
17
Location
Chicago
Pandemic hit a family business pretty hard and will be out of work for the first time in 35 years of working. 52 years old, wife is 50 and also works with me. She has taken on a PT restaurant job with no bennies making pretty decent money and I am working for a former vender in the same dying trade part time with no benefits.
Stats. no debt. $3.5M net worth, 2.6M invested with approximately 1.7M in 401k and 450K in Roth accounts, rest in regular investment accounts.
ETF stock funds mostly.

Crossroads part is not sure I can retire now. Like I said my trade is dying so we are considering just taking regular jobs to pay bills and get insurance for a few years or try to retire using ACA to make it more affordable.

Feel like we are in a good position but also really uneasy about the future in general and particularly our own personal future. Played with firecalc a bunch and in the low 90s right now with 100k draw. Another 3 to 4 years puts us up to 100%, but really scared of another 2008
 
Another small business may have an opening for you that fits perfect.

In 2005 I was still trying to recover lost business from 2001/2002. I went with a megacorp defense job for 7-8 years. That was step 1. After that job went south in 2014 I had an offer from a similar defense business, but much smaller. Step 2 for 5 years was an incredible ride.

So I'm thinking that with the reporting of job hiring being difficult, with your experience and skills you are a good fit. Doesn't have to be same field either.
 
What is your actual budget 100K sounds like a guess. That's the first thing you need to know.
 
I assume net worth includes non-portfolio $, like a $900K paid for house?

What about SS (I'm assuming no pensions from a family business?)? And is the $100K estimate good, including health ins?

So yes, too marginal for my tastes, with FIRECalc showing low 90's. But SS (even factoring a reduced amount) could turn that around. Remember, delaying to 70 provides longevity insurance for the second-to-die spouse, and you can spend more today, knowing you have that cushion in the future.

-ERD50
 
target2019 said:
Another small business may have an opening for you that fits perfect.

In 2005 I was still trying to recover lost business from 2001/2002. I went with a megacorp defense job for 7-8 years. That was step 1. After that job went south in 2014 I had an offer from a similar defense business, but much smaller. Step 2 for 5 years was an incredible ride.

So I'm thinking that with the reporting of job hiring being difficult, with your experience and skills you are a good fit. Doesn't have to be same field either.
Click to expand...


I agree with this. OP Blux you probably have some good skills that another employer can use. Might be in different field entirely. But a good job with benefits for 3-4 years and you will be more comfortable with retirement. I do think you can likely make it as you are, especially with some extra part time income from you and spouse. You will need to really check your budget and figure out expenses. Have you included taxes for instance? You do have a nice savings amount, but at your age it is a little close to the limit of 4% withdrawal rate (rough numbers .04 x $2.6M = $104K).


From your comments it seems you are worried about a market correction and subsequent reduced savings total. Just remember that as long as you don't knee jerk reaction and sell low to lock in losses, you can just ride it out and the market will recover. It always has and it takes patience to hold on through that downturn. The unknown of when it will recover back is something you just have to trust your logical side to overcome the emotional side worries.
 
Are you open to moving to a lower cost of living area? That would stretch your retirement fund. Other than that you might find working for someone else to be a bit “freeing” in the sense that the ultimate responsibility of the business doesn’t fall on you.
 
38Chevy454 said:
I agree with this. OP Blux you probably have some good skills that another employer can use. Might be in different field entirely. But a good job with benefits for 3-4 years and you will be more comfortable with retirement. I do think you can likely make it as you are, especially with some extra part time income from you and spouse. You will need to really check your budget and figure out expenses. Have you included taxes for instance? You do have a nice savings amount, but at your age it is a little close to the limit of 4% withdrawal rate (rough numbers .04 x $2.6M = $104K).


From your comments it seems you are worried about a market correction and subsequent reduced savings total. Just remember that as long as you don't knee jerk reaction and sell low to lock in losses, you can just ride it out and the market will recover. It always has and it takes patience to hold on through that downturn. The unknown of when it will recover back is something you just have to trust your logical side to overcome the emotional side worries.
Click to expand...

Yes, a bad correction scares me as I know I am somewhat close to being where I want to be. That being said, I only got to this point by being aggressive with my investments. Being conservative now could be a very smart move if that were to happen, but will also extend the length of time I will have to work to feel secure if that correction never happens.
I was using 100k as a first year draw amount and had normal CPI selected. I think it would be tight on that budget until medicare and SS kicks in but we save at a high rate now so used to living frugally.
 
ERD50 said:
I assume net worth includes non-portfolio $, like a $900K paid for house?

What about SS (I'm assuming no pensions from a family business?)? And is the $100K estimate good, including health ins?

So yes, too marginal for my tastes, with FIRECalc showing low 90's. But SS (even factoring a reduced amount) could turn that around. Remember, delaying to 70 provides longevity insurance for the second-to-die spouse, and you can spend more today, knowing you have that cushion in the future.

-ERD50
Click to expand...

100k draw rate is what I was figuring. I am eligible for SS.....app 2500 for me at 67 and wife around 2200. Insurance....that is the tough one. Wife is type1 diabetic so we cannot mess around insurance wise.
 
Another question....do you shoot for high 90s, 100%, better than 100% on FireCalc?
 
Blux said:
Another question....do you shoot for high 90s, 100%, better than 100% on FireCalc?
Click to expand...

The answer is all over, but most folks shoot for 90% and above. There are a minority that shoot for 200% effectively and a minority under 90%.
 
Dtail said:
The answer is all over, but most folks shoot for 90% and above. There are a minority that shoot for 200% effectively and a minority under 90%.
Click to expand...

I feel like wife and I are sensible enough to adjust spending based on what our accounts are doing, but stuff like insurance isn't something I ever expect to pay less going forward.
 
What do you actually spend now, that is the question? Do you have the numbers in black and white.


It's a pretty simple question and the answer is pretty important. Do you say it will be tight because you now spend more then a 100k. 100k is a pretty big number for frugal. Now I don't judge or care what you spend just wondering if you actually know.


Take a little time to dig around in your 2021 and 2020 spend.
 
I do have a pretty good idea, but we have never had to buy our own health insurance before. Looking into ACA. Lots of variables, keep income low for ACA credits, need to be aware that my nest egg is mostly locked up until I am 59 1/2, etc.

We only gross maybe 110k per year and been saving 1/2 of that for years so I think I could live on 60k plus cost of insurance, but it would be nice to finally "live a little"
 
I think you may be overestimating your spending in retirement on health insurance premiums and on federal income tax. Both could be far less than you estimated. You might be in better shape than you think, especially factoring in that part-time job.

First, If your MAGI is less than $69K, you will have a significant premium tax credit, which substantially reduces your health insurance premiums. Look at the ACA, browse around and see what you would actually pay when your income only comes from your investments and your wife's W-2 income.

Second, your federal income tax could be very low or even zero. You will be taxed at regular tax rates for your wife's W-2 income. But dividend income and capital gains from any assets you sell will be taxed a zero% if your total income is less than $80K and 15% for income above that. You can also withdraw from your Roth tax free without penalty, but only up to the amount you invested, not any earnings until 59-1/2. This means you can live off of your assets from the after tax account, but if your MAGI approaches $69K, you can withdraw a little from your Roth to avoid the ACA cliff.

You can make a guess at your taxes using this calculator:

https://www.dinkytown.net/java/1040-tax-calculator.html

A sample scenario for you (making up numbers, of course YMMV):

Your wife makes $25K, You withdraw $50K from your portfolio with a capital gain of $25K, and you have $25K of qualified dividend income. Your taxable income would be $75K but the dividend and capital gain income is taxed at zero percent.

But you need to keep your MAGI low for the ACA. To keep your MAGI under $69K for ACA purposes, you could withdraw $37K from your after tax account with a capital gain of $18.5K and $13K from the Roth, with no taxable income from that withdrawal. Your MAGI would then be $68.5K, which is also your state taxable income for Illinois, before personal exemptions.

Your cash for living expenses would be:
$25K W-2 minus Social Security tax and Medicare tax, and state income tax
$13K from your withdrawal from your Roth
$37K from the assets you sold
$25K from qualified dividends (not reinvested)
Total: $100K minus the small amount for SS and Medicare tax.

Your withdrawal rate would be $75K/$2.6M x 100 or 2.9%, which is a safe withdrawal rate.

In the above scenario, your subsidized health insurance premiums will probably be $300-$400/mo.
Your federal income tax would actually be zero.
State income tax would probably be around $3K/year.

Spend a weekend figuring out your spending for the last two years. You can do this with your income tax return to estimate income taxes, your end of year W-2s for health insurance costs and other taxes, all credit card statements, and bank statements. Make a spreadsheet and put in everything. It takes time but it will give you a handle on your actual spending. The results may surprise you. If you've saved that much on $110K gross per year, you are probably living more frugally than you think.

Good luck! If all else fails, you can get a part time job to preserve more of your portfolio and still feel you've left the rat race.
 
Reading your posts I think you already know what you feel you should do. Your worried about not having enough and also want to be able to live a little. If your concerned about being constrained then working for a few more years could be the right answer.

If you were 10 years older you could live much easier with the same amount of money being a few years from Medicare and Social security

If you did the math and models right and could retire, would you be looking over your financial shoulder afraid to live a little as you put it?

Everyone is different. Many people in your situation would have different right answers. Youi have to pick what is right for you
 
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