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Greetings from Maine / Advice Requested
Old 12-08-2021, 05:22 AM   #1
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Greetings from Maine / Advice Requested

Hi All,


Long time listener, first time caller.



Great forum with tons of information.


Would like some advice on whether the experts feel we're ready...Details below:


Me: 55
Wife: 57


AA is 60% equities, 30% bonds, 10% cash - all in Vanguard mostly in index funds and we have $2.8m. I am okay with moderate swings but agree with many on this site that the stock market is richly (possibly overly) valued.


IRAs are $2m. Taxable account has $800k in it.



Soc Security site has us receiving around $45k combined per year using 65 as retirement age



No debt whatsoever. Might need new roof soon - around $20k


Have $150k in cash



I've calculated our annual expenses including taxes, recreation and healthcare at $120k. We could probably spend less than this and still be reasonably comfortable.


I'm still learning about ACA but I'm also looking into health-share companies to cover medical costs (quasi insurance I guess). Company I'm currently reviewing is called Zion Health. Any horror stories about health-share or Zion anyone willing to share? I haven't seen health-share accounts mentioned on the site much. Appears more people are going the ACA route because of the subsidy.


Questions:


Are we in a place to punch out completely? Neither of us will have a pension or any other passive income. What I've listed about is what we've got.



I'm recently seeing info on I bonds. Can someone enlighten me on these and would they be an appropriate addition to our investments?



We have lots of things planned in retirement but we wouldn't be averse to part time work just to keep from being too bored and to cover a small percentage of our expenses. We, like many, have had enough of the rat race and would be willing to leave good paying jobs for a better quality of life.


Are there financial calculators aside from FireCalc that people like and would recommend? I have found the ameriprise retirement calculator to be intuitive but I'd like to look at others just to see how close they come to each other.



Advice appreciated...
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Old 12-08-2021, 06:16 AM   #2
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Welcome! First, there have been a few threads about healthcare sharing ministries, as they're usually called. (That might be affecting your search.) It sounds like you know the bottom line, that they're not really health insurance per se. Here's one of the most recent: https://www.early-retirement.org/for...ns-106773.html

Quote:
Originally Posted by connor77 View Post
I've calculated our annual expenses including taxes, recreation and healthcare at $120k. We could probably spend less than this and still be reasonably comfortable.
IMO that's key, flexibility. My plan is to keep enough cash and bonds to ride out any downturn, but if we hit a big one early in our retirement, we might even try to put more money into equities during the downturn. That's part of what has gotten us where we are today, after all, confidence in the long-term returns.
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Old 12-08-2021, 07:22 AM   #3
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Remember that your draw from the tax deferred (IRA)account of 4% will only net you 3% due to taxes, and only 2 % if you are paying an advisor 1% of Assets under management. I think you could retire if you control expenses, but the biggest concern is the affect of taxes on your withdrawals.

I-bonds are popular now due to Inflation as they are(government) inflation adjusted bonds. You can only buy 10,000 per year each(20,000 as a couple) and I am not sure how much that would improve your situation.

I used the ACA, but I had the ability to control taxable income
to receive the maximum subsidies and cost sharing.

Welcome here and keep asking the questions!!!



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Old 12-08-2021, 08:12 AM   #4
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Welcome connor77! If you haven't found them already, we have a helpful list of things to think about before you make the leap:

Some Important Questions to Answer

As far as other calculators go, I haven't personally used it but others here have used Fidelity's calculator.

As others have said, flexibility in spending and the willingness to take on some part-time work are key to a comfortable ER.

Personally, I would not be comfortable with the risks in a healthcare sharing ministry.

Thanks for joining and we look forward to hearing more from you!
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Old 12-08-2021, 08:30 AM   #5
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The one thing I find that Fidelity does better than most is budget planning. They have detailed breakdowns of categories, which let me put in my current spending for things like utilities and property tax and groceries, and mark those as essential, and put in a big travel budget but mark it as discretionary spending.
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Old 12-08-2021, 09:07 AM   #6
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Quote:
Originally Posted by The Cosmic Avenger View Post
The one thing I find that Fidelity does better than most is budget planning. They have detailed breakdowns of categories, which let me put in my current spending for things like utilities and property tax and groceries, and mark those as essential, and put in a big travel budget but mark it as discretionary spending.

I have a pretty detailed spreadsheet that captures "must haves" vs "wants" pretty well and I have plenty of history available to me through my spreadsheet so I'm confident I won't miss anything.

I also have, within my spreadsheet, several different scenarios that capture different rates of return and also different spending budgets.
I haven't used Fidelity's calculator but now will so thanks for the heads up about it. As someone mentioned above, I need to get good at withdrawing money from my taxable account to minimize the tax impact. Will continue to read and learn about that over the next few months. Thanks for everyone's advice thus far!
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Old 12-08-2021, 09:12 AM   #7
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Quote:
Originally Posted by connor77 View Post
I have a pretty detailed spreadsheet that captures "must haves" vs "wants" pretty well and I have plenty of history available to me through my spreadsheet so I'm confident I won't miss anything.

I also have, within my spreadsheet, several different scenarios that capture different rates of return and also different spending budgets.
I haven't used Fidelity's calculator but now will so thanks for the heads up about it. As someone mentioned above, I need to get good at withdrawing money from my taxable account to minimize the tax impact. Will continue to read and learn about that over the next few months. Thanks for everyone's advice thus far!
For withdrawal optimization, iORP is very comprehensive...maybe overwhelmingly so, but there is a more basic version.
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Old 12-08-2021, 09:53 AM   #8
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I am one that generally needs the advice of these very wise people as opposed to giving it, however, for what it’s worth, get decent healthcare coverage. No matter your health today, you could wake up tomorrow in a very different situation. People think it’s only those in poorer health that have to be concerned. Most people that have a serious health scare were in very good overall health otherwise.

I also like the Fidelity calculator.

Best of luck!
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Old 12-08-2021, 10:10 AM   #9
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I am one that generally needs the advice of these very wise people as opposed to giving it, however, for what it’s worth, get decent healthcare coverage. No matter your health today, you could wake up tomorrow in a very different situation. People think it’s only those in poorer health that have to be concerned. Most people that have a serious health scare were in very good overall health otherwise.

I also like the Fidelity calculator.

Best of luck!
I agree. It just amazes me when people saying “I’m in good health” as if it’s guaranteed that this will continue to be the case indefinitely. Anyone is just one accident or one illness away from a complete change to their life or their finances.
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Old 12-08-2021, 10:25 AM   #10
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Hello from a fellow Mainiac!

I will also recommend the Fidelity retirement planner. It is a Monte Carlo scenario planner vs historically based as Firecalc calculator. The results are also scored on a significantly below average return basis I believe. So, it tends to be a bit more conservation than other calculators in my experience.

Also note that for at least the next year or two (I can’t recall exactly) insurance premiums purchased on the ACA is limited to 8.5% of your income.

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Old 12-08-2021, 10:47 AM   #11
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Would someone be kind enough to post a link to the specific retirement calculator that people like from Fidelity? I want to make sure I'm using the correct one...and there are a few. Thanks!
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Old 12-08-2021, 01:05 PM   #12
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Quote:
Originally Posted by connor77 View Post
Would someone be kind enough to post a link to the specific retirement calculator that people like from Fidelity? I want to make sure I'm using the correct one...and there are a few. Thanks!
Go to the main page, then click on Planning and Advice, then Retirement. The tool is near the middle/bottom of the page with a big blue Get Started button. You can use as a member or a guest.
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Old 12-08-2021, 01:10 PM   #13
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Would someone be kind enough to post a link to the specific retirement calculator that people like from Fidelity? I want to make sure I'm using the correct one...and there are a few. Thanks!
https://myguidance.fidelity.com/ftgw...als/retirement
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Old 12-08-2021, 01:18 PM   #14
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Regarding health insurance. Don’t skimp and don’t use the ministry options unless you completely understand what you are getting into. If you have a need to use HC insurance, the last thing you need is a provider that won’t pay for all or some.
Our first year into retirement my wife needed unexpected surgery. I was glad we had the coverage and walked away paying only a fraction of the total expenses and could concentrate on her recovery.
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Old 12-10-2021, 08:38 PM   #15
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I'll certainly weigh my options carefully. I'm still researching but it's possible that if my wife and I get an ACA plan, we won't be able to see our current doctors which we both like.

Of course I'll completely understand any decision I make regarding health insurance. I get it that lots of unplanned things come up.
I'd like to know if there are forum members that have actually had a good experience with medi-share plans...if there are any people that have.
What do those of you that are borderline investment experts think about my asset allocation? I read a thread recently that seemed to make a pretty compelling argument for an all stock portfolio. Just need the guts to do it and also make sure to have years (guessing at least 3, maybe as many as 5) in cash to cover expenses if the markets head south for a prolonged period of time. Anyone interested in weighing in on this? By the way, thanks to all who suggested the Fidelity calculator. Considerably more robust than the one I was using although I must say I wish I understood the "below average", "significantly below average" stuff better than I do. I get it at a high level obviously but I'd like a little more substance around the impact of these choices. It's also entirely possible I'm overthinking stuff.
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Old 12-10-2021, 08:43 PM   #16
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Originally Posted by connor77 View Post
I'll certainly weigh my options carefully. I'm still researching but it's possible that if my wife and I get an ACA plan, we won't be able to see our current doctors which we both like.

Of course I'll completely understand any decision I make regarding health insurance. I get it that lots of unplanned things come up.
I'd like to know if there are forum members that have actually had a good experience with medi-share plans...if there are any people that have.
What do those of you that are borderline investment experts think about my asset allocation? I read a thread recently that seemed to make a pretty compelling argument for an all stock portfolio. Just need the guts to do it and also make sure to have years (guessing at least 3, maybe as many as 5) in cash to cover expenses if the markets head south for a prolonged period of time. Anyone interested in weighing in on this? By the way, thanks to all who suggested the Fidelity calculator. Considerably more robust than the one I was using although I must say I wish I understood the "below average", "significantly below average" stuff better than I do. I get it at a high level obviously but I'd like a little more substance around the impact of these choices. It's also entirely possible I'm overthinking stuff.
Regarding Fidelity, Significantly below is a 90% confident level. Below average is a 75% level and average is a 50/50 outcome. If you are good at significantly below, you are golden. Assuming your inputs are correct.
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Old 12-10-2021, 08:52 PM   #17
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I'm not good at "significantly below" but I am good at "below average". As I mentioned in my original post my wife and I can be flexible. If there are people on the forum that might have had similar circumstances (and numbers) to me, how much cash (in years) did you have or would you recommend?
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Old 12-10-2021, 09:10 PM   #18
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There are a lot of ways to achieve what you desire. Personally I am not a cash guy. I built a muni bond ladder that funds, realistically over funds, the first ten years of our retirement. It’s a pension of sorts and wards off return sequence risk. After the ladder matures, SS kicks in and lastly I have a significant amount in equities as a long term inflation hedge. That’s my plan.
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Old 12-13-2021, 12:28 PM   #19
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@connor77

For calculators I think Fidelity's is a good one, have used it in the past. I also like and actively use the one from Flexible Retirement Planner https://www.flexibleretirementplanner.com/wp/

Similar to FIRECalc (monte carlo simulator) BUT it allows for a ton of customization. So if you have the need to control items - costs, inflation, returns, etc.. down to the year timeframe you can. It is somewhat of a rabbit hole in terms allowing you to slice your scenario 99 different ways but it was a nice 'how are we doing check' view that lined up with feedback from 'professionals' on our situation.

+1 on the Ibonds for short term $$ as long as you don't need it for 12 months.
They have tightened up the rules around them vs when they 1st came out, used to be able to buy them with a credit card but I think they are a decent place to park cash given the rates that are out there today for CDs/Bonds. TreasuryDirect is a straight fwd site that has all the info that you need on the limits and how to invest.

Good luck
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Old 12-13-2021, 02:15 PM   #20
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....
Similar to FIRECalc (monte carlo simulator)
...

If I may pick a nit, FIRECalc is not a monte carlo simulator. What it does is run your plan inputs (starting balance, outside income, asset allocation, spending amounts, etc.) through actual performance data from all years starting in 1871 for as many full cycles as can be used. So, if you pick a 30 year horizon for your plan, FIRECalc will run those inputs through the period from 1871 to 1901, then 1872 to 1902, 1873 to 1903 and so on and so forth, until it has done 120 cycles (the max number of 30 year runs that can be accommodated with a 150 year data set. Then it determines in how many of those 120 cycles you would have run out of money (failed) before the end of 30 years. If failure occurred in 12 of those cycles, then you have a 90% probability of success. Of course reality will not match any particular cycle, so the key assumption is that the future will not be any worse than the worst of the past.
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