Hello! 59 year old RN ~ widowed at 50 ~ retired at 58

[vrijheid]

Joined this wonderful group last fall so I've been hanging around, soaking up the wisdom. Now looking for reassurance, advice, a kick in the pants? If I haven't provided the correct info, please let me know.

I still work PRN as RN and also work from home as ObGyn office computer tech and EMR go to person. Am loving the FIRE life!

Parent of two young men, 29 & 26, college graduates and successful careers.

Downsized from 6000 sq. ft. colonial on 10 acres with in ground pool to 3000 sq. ft. condo (no HOA) in reasonably LCOL area.

Total assets: $1,724,000

Total liabilities: $21,000 (on 2017 Volvo SUV @1.99% - because I can make more with my money than 1.99%)

Current Asset Mix split between Vanguard, Fidelity and Credit Union:
33% domestic stock
4% Foreign stock
13% Bonds
33% Short term
Have a mix of cash, mutual funds, ETFs and dividend paying stocks.
Planning on stock dividends supplementing my retirement income but reinvesting dividends currently.

As PRN & work from home, I earn approximately $10,000-$15,000 per year which 92% of which goes into my Roth 401K at Fidelity.

Non cola Pension from husband's mega corp $26,000 per yr.

Inherited annuity over 5 years which pays $32000 per yr. Stops in 2021.

As a widow, have option to take husband's SS at 60 for $22000 per yr or FRA for $33600. Have met with SS rep and understand the rules and the amount paid out per yr starting at age 60. Or I can take mine at age 62 at significantly less and then switch to husband's SS at FRA. Undecided at this time.

I max out HSA every year. Husband's megacorp contributes $750 per yr until I turn 65.

If I have enough earned income each year, I also continue to max out my Roth IRA.

Excellent health insurance through husband's megacorp until I turn 65 and then they become secondary and will also give me $3500 per yr in credits towards supplemental Medicare.

I bought one of those fantastic LTC plans in late 1990s that covers at 100% with 5% cola every year.

Yearly expenses are at or below $50,000.

Started Roth conversions in 2017 and paying tax due from available cash.

Firecalc has me at 100% over 35 yr period.

Fidelity Planning and Guidance Center has me at 150+ at market significantly below market.

How am I doing? What am I missing? Any advice is greatly appreciated!

 

[HI Bill]

Sounds like you're doing all the right things and are on top of your finances! I'm not quite clear on your total assets...do they include the 3,000 sf home? What are your invested assets (that, along with expenses and income, are all that really matters)? Sounds like your major concern is figuring out how to maximize SS benefits. If your health is reasonably good to great, I'd consider waiting until the benefits max out (I'm not clear on how this works for a deceased spouse, but it sounds like FRA (67?) is the way to go). Best wishes!

 

[joeea]

Parent of two young men, 29 & 26, college graduates and successful careers.

Downsized from 6000 sq. ft. colonial on 10 acres with in ground pool to 3000 sq. ft. condo (no HOA) in reasonably LCOL area.

Are your sons out on their own, or still living with you?
If the former - wow, you have a large condo for a single.

Total assets: $1,724,000

Nice! Well done!

As a widow, have option to take husband's SS at 60 for $22000 per yr or FRA for $33600. Have met with SS rep and understand the rules and the amount paid out per yr starting at age 60. Or I can take mine at age 62 at significantly less and then switch to husband's SS at FRA. Undecided at this time.

How much will your SS benefits be at FRA? At 62? At 70?
I'm not sure you can really go wrong here. But doing the math will tell you what your optimum strategy will be. (You will have to take a stab at your expected lifespan).

Excellent health insurance through husband's megacorp until I turn 65 and then they become secondary and will also give me $3500 per yr in credits towards supplemental Medicare.

Nice!

I bought one of those fantastic LTC plans in late 1990s that covers at 100% with 5% cola every year.

Good for you! How much are the premiums these days? Who is the provider?

Yearly expenses are at or below $50,000.

Firecalc has me at 100% over 35 yr period.

No surprise there. If it could go over 100%, you'd be far over.

How am I doing? What am I missing? Any advice is greatly appreciated!

You are doing great!
You have won the game. Do what makes you happy, since financially you are in terrific shape.

You haven't mentioned any estate planning. It might be worth thinking that through and/or spending a few hours with a fee-only fiduciary financial planner coming up with a plan.

 

[vrijheid]

Thanks for the reply, HNL Bill!
The assets do not include the condo.
Invested assets: $1,724,000
Expenses: at or below $50,000/yr
Income:approx. $58,000/yr
One of my concerns is deciding when to take SS.
Another that is tied in is how to supplement income when $32000 annuity stops in 2021. Not sure if I should then start taking dividends or withdrawing from investments in the most tax efficient way. I could start SS early and not withdraw from investments or I could wait on SS and let it build and withdraw from investments.
Health is excellent!

 

[vrijheid]

Hi Joeea!

Are your sons out on their own, or still living with you?
If the former - wow, you have a large condo for a single.

They are out on their own! I just love to entertain.

Nice! Well done!


How much will your SS benefits be at FRA? At 62? At 70?
I'm not sure you can really go wrong here. But doing the math will tell you what your optimum strategy will be. (You will have to take a stab at your expected lifespan).

My SS benefits will be significantly less than my husband's SS at any age. Mine at 62 ~$9000/yr. I've met with SS rep and it comes down to if I want to supplement my SS benefit with investments withdrawals at age 62 and take my husband's SS at my FRA 66&10months which would be $33,600. Lots of options.


Nice!


Good for you! How much are the premiums these days? Who is the provider?

$1700/yr (reasonable I believe). Brighthouse Financial, a division of Metlife.


No surprise there. If it could go over 100%, you'd be far over.


You are doing great!
You have won the game. Do what makes you happy, since financially you are in terrific shape.

You haven't mentioned any estate planning. It might be worth thinking that through and/or spending a few hours with a fee-only fiduciary financial planner coming up with a plan.

I agree. I have that on my To-Do list.

Really appreciate your feedback.

 

[Dreamer]

You sound in great shape to me.

I only wanted to comment on the social security benefits. You could also take widow's benefits and then switch to your own social security at age 70. This would give you the benefit of delayed retirement credits on your own record. I hope that the social security representative went over this with you also. If they did not, then you need to see how much you could receive on your own at age 70.

 

[vrijheid]

Hi Dreamer! Thank you and yes, SS rep did go over taking widow's benefits and then switching to my own SS at 70. They are very thorough and I appreciate that.

 

[HI Bill]

Another that is tied in is how to supplement income when $32000 annuity stops in 2021. Not sure if I should then start taking dividends or withdrawing from investments in the most tax efficient way. I could start SS early and not withdraw from investments or I could wait on SS and let it build and withdraw from investments.

Non-reinvest (spend) dividends on taxable accounts first, as you're already paying taxes on them. Before you start taking SS, I'd replace the $32K with $ from your tax-deferred accounts, before starting SS, so the tax bite is lower. Your standard exemption is currently $12K, so if you took out $32K, only $20K is taxed (assuming no other income), at a current rate of 12%. Then, when you have SS income (and up to 85% is taxable) and RMDs or other distributions start, you'd likely have lower taxes owed.

 

[RunningBum]

Congrats, sounds like you're in great shape.



I don't fully understand the widow's benefit but what Dreamer said makes sense to me. I wouldn't fear dipping into investments a bit while delaying SS.


I'm not clear on your investments as it looks to me like they only add up to 83%. 33% in short term seems way too high as that probably isn't making you too much. I'd look to get a better return on much of that unless you have some near-term plans for it.



The part I didn't get is that you say your are retired, yet still working? Sounds more like semi-retired. Whatever you want to do is fine, and maybe you like the work, it's not too demanding, or the benefits are nice, but I worked part-time from home for my last few years and didn't call myself retired until I was totally out and had no paycheck and no work obligation.

 

[vrijheid]

Non-reinvest (spend) dividends on taxable accounts first, as you're already paying taxes on them. Before you start taking SS, I'd replace the $32K with $ from your tax-deferred accounts, before starting SS, so the tax bite is lower. Your standard exemption is currently $12K, so if you took out $32K, only $20K is taxed (assuming no other income), at a current rate of 12%. Then, when you have SS income (and up to 85% is taxable) and RMDs or other distributions start, you'd likely have lower taxes owed.

That makes sense, HNL Bill! Thank you!

 

[vrijheid]

Congrats, sounds like you're in great shape.



I don't fully understand the widow's benefit but what Dreamer said makes sense to me. I wouldn't fear dipping into investments a bit while delaying SS.


I'm not clear on your investments as it looks to me like they only add up to 83%. 33% in short term seems way too high as that probably isn't making you too much. I'd look to get a better return on much of that unless you have some near-term plans for it.

Hi Running Bum! Thanks for the input. Yes, I do have too much in short term~trying to decide where to put it presently.


The part I didn't get is that you say your are retired, yet still working? Sounds more like semi-retired. Whatever you want to do is fine, and maybe you like the work, it's not too demanding, or the benefits are nice, but I worked part-time from home for my last few years and didn't call myself retired until I was totally out and had no paycheck and no work obligation.

LOL! Yes, I consider myself retired....FIREd but staying for the boss who still hasn't replaced me after almost a year even though I gave them plenty of notice before pulling the plug. Have to be honest....I like the little bit that goes into my Roth 401K monthly and I like knowing I can walk at any time.

 

[joeea]

My SS benefits will be significantly less than my husband's SS at any age. Mine at 62 ~$9000/yr. I've met with SS rep and it comes down to if I want to supplement my SS benefit with investments withdrawals at age 62 and take my husband's SS at my FRA 66&10months which would be $33,600. Lots of options.

Seems like the only reasonable option is to take your own benefit at 62, then switch to survivor benefits at 66 years +10 months. I'm not sure you can do better than that, but clearly it depends on your lifespan.

 

[HI Bill]

That makes sense, HNL Bill! Thank you!

...and it you have Long Term Gains on taxable accounts, and your Adjusted Gross Income is below $38,600 under current tax law, you could pay 0% taxes on the long term gains. And if you have any ROTH IRA, you can take 'return of capital' any time, tax-free.

 

[vrijheid]

...and it you have Long Term Gains on taxable accounts, and your Adjusted Gross Income is below $38,600 under current tax law, you could pay 0% taxes on the long term gains. And if you have any ROTH IRA, you can take 'return of capital' any time, tax-free.

Great info! I do have Roth IRA and inherited Roth IRA. Thanks so much!

 

[vrijheid]

Seems like the only reasonable option is to take your own benefit at 62, then switch to survivor benefits at 66 years +10 months. I'm not sure you can do better than that, but clearly it depends on your lifespan.

That’s the way I’m leaning right now. Thank you!

 

[HI Bill]

Great info! I do have Roth IRA and inherited Roth IRA. Thanks so much!

If the decedent for the inherited IRA was already 70.5, RMDs are required for you based on his/her age. If you need to bridge the gap to SS, you could also consider taking more than the RMD from the inherited IRA.

Now that we have some more info, a better plan:

Start with dividends from taxable accounts and RMDs on the inherited IRA. Then, supplement with ROTH IRA principal, and if needed, distributions from taxable accounts, which should mostly be return of principal with (hopefully) mostly long-term capital gains to minimize taxes. The account values, and the distributions in the various accounts will affect how tax-efficient your distributions are. You may want to consult a tax advisor for maximum tax efficiency!

 

[vrijheid]

HNL Bill
My husband was early 50’s when he passed so he was not taking RMDs.

I will definitely consult my tax advisor and thanks again for the great advice.

 

[Hermit]

Hi Vrijheid,

A belated Welcome to the forum!

Just a note on deciding on your SS avenue. I am in somewhat the same situation in regard to the decision on taking my late spouses benefits vs. mine. In my case our amounts are switched. My SS is larger that my late DW's. I am claiming DW's benefits until I turn 70 at which I will switch to mine. (I think your FRA is the max in your case.) The reason I am going this route is that when I take my SS benefit does not matter a whole lot. You still wind up with about the same amount of benefits. However, as a widower, I have the added benefit of taking SS on my late wife's account. All the income I get on her account is simply additional income. If I move to my own account, the income I am currently receiving on DW's account just disappears. If I needed my larger SS to stay retired it would be different, but I don't and it appears that you are in a similar situation.

 

[vrijheid]

Hi Vrijheid,



A belated Welcome to the forum!



Just a note on deciding on your SS avenue. I am in somewhat the same situation in regard to the decision on taking my late spouses benefits vs. mine. In my case our amounts are switched. My SS is larger that my late DW's. I am claiming DW's benefits until I turn 70 at which I will switch to mine. (I think your FRA is the max in your case.) The reason I am going this route is that when I take my SS benefit does not matter a whole lot. You still wind up with about the same amount of benefits. However, as a widower, I have the added benefit of taking SS on my late wife's account. All the income I get on her account is simply additional income. If I move to my own account, the income I am currently receiving on DW's account just disappears. If I needed my larger SS to stay retired it would be different, but I don't and it appears that you are in a similar situation.

Hi Hermit and thank you for that perspective.

Yes, it sounds like your situation is similar and condolences on the loss of your wife.

As of now I will probably take my lower SS at 62 and take my husband’s at my FRA when I will receive his maximum.

Longevity runs in my family with my grandmother living to 102 and in fairly good health up to the end so I am planning for the long haul.

I will continue to Roth convert while I’m able and the sweet spot will be between 62 and when I take his SS.

There is a lot to think about in order to plan ahead in a tax efficient manner.

I really appreciate everyone’s advice and opinions.

 

[SheitlQueen]

Keep in mind that if you take SS before your FRA there is a limit on how much earned income you can make before they start taking back some of your benefits.
I was in the same boat as you and elected to take my husbands benefit at age 62 and will defer taking my own until I turn 70, unless I really need the extra income before then, which is not likely.

 

[vrijheid]

Keep in mind that if you take SS before your FRA there is a limit on how much earned income you can make before they start taking back some of your benefits.
I was in the same boat as you and elected to take my husbands benefit at age 62 and will defer taking my own until I turn 70, unless I really need the extra income before then, which is not likely.

Hi SheitlQueen!
Thanks for that reminder....yes, and that only applies to earned income, correct?
I believe the 2018 earned income limit is $17040.

 

[Dtail]

Hi SheitlQueen!
Thanks for that reminder....yes, and that only applies to earned income, correct?
I believe the 2018 earned income limit is $17040.

Doesn't one get back the SS income down the road which was taken away, thus the takeaway is only temporary?

 

[vrijheid]

Doesn't one get back the SS income down the road which was taken away, thus the takeaway is only temporary?

Hi Dtail! Yes that is my understanding as well.

 

[SheitlQueen]

Hi SheitlQueen!
Thanks for that reminder....yes, and that only applies to earned income, correct?
I believe the 2018 earned income limit is $17040.

Yes, earned income.

 

[SheitlQueen]

Doesn't one get back the SS income down the road which was taken away, thus the takeaway is only temporary?

Yes, you do eventually get it back. But if you are working to pay bills, then having the SS taken away (even temporarily) sort of defeats the purpose of working