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Help, don't know I can afford retirement
Old 08-21-2013, 09:21 AM   #1
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Join Date: Aug 2013
Location: Columbus
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Help, don't know I can afford retirement

Hi Everyone,

I'm 59 1/2, working in the public sector for 13 years, previous to that I have 28 years in social security.

My network is $211,000 and my projected retirement from public sector is 25,992. I do qualify for SS but it is reduced because of my generous public pension. Whatever!!! So at 62 I can get $750 a month from SS.

My pension system is changing health care eligibility and if I don't retire by Nov. 30th, 2014, I will have to stay till I have 20 years in order to get HC.

The system is also pushing all retires when eligible for Medicare at 65. The cost of my HC from my pension system is $396 a month and I get reimbursed $203 dollars. High deductible plan. My health is stable but I take some costly meds.

I have calculated that I will have to drastically reduce my living expenses in order to live on my pension and 401k monies.

Any thoughts from all you money crunchers on taking the ER plunge?


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Old 08-21-2013, 09:42 AM   #2
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Katsmeow's Avatar
Join Date: Jul 2009
Location: NE Tarrant County
Posts: 4,387
When you say your network is $211,000, I assume you mean net worth. Is that investible assets? If so, are they in an IRA, 401(k), Roth IRA, or are in after tax funds? If so, how is the $211k invested?

Is your motive for retiring the lack of health care after November, 2014? Have you looked at the Affordable Care Act?

Are you single or married?

Do you own a house? Does it have a mortgage on it?

You say your projected pension is $25, 992? Is that if you retire now? Can you get the $25,992 immediately?

It sounds like at 62 you would have about $35k a year from pension and SS (if you took SS at 62). At a 4% withdrawal rate you would have about $8,000 per year from investments if the $211,000 is all invested assets (assuming these are invested in a balanced portfolio). If so, then that gets it up to $43k a year.

What are you spending now that you would have to drastically reduce living expenses to live on pension and 401k monies. Remember that in retirement you don't have to save for retirement any more so sometimes people need less money in retirement than when working and still accumulating assets.

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Old 08-21-2013, 01:58 PM   #3
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Join Date: Apr 2012
Location: San Diego
Posts: 10,841
You need to know your expenses in retirement to know whether you've got enough. One way to figure that out is to look at your current gross income, then subtract out the things you won't be paying (401k/403b type saving, medicare insurance tax, etc. (SS tax for folks other than you), etc)

Some other things might also be adjusted when you retire. Your health insurance might change - you say what it is if you retire, you don't say what your part of the premium currently is. You need to adjust accordingly.

Once you know your annual expected expenses - run it through firecalc. (link at bottom of page). Be sure to select the various tabs at the top to input your pension and social security. Firecalc assumes GROSS expenses - so you need to account for taxes (which is why I had you start with gross income in the previous paragraph.) But many have reported that taxes often go down in retirement - not sure if your pension is taxable... if it is, you need to account for that.

You mention the healthcare qualification as a reason to pull the trigger sooner. Since you're 59.5 now - you only have 5.5 years till medicare... Have you looked into what your state is offering under obamacare. I know that here in CA, the difference (increase) between my employee premium cost and the CoveredCA premiums (assuming no premium refunds) is only about $600/month. So I use that as my budget guideline for retirement planning. But I can pull in the budget a bit and come out way ahead and save money on health insurance by dropping below the premium subsidy rates. (4x poverty line)
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