Hi There! Looking to retire at 55 and need some advice

[Bigchinook]

Hello, I recently stumbled across this site when the bug hit me to get serious about FIRE. I'm 52, the wife 53 both working with combined income of $163k annual. We are both retired military receiving combined pensions of $81k (36% tax free VA disability). We are covered under Tricare for Medical.

The wife has and additional pension that she is eligible to take at 55, that would be $9k a year, but we are going to hold off until she turns 60 with it will be $12k annual

Current Investment portfolio is mostly 401k/Roth & Traditional $700k with $40k of total in taxable accounts/emergency funds. 60% Stock 30% bond 10% cash

2022 the mortgage will be paid off with no other debts and my goal is $10K monthly for annual retirement income of $120k starting in May 2022.

Our employers only off 401k Lump sum distributions for Age of 55, so I'm planning to utilize a SEPP for me at 55 to help bridge the gap years.

The wife will start dipping into her accounts in 2025 at 59.5 of age and I'm estimating total WD amounts from the portfolio (My SEPP and wife normal distributions) to total $259k over 13 years to maintain $120k annual adj for inflation.

We have no survivor benefits for any of the pensions, I planned on the nest egg to be the survivor benefit!

My questions revolve around SS age and waiting. The current plan has me starting SS at 62 and the wife waiting until 67 (she has full credits). Should she start SS early at 62 to lessen the WD from investments or wait it out for the larger benefit? If she started SS at 62, total WD from portfolio would drop from $259k to $162K.

Total portfolio in 2022 is estimated $800k. Not assuming growth or inflation: Nest egg left if we both check out at Age 90 and 91 would be $541k wife starting SS @ 67 or $638k wife starting SS @ 62 in today's dollars.

Thanks!

[Golden sunsets]

Quote:

Originally Posted by Bigchinook Hello, I recently stumbled across this site when the bug hit me to get serious about FIRE. I'm 52, the wife 53 both working with combined income of $163k annual. We are both retired military receiving combined pensions of $81k (36% tax free VA disability). We are covered under Tricare for Medical. The wife has and additional pension that she is eligible to take at 55, that would be $9k a year, but we are going to hold off until she turns 60 with it will be $12k annual Current Investment portfolio is mostly 401k/Roth & Traditional $700k with $40k of total in taxable accounts/emergency funds. 60% Stock 30% bond 10% cash 2022 the mortgage will be paid off with no other debts and my goal is $10K monthly for annual retirement income of $120k starting in May 2022. Our employers only off 401k Lump sum distributions for Age of 55, so I'm planning to utilize a SEPP for me at 55 to help bridge the gap years. The wife will start dipping into her accounts in 2025 at 59.5 of age and I'm estimating total WD amounts from the portfolio (My SEPP and wife normal distributions) to total $259k over 13 years to maintain $120k annual adj for inflation. We have no survivor benefits for any of the pensions, I planned on the nest egg to be the survivor benefit! My questions revolve around SS age and waiting. The current plan has me starting SS at 62 and the wife waiting until 67 (she has full credits). Should she start SS early at 62 to lessen the WD from investments or wait it out for the larger benefit? If she started SS at 62, total WD from portfolio would drop from $259k to $162K. Total portfolio in 2022 is estimated $800k. Not assuming growth or inflation: Nest egg left if we both check out at Age 90 and 91 would be $541k wife starting SS @ 67 or $638k wife starting SS @ 62 in today's dollars. Thanks!

Why did you elect zero survivor benefits?

[joeea]

Quote:

Originally Posted by Bigchinook We have no survivor benefits for any of the pensions, I planned on the nest egg to be the survivor benefit! My questions revolve around SS age and waiting. The current plan has me starting SS at 62 and the wife waiting until 67 (she has full credits). Should she start SS early at 62 to lessen the WD from investments or wait it out for the larger benefit? If she started SS at 62, total WD from portfolio would drop from $259k to $162K.

It would help to see your respective social security benefit numbers at 62, 67, and 70. And it would help to see what pensions remain in the case where one of you passes, rather than just the combined total.

In general, with no survivor benefits in any of your pensions, it might make more sense for the higher earner to delay their social security benefits until 70.

You might also with to explore various scenarios using https://opensocialsecurity.com/. Be sure to use the Advanced Options setting and an "Assumed age at death" mortality table.

[Bigchinook]

Quote:

Originally Posted by Golden sunsets Why did you elect zero survivor benefits?

Because we both have pensions. My survivor benefit plan is the investment portfolio when retired. While working we both carry Life insurance through our employers.

[Bigchinook]

Quote:

Originally Posted by joeea It would help to see your respective social security benefit numbers at 62, 67, and 70. And it would help to see what pensions remain in the case where one of you passes, rather than just the combined total. In general, with no survivor benefits in any of your pensions, it might make more sense for the higher earner to delay their social security benefits until 70. You might also with to explore various scenarios using https://opensocialsecurity.com/. Be sure to use the Advanced Options setting and an "Assumed age at death" mortality table.

Thanks for the reply joeea. Reason why I'm thinking about hitting social security at the earliest opportunity is due of the no Survivor Benefits on the pensions. I would draw less out of nest egg to maintain my monthly goal during retirement thus protecting it.

My SS:
At age (62): $1,615 a month - $19,380
At age (67): $2,393 a month - $28,716
At age (70): $3,027 a month - $36,324

My Pension (already receiving) At Age 62 - $55,913

Wife SS:
At age (62): $1,392 a month - $16,704 annual
At age (67): $2,063 a month - $24,756 annual
At age (70): $2,617 a month - $31,404 annual

Wife Pension (already receiving) At Age 62 - $48,758

[mh]

There’s a guide to military retirement book/website that you might find interesting to go over if you haven’t seen it.


https://the-military-guide.com

[pb4uski]

Quote:

Originally Posted by Bigchinook Thanks for the reply joeea. Reason why I'm thinking about hitting social security at the earliest opportunity is due of the no Survivor Benefits on the pensions. I would draw less out of nest egg to maintain my monthly goal during retirement thus protecting it. My SS: At age (62): $1,615 a month - $19,380 At age (67): $2,393 a month - $28,716 At age (70): $3,027 a month - $36,324 My Pension (already receiving) At Age 62 - $55,913 Wife SS: At age (62): $1,392 a month - $16,704 annual At age (67): $2,063 a month - $24,756 annual At age (70): $2,617 a month - $31,404 annual Wife Pension (already receiving) At Age 62 - $48,758

I would reframe it a different way. Look at delaying SS as an opportunity to buy a COLA adjusted annuity benefit. The cost of the annuity is the benefits that you would forgo if you delay to 70 rather than starting at 62. The benefit is the increase in benefits if you do delay.

If you take at 70 rather than 62, you give up 8 years of $19,380... or $155,040... but you get an EXTRA $16,944 annually plus annual inflation adjustments... that is a 10.9% payout rate. A 70 yo male buying a SPIA for $155,040 would only get $11,844 of annual benefits... and those benefits are fixed and not inflation adjusted... according to immediateannuities.com. So to me, delaying SS is a screaming-deal way to buy a COLA adjusted annuity from the SSA. Even if payouts decline by 25% in 2034 and the $16,944 extra becomes $12,708 extra its still a good deal.

Assumes that you are in good health.

[joeea]

Quote:

Originally Posted by Bigchinook Reason why I'm thinking about hitting social security at the earliest opportunity is due of the no Survivor Benefits on the pensions.

For me, that would be the reason to delay until 70.

Quote:

I would draw less out of nest egg to maintain my monthly goal during retirement thus protecting it.

By "protecting it" do you mean you wish to maximize the amount you and your wife pass on to your heirs?

Many would use the guarantee of much larger inflation-protected benefits later in life as a way to feel comfortable spending down a bit more of their assets now.

[Bigchinook]

Quote:

Originally Posted by joeea For me, that would be the reason to delay until 70. By "protecting it" do you mean you wish to maximize the amount you and your wife pass on to your heirs? Many would use the guarantee of much larger inflation-protected benefits later in life as a way to feel comfortable spending down a bit more of their assets now.

I was using the Term "protection" for the surviving spouse. I expect by averages to be out lived by the wife. My Pensions and SS a slightly higher, so rational was to take SS for me at 62 and have her wait.

$19,380 a year less deduction from assets would allow for growth and a larger sum in the event I pass before she turns 67-70. If I wait until 70, I would have to live 9 years to make up the difference of forgoing $155,040


I do see the rational of waiting though. Thanks for the input and to pb4uski as well. It makes sense when combined with inflation protection to spend down assets. Health is good, but not guaranteed of course. I think I will reassess the closer I get to 62 and how the health is trending.

The Fidelity Model has me at 106 with assets left over in all scenarios of market conditions. So taking SS early is not set in stone for me, I was curios to how other viewed the subject. Thank you all.

[pb4uski]

Quote:

Originally Posted by Bigchinook I was using the Term "protection" for the surviving spouse. I expect by averages to be out lived by the wife. My Pensions and SS a slightly higher, so rational was to take SS for me at 62 and have her wait. ....

Not sure if you know this, but if you pre-decease your DW, she will get your SS... another reason for delaying... she'll get your $36,324 rather than her $31,404.... so if you delay to 70 and then pass on she ends up with much more a year.

[Bigchinook]

Quote:

Originally Posted by pb4uski Not sure if you know this, but if you pre-decease your DW, she will get your SS... another reason for delaying... she'll get your $36,324 rather than her $31,404.... so if you delay to 70 and then pass on she ends up with much more a year.

I did not know that. I thought because she was full credits she was on her own. Makes sense now, thanks!