Newbie: 58 and think I could retire now, but need some advice

[PointBreeze]

Hello all,

I'm 58 and still working. We paid off our mortgage last month (after just 9 years) and we have total savings of $1.5M. My partner in crime (PiC) is 73 and has been retired for 3 years. PiC has had two cancers and has heart disease and is in good shape right now, but I'm eager to retire so we can spend more quality time together in case the good health doesn't hold out.

PiC's SocSec and pension come to ~$27K/year.

I'm very cautious and want to keep at least $150K in cash to weather the inevitable stock market correction.

We can have a very good standard of living for $67K/year (after tax, and budgeting $14K/year for my health care until I'm 65, just in case). So it seems to me, if I retired today and withdrew about 3.33% from the $1.35M that's not in cash, then together with PiC's income we're good to go: $27K + $45K = $72K. Since I'm just 58 and have some longevity in my genes and good health now, I don't want to withdraw more than 3-3.5%.

Once I start taking SocSec (which at full retirement age in 9 years will be at least $31K), we'll need to withdraw only 1-2%. But then once PiC passes away (remember, 73 and bad health history), I'll have to fully support myself (and will lose about $400K of our savings to inheritances for PiC's kids from a previous marriage to boot).

So, I have a complicated situation and would love any advice.

I'm very glad to be joining this community!

PointBreeze

 

[MBAustin]

Welcome PointBreeze! If you haven't found them already, we have a helpful list of things to consider when making plans to retire:

Some Important Questions to Answer

Personally, I would exclude the $400K that goes to PIC's kids when he dies from your assets when calculating withdrawal rates, etc., unless he is already drawing from it (such as RMDs).

That said, if you have major expenses accounted for and a good handle on spending, I'd take advantage of PIC's good health now and go for it. You could always pick up some part time w*rk later if necessary.

 

[FlaGator]

I think you're prudent to have a couple years of expenses in cash/short term bonds.

I would re-run your #s with the $1.1 million net and understand what that impact would be on annual spending. I would look at both pre- and post your SS to bracket it, as well as possible spending adjustments. Rough math tells me the post-SS is manageable, pre-SS may take some changes for you to be comfortable.

Having done that, here's an option (maybe contrary to your nature, but it's an option):
Pull the trigger now, knowing it will work. When circumstances change, adjust and go forward.

The only things you know right now are how much money you have, you're healthy and PiC less so. Make the most of the time now, and adjust when you have to. Lot can change along the way.

 

[PointBreeze]

Thank you both very much for your advice.

I'm really teetering on the fence: fiscal caution is warring with my heart.

 

[Ready]

If it were me I think the age of my partner would cause me to want to retire now while we still have the ability to have quality time together. But I can understand it's a tough decision for you.

 

[1-31-18]

Don't have anything to add and have not yet retired myself, but my loved one's health issues would be driving me in this situation as I understand it. Just my two cents.

 

[joeea]

I'm 58 and still working. We paid off our mortgage last month (after just 9 years) and we have total savings of $1.5M. My partner in crime (PiC) is 73 and has been retired for 3 years. PiC has had two cancers and has heart disease and is in good shape right now, but I'm eager to retire so we can spend more quality time together in case the good health doesn't hold out.

PiC's SocSec and pension come to ~$27K/year.

I'm very cautious and want to keep at least $150K in cash to weather the inevitable stock market correction.

We can have a very good standard of living for $67K/year (after tax, and budgeting $14K/year for my health care until I'm 65, just in case). So it seems to me, if I retired today and withdrew about 3.33% from the $1.35M that's not in cash, then together with PiC's income we're good to go: $27K + $45K = $72K. Since I'm just 58 and have some longevity in my genes and good health now, I don't want to withdraw more than 3-3.5%.

Once I start taking SocSec (which at full retirement age in 9 years will be at least $31K), we'll need to withdraw only 1-2%. But then once PiC passes away (remember, 73 and bad health history), I'll have to fully support myself (and will lose about $400K of our savings to inheritances for PiC's kids from a previous marriage to boot).

Things to consider:

• Do you get any of the pension after your partner's passing?
• Is there any life insurance?
• Do you both have long-term care insurance?
• Will you want to keep your current residence (now or when you are alone), or will you want to move?
• Have you looked into (and run the numbers for) waiting until 70 to begin collecting your SocSec?
• How are your $1.5M in savings invested?
• Have you and your partner considered changing wills such that the children wait until you have both passed to claim their inheritance?
• Have you considered how your partners needs will be met in the case where you pass first?
• Have you considered the possibility of working part-time as a way to ease your financial worries?
  

 

[MarieIG]

Run the scenario as PiC passes the day after you retire. (Hopefully PiC will live to be a 110, but figure out what you would do in that situation, and exactly what you would need to be comfortable.)

 

[someguy]

Also keep in mind the real possibility that your PiC may not "drop dead" and instead require significant care that could impact your finances, your ability to work, or both. I'm not an expert by any stretch, but I understand that in the US, there are significant risks to a couple that are so far apart in age in terms of the older partner needing old-age care and the expected joint asset drawdown before medicaid kicks in.

What would your expenses be if it were just you? You may want to run a two-stage scenario of income vs. expenses -- the first stage with both of you still alive (and the $400K earmarked for inheritance IN the calculation) and the second stage with only you alive (and the $400K out of the picture).

You may find that you can retire now and be comfortable in stage one but not be comfortable in stage two. For example, going from a two to a one person household may only drop your expenses 25% but could drop household "income" by 50% (or more, depending on the exact circumstances). Of course most couples don't both die at the same exact time, but your very large spread in age virtually guarantees that the gap between PiC's death and yours will be a lot bigger than most.

 

[someguy]

I want to follow up and also mention to consider not framing your main question (to retire now or not) as black and white. Do you have in between options including reducing hours in your current job or finding another part-time job?

If there isn't the option to formally reduce, what if you just start spending 25% less time at/on work? Maybe you don't get big raises or bonuses or forego promotions but that might be worth the trade off (considering you are contemplating quitting altogether). And maybe you only do this for a few more years any way.

 

[Blue Collar Guy]

I like the suggestions about rerunning the numbers at 1.1 million. Then assume you no longer have your PiC, add in 70 % of your expected social security and see what the results are. If they are good then you are ready to bail and spend time with your PiC. I want to add this from a personal perspective. I have a dead broke Uncle thru marriage. If he had your assets he would think he was king Midas. Your a smart person, you will find a way to pay your bills and live a good retired life if all the worse case scenarios happen.

 

[Red Badger]

Your a smart person, you will find a way to pay your bills and live a good retired life if all the worse case scenarios happen.
__________________From Blue Collar Guy and +1 here.

As other have offered, slice and dice your $$ a few different ways. Then, consider going with your heart.

My DW has some health issues, and I had enough of catching the "next flight out" to get home and be by her side. So, I retired a little while back with perhaps more risk than other members here would want to tolerate. But if I spend a few good years (maybe more) with DW, I'll be more than happy irrespective of any ($$) mess I'm left with to clean up. Conversely, if I were out of the country or on the opposite coast, and things turned south in a bad way, my regrets would follow me to my grave.

Edit: my j*b was travel intensive - no options or desire to swap careers.

 

[Moemg]

If your partner dies you will have your $31 K in SS plus a million plus the value of your house even if your partner spends a year in nursing care you will still be okay . Retire and enjoy ! Hopefully you have many years together !

 

[robnplunder]

I retired at age 54 with 1.75M + Equity, and 90k yearly budget plan. So, my finance situation was like the OP but we (DW was also 54) had more years to go. So far, so good. The two positive years in stock market was a big reason. Another reason is that we spent less than planned. Looking at the OP's situation, PiC has fixed income and the OP will also have it (soc sec) in a few years. With $67k spending budget plan, I believe the OP is good to go.

 

[Rianne]

I keep going back to the Vanguard Nest Egg Monte Carlo simulation. The 5 or 10 K simulations give me a comfort zone for our 1.9 M net worth. We're staying in the stock market for at least 5 years (50%) and have other bond accounts to offset. VG advice to get into European market was excellent.

 

[Koolau]

I too am in the camp that you can make it work once you are on your own. Relocating to lower cost housing and COL area can do wonders for portfolio survival. Too early to talk about, but you probably will find another PiC eventually. YMMV