Ready, Set, Go ,,,but scared to plunge

[ginny37]

Hi All,

I am 58 years old, and have worked for the past 41 years. I just celebrated 36 years years of service with a megacorp and is eligible for 48K annually of pension if I leave end of March. My SS will be 1800 at 62 and 2600 monthly at 66 and 4 mths. I'm leaning towards taking my SS at age 66/4 mts. My DH is retired and will be 62 soon. He has a current pension of 22k annually, with 9k of a OPM supplement until he reaches age 62 and then 17k annually in Social Security. We have 550k in 401k, 100k in stock, 50k in cash, 50k of deferred income to be distributed in 2014 & 2015 equally, and 75k of stock options to be paid over the next 3 years equal distribution depending on corp performance and market. Both of us have subsidized Heath care with my husband paying 150.00 per mt, and there is no cost to me except for a 1200 annual deductible with 20% co payment. Both are veterans as a health care fall back, just in case this is required. We have a mortgage of 230k with maybe 75k in equity ( market hasn't rebound in my area) with a monthly payment of 2300, a car note of 569.00 and other miscellaneous consumer bills of about 400.00 per mt which should be paid off in 2 years. My job has become extremely politically unproductive and I am so ready to retire on one hand and the other is I'm not so sure if I can financially sustain myself long term. I have been consulting with a FP, but in reading your post, I think I will forgo moving any money or pursuing this relationship any further due to the drain on my finances. I think I can learn how to do this myself with a tad bit if time to educate myself. Any suggestions out there on whether I should retire end of March 2014 and advice on what funds to roll the 401k to upon retirement.

 

[Gumby]

Welcome, Ginny. You don't say how much your actual spending is, but I note that your debt service (mortgage, car loan, consumer debt) is currently $39,000 + per year. If we assume that your additional spending on everything else (taxes, food, clothing, utilities, etc) is another $30,0000 per year for about $69,000 per year total, then your pension plus your husband's pension plus his social security ($48k + $22k + $17K) should cover your spending. You could tap into your nest egg for splurges.

You should try inputting your actual data into Firecalc (link at bottom of page) to see what your success rate is.

 

[WestLake]

You're in pretty good shape but perhaps it would make you feel better to pay off the car note or even the house before retiring.

 

[ginny37]

Thanks. The Firecal show 100% success rate over 37 years. I do plan to pay off the car by end of 1st year of retirement and reduce consumer debt down to a minimum over the next 2 years, using some of the deferred income.

 

[obgyn65]

Many of us are scared to make the plunge even if we are financially independent. You are not alone. I think your financial situation looks good.

 

[racy]

... I have been consulting with a FP, but in reading your post, I think I will forgo moving any money or pursuing this relationship any further due to the drain on my finances. I think I can learn how to do this myself with a tad bit if time to educate myself. ....

Welcome Ginny,
I'm pleased to hear that you want to learn how to do your own financial planning. I find bogleheads.org website to be full of self-help information, not to mention their forum.

Here's a link to the Getting Started page over there: Getting started - Bogleheads

 

[ginny37]

Excellent. Thanks for the suggestion.

 

[Spudd]

If you have 50k in cash, why don't you pay off your consumer debts in one fell swoop instead of just putting 400/mo towards them? Presumably the interest rate you're paying is a lot higher than the interest you're getting on that 50k.

 

[Live And Learn]

Hi Ginny - welcome to the forum. Deciding to retire is scary but you appear to be in good shape. Have you tracked your actual spending for the past couple of years so that you know exactly how much budget you will need to enter into FIRECalc ? If you have, and are getting 100% success I would say its time to stop worrying. With the pensions and VA healthcare in your favor your risk is very manageable.

 

[ginny37]

If you have 50k in cash, why don't you pay off your consumer debts in one fell swoop instead of just putting 400/mo towards them? Presumably the interest rate you're paying is a lot higher than the interest you're getting on that 50k.

Good idea.

 

[ginny37]

Hi Ginny - welcome to the forum. Deciding to retire is scary but you appear to be in good shape. Have you tracked your actual spending for the past couple of years so that you know exactly how much budget you will need to enter into FIRECalc ? If you have, and are getting 100% success I would say its time to stop worrying. With the pensions and VA healthcare in your favor your risk is very manageable.

I haven't tracked my actual spending down to the penny. However, I do know where most of my spending takes place ( grocery, dining and shopping on a whim) and where I am starting to focus on cutting back prior to end of March.

 

[Live And Learn]

I haven't tracked my actual spending down to the penny. However, I do know where most of my spending takes place ( grocery, dining and shopping on a whim) and where I am starting to focus on cutting back prior to end of March.

I thought I knew where all my spending was also - until I really started tracking it. I was actually "shopping on a whim" a lot more than I thought I was. It was easy to reduce that spend, without even an ounce of pain, but until I had two years of spending documented I didn't think I was spending quite as much as I was. If you use credit cards for all your purchases its easy to download account activity to see where you are spending.

 

[seraphim]

I agree with others you have the potential to retire, depending on your ability to live within a certain budget. There are smartphone apps to help you track your spending - just make an entry every time you spend a dollar. One month worth of tracking will probably open your eyes. We loved to eat out, but didn't realize how much we actually spent until we tracked it.

My concern would be that mortgage payment. From your comment, I'm assuming you may be in an 'upside down' situation. If not, perhaps research downsizing your home. If you have adult children, do you 'help them out' on a regular basis? That's something retirees fail to take into account.

At best, I'd assume an $18k max income from investments, for planning purposes. Best not to use it, unless necessary.

Welcome and good luck.

 

[ginny37]

Thanks, I will certainly take all the input into consideration. I do have intentions of downsizing and would consider this if I could get my house on the market by 2/1 and sell in 30 days before I retire and can still qualify for a decent replacement home with the equity gained. While my house isn't underwater, it is still taking time for resale homes to move.

 

[ginny37]

It's been a while since I posted an update. During 2014, I endured the OMM syndrome and it was really hard, but now it is confirmed that I will be retiring on 3/31/15. My financials changed a bit and while retiring is a bit scary, I can no longer stand to tolerate the extreme politics on the job. Annual Retirement income changes from 48k per year to 58k and savings and investments equate to 900k with a AA mix of 50/50. My DH retirement and social security equates to $36k annually. No change in health care costs. I plan to draw SS at 66/4 with 26k per year. As a gap closure until age 66, I plan to draw not more than 4% from portfolio for 7 years and reduce withdrawals at that time. I have paid off my consumer bills of $400 per mt, however mortgage and car note are the same. I am pondering paying off the car note in March. The real estate in the area is bouncing back and we have about 100k of equity in the house. We are considering downsizing to a smaller home in a lower cost of living area over the next 12 month. (Actively searching), and will use the equity and another 100k of cash and investments to reduce costs to a minimal mortgage for 15 years to further reduce withdrawals from the portfolio. The next step for me is to make sure that my portfolio continue to grow, weather the volatility and manage my funds by remaining with Fidelity where my current 401k is today. Any ideas on funds or portfolio growth or comments is appreciated.


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[kimcdougc]

ginny37, Congrats on setting a date!

 

[rodi]

Congratulations on setting the end date. I remember the great feeling I had when I realized I could leave and not look back.

 

[Options]

Congratulations! I recommend leaving 4/1/15 instead of 3/31. If your employer's health insurance is like most, your insurance runs to the end of the month that you leave your employer. Leave 3/31, and you coverage ends immediately. Leave just one day later, 4/1, and your insurance coverage doesn't end until 4/30, and you have one less COBRA payment to make!

 

[ginny37]

Thanks kimcdougc , Rodi and Options.

Options, my retirement date is based on an Enhanced Pension Option from Megacorp. One of my retirement benefits is subsidized health care, so there will be a gap in coverage for one month, and any medical care expenses in the month of April will be retroactive once retirement coverage is in effect. So I won't have to use COBRA. I would love to slip over to the 1st of the following month, but this is not an option for me.


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[Options]

Nothing beats employer subsidized health care. Looks like you're ready to go.

 

[kimcdougc]

We were going to use the Mega corps retirement health care plan but just found out it is going to costs us $2300 a month. So we will be going on Cobra for $1200 per month then on to Obama care we go! You would think they would pay some of the cost after 30 years of DH employment. Nope.

 

[Accidental Retiree]

We were going to use the Mega corps retirement health care plan but just found out it is going to costs us $2300 a month. .

That's obscene! In what universe is that a benefit to a retiree? Twice COBRA?

 

[ginny37]

While I realize carrying affordable megacorp HC is a risk, for 2015 my out of pocket will be 10.00 per mt for the policy and 1300 out of pocket deductible with 20% copay. In addition I am a veteran and have access to health care through VA if necessary.


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[nuke_diver]

Nice congrats to you.

I would have been already gone had I had subsided HC. That's a big expense taken care of

 

[2B]

Congratulations. Welcome to the Class of 2015.