Things quickly change (mentally) when you approach 59 1/2...is it possible?

[dadu007]

I will pass the 59 1/2 yard marker this coming July.
The atmosphere/morale at work has changed radically in the past two years, as has my attitude. I've been at the company ~19 years; 25 in the industry. I *think* I have a workable plan to pull the trigger on ending my employment in July, but I am looking for a little feedback on my numbers...I don't know if it's just desperate thinking on my part.

Me: will be 59 1/2 in July
Spouse: 52, still working, just re-upped her credentials to work in the school district helping kids with Special Needs. She loves it and was born to do this work. No plans for her to quit until FRA. She will have a pension. Currently funding her 403b ($300/month). District matches at 2%. Her salary will continue to rise as she finishes credentialing. Should be 60k+ in 2 years or so...

I love doing the house-husband stuff already, cooking, cleaning, home improvement...MUCH more than working at my job. Also I'm a loner, and crave more time to myself.

My currently salary: $120,000 with 6-8k yearly bonus (that bonus may change; company performance is in the tank...due to a recent merger and huge industry-wide upheaval due to changing technologies). The younger people I supervise are running circles around me brain-wise... I know I am consciously and unconsciously trying to manage my way out the door and leave the department in capable hands.
I just can't stop thinking about quitting; those thoughts and the work stress levels are becoming invasive in all my thoughts. I didn't sleep well over Xmas vacation, worrying/stressing about my job. I would welcome a layoff!!!
After I quit, I have a couple years of home improvement projects to work on, which I enjoy..photography is my big main hobby. I've bought all the gear I will want/need in anticipation of retiring.
Longevity is not in my genes...father died at 74, both grandfathers at 68 (father and paternal grandfather had strokes in their late 50s). My mother is 84 and declining...

My 401k: $515,000 - 50/50 Stocks/Bonds (70k in VBTLX bond index, 177k in Fixed Income)
My Roth IRA: $400,000 - 100% Stock (Total stock index fund/big chuck of Apple stock)
My frozen Defined Plan - $43,000, available at age 65 (lump sum or $300/month until it's gone)
Total mix for me: ~$1,000,000 in invested funds at 70/30 stocks/(bond + fixed)

Spouse:
Taxable: $141,000
Tax-Deferred: $163,000
Tax-free (Roth): $101,430
Total mix for spouse: ~$400,000 at 96/4 Stocks Index funds/Bonds

Joint Vanguard Taxable (VTSAX): $40,500

So, TOTAL INVESTED ASSETS: ~$1,400,000, at a overall 78/28 stock/bond mix. I'm good with that risk, since my wife is younger and actively working.


Also, $40,000 in cash on the side.


House: Value is $400,000 with $79,000 left on the mortgage. (The previous goal was to work until that was paid off, which at current rate of paying additional principal each month is December 2021. Interest rate is 3.625 percent.

My SS at age 70 will be $36000/year. The earliest my wife would take hers is at age 67, at ~18,000/year. 2019 pushed me past the "2nd bend" on SS earnings, so me working longer won't do much there.

Oldest son will finish sophomore year in College this May. (This year paid for.)
Younger son is a junior in high school.
We are committed to paying for their undergrad tuition, room and board. Grad school is on them if it happens. So that's 6 more years at $25,000 a year,...~$150,000

We are currently on my workplace healthplan, but my wife's school district open enrollment is in May, with coverage activation starting July 1. THIS PLAYS WELL WITH ME TURNING 59 1/2 IN JULY. If I give notice to leave the company on June 30, healthcare is covered through her work for the whole family for the foreseeable future. Oldest son is a Typ1 Diabetic, so this is extremely important.
Once that kicks in, her take home pay will be ~$2000/month (currently at $3000/month with no healthcare premiums)

Our current yearly expenses run ~$65,000 - $70,000
I use YNAB, so everything is accounted for. We are not big spenders, although we did buy my final new car for me this past year. Both me and my wife did tons of world travel when we were younger, so travel isn't a retirement goal.

Really, the kids' college is the big worry; I can't figure out how to model that in Firecalc. I have modeled it in Pralana Gold, and that says we're good to go. I modeled to age 90 in both.

So the overall fantasy plan is to quit end of June, move to wife's healthcare plan July 1, and immediately rollover work 401k funds to Schwab IRA for Roth conversion purposes. And, of course, try not to spend any more money than necessary!

I was just hoping a few folks could take a peek and give me their take...
My brain is polluted by stress thoughts and fear, of course.

Thanks for any feedback.

 

[NW-Bound]

I do not see you mention a pension for yourself, so take it that you will not have one. Given that your wife still works and provides health insurance, and that you are older and closer to SS if you need it, I think your $1.4M in savings will do fine.

Take out $200K for your children tuition, and the $1.2M will provide $40K at a conservative WR, which is still more than enough to supplement your wife's income. You are still OK.

 

[Rianne]

I do not see you mention a pension for yourself, so take it that you will not have one. Given that your wife still works and provides health insurance, and that you are older and closer to SS if you need it, I think your $1.4M in savings will do fine..

"My frozen Defined Plan - $43,000, available at age 65 (lump sum or $300/month until it's gone)"


Is this your pension? Your wife's income and healthcare more than protects you.



Enter data in Firecalc. With $70K average spending, even with setting aside $200K for college, looks like 100% success.

 

[dadu007]

@NW-Bound: Correct, I do not have a pension. I have just one lump sum, currently $43,000, which, by my employer's calculation, will be ~$54,000 at age 65. I can take it as a (taxable) lump sum at that time (no earlier), or dribble it out at $300/month until the funds are depleted. Thanks for your input.



@Rianne, thanks for the Firecalc tip

 

[MarieIG]

How does your wife feel about your retirement in July?

Also, review your situation if one of you were to die (sooner rather than later) or DW were to become disabled.

 

[Dtail]

@NW-Bound: Correct, I do not have a pension. I have just one lump sum, currently $43,000, which, by my employer's calculation, will be ~$54,000 at age 65. I can take it as a (taxable) lump sum at that time (no earlier), or dribble it out at $300/month until the funds are depleted. Thanks for your input.



@Rianne, thanks for the Firecalc tip

Same here with a pension currently valued at 54,135 at age 65. I will take it then, as who knows if the pension fund might dry up later on, plus substitutes for taking TIRA/SS that year.

 

[Mountain skier]

Looking at your numbers carefully I believe you are in good shape to retire. Do you have an estimate of what your wife's pension will be per month?

 

[dadu007]

Do you have an estimate of what your wife's pension will be per month?

That's a bit of a moving target, since my wife is just re-kickstarting her career after being a SAHM for 15 years (she was a professional before we had our children).
Her current pay is on the low side, but once she obtains a couple certifications she is currently working on, her pay will move up to a different "lane". (In general...and I don't claim to fully understand this yet; it's on my do list to investigate this further once in retirement...in the public schools your pay is bumped up along the way with more certifications and other education.)
That said, at her current pay, based on the schools' calculators, her pension would be ~1600/month. BUT, I expect her pay to be in the ~80k in 5-7 years. (?) She wouldn't start collecting her pension it until age 66 or so...
And I have not figured her pension in to my retirement calculations at all so far, only her SS and investments.

 

[latexman]

I think, not 100% sure, that a fair portion of teacher's pension causes a Windfall Elimination Provision (WEP) offset to SS, thus reducing their SS. Does WEP apply to your wife?

 

[dadu007]

I think, not 100% sure, that a fair portion of teacher's pension causes a Windfall Elimination Provision (WEP) offset to SS, thus reducing their SS. Does WEP apply to your wife?

I confess I've never heard of WEP, but I'll definitely look into it!
I was looking at her pension retirement website last night, and they have something called an "accelerated annuity", which somehow seems to involve the SS timeline, so maybe that is related to WEP? When we log in to her account her full retirement age for the school district is listed as age 66 (in 2033).
Here is the website for the curious (scroll down to see the accelerated annuity section):


https://minnesotatra.org/plans/


The good thing is I have many years to try to sort through this; they don't make it easy to understand.

 

[Telly]

You can find info on WEP and GPO on the SS website.

In simplest terms, WEP affects people who have paid into SS at some time, claiming SS benefits on their own SS record, who also have a pension that they contributed to while not contributing to SS. Most school district employees are in this group here in TX. But some have never contributed to SS, so WEP is not invoked. But they can be hit by GPO.

GPO affects the person if they claim/receive SS on their spouse's record.

The purpose of WEP and GPO is to avoid people who contributed little/none to SS, and therefore who are low on the SS bend-points curve, from receiving a greater dollars-out vs. dollars-in from SS. Around here, district employees I have come in contact with often complain about the "unfairness" of this rule, don't seem to understand the underlying concept. They believe that it should be overturned. It ain't gonna happen.

 

[dadu007]

@Telly, Interesting... Another topic to explore! My wife does pay FICA and Medicare FICA taxes through her work, so there's that, and she has earned enough SS credits on her own to collect her own SS, although I'm doubtful her lifetime earnings will match mine.
I find the minutiae of retirement financial planning interesting and engaging...this will keep me busy for awhile, trying to figure out how her SS and/or pension will figure in down the road...