Unemployment or Early Retirement?

[Persn]

Would Sacramento be a possibility? There are some reasonably priced 55+ communities there and rents are good too.

I retired at 54 and my Social Security estimate has changed very little in the last six years of low or no earnings, so your estimate of 20K at 62 sounds accurate. I use the calculator on the SS website that bases the estimates on your earnings history. It gives an estimate for 62, full retirement age, and 70.

[NomDeER]

Quote:

Originally Posted by Persn Would Sacramento be a possibility? There are some reasonably priced 55+ communities there and rents are good too.

Sacramento is definitely an area I want to look into. I haven't spent much time there. I think of it as being really hot, but it's potentially a good option. I'd be relatively near friends. Also, I think my chances of getting contract work are best in Northern California. I used to work with a guy who commuted from Davis to San Francisco. There is no way I would do that on a daily basis, but I could do it periodically for some contract work.

Are there particular areas of Sacramento you'd recommend? Not expensive, but a safe neighborhood? And do you know what I should expect to pay for rent?

I'm trying to identify potential places in California that are more affordable. I've lived in the Bay Area and Los Angeles. I hated Los Angeles, but it's not an option financially anyway. And the Bay Area obviously isn't affordable. My neighbor recently moved to San Luis Obisbo. He says it's a relatively affordable place to retire. So, I'll look into it.

I'm not old enough for a 55+ community yet, but at least I have something to look forward to when I hit that age.

[Fedup]

Pismo dunes in Pismo beach has nice mobile home area. But the term Bay Area is huge. Some inexpensive areas are Contra Costa, Mountain House, Manteca, Santa Rose, maybe Martinez. I think they are all slight on the hot side, but so is Sacramento.

[supernova72]

FWIW as you might have heard the housing market in Seattle WA is red hot now and many sellers are getting $100K over asking price (no kidding). I love the area but finding something affordable within the city limits would be a challenge. My small 1924 craftsman that is 1240 sq feet "Zillows" for $610K and it's not even remodeled.

However outside of city limits (Tacoma, San Juan Islands, north of Everett) things are much more affordable. No state income tax, mild climate if you don't mind 36 inches of rain a year.

If you go east like to Spokane houses are half the price but winters are a bit more harsh. Financially you look solid to me. I'm 56 and in a similar situation.

[Cobra9777]

I agree that, financially, you look fine. You just have some more homework to do. But I can tell from the discussion so far that you are asking all the right questions. And you found the right forum to get answers. Best of luck. You're going to love retirement.

[NomDeER]

Quote:

Originally Posted by supernova72 However outside of city limits (Tacoma, San Juan Islands, north of Everett) things are much more affordable. No state income tax, mild climate if you don't mind 36 inches of rain a year. If you go east like to Spokane houses are half the price but winters are a bit more harsh. Financially you look solid to me. I'm 56 and in a similar situation.

I love Seattle, but I know that it is far too expensive for me. Eastern Washington is out due to allergies. I don't mind rain, and prefer it to snow and to heat. I like living in walkable areas near good hiking and the water. (That's my favorite thing about San Francisco.) Safety is more important to me than granite countertops. (Your Craftsman sounds great, though!) Are there any particular towns or cities you would recommend most?

Quote:

Originally Posted by Cobra9777 I agree that, financially, you look fine. You just have some more homework to do. But I can tell from the discussion so far that you are asking all the right questions. And you found the right forum to get answers. Best of luck. You're going to love retirement.

Thanks! I should have started planning a long time ago. The research is a bit overwhelming. Trying to forecast taxes and health insurance seems almost impossible. I don't know much about tax planning. And some of the financial discussion I'm reading on this forum is incomprehensible to me because I don't have enough background knowledge. But I'll work on it. I need knowledge if I'm going to make this work. And I also need knowledge in order to get rid of my current stress and fear of ultimate poverty.

[RobbieB]

The whole central valley of CA is affordable. It's a big place. Good food too.

I've been here for 30 years and not planning to move.

[CaptTom]

Quote:

Originally Posted by NomDeER Trying to forecast taxes and health insurance seems almost impossible

So, pick a "worst case" number for health insurance. Go to Kaiser Family Foundation or some such web site and plug in numbers until you get a reasonable range, then add 10%, or 25%, or whatever number your gut tells you.

Assume that with a lower income, you'll be paying lower taxes. Possibly by quite a bit. Again, you can go to various free tax web sites and plug in numbers.

One more thing to combat the stress: Many of the calculators, and much of the advice you'll receive, assume you want to die with all your savings and investments intact, and that your expenses will still be the same if you live to an advanced age.

These assumptions may not apply to you.

Think about the worst case. If you live to an advanced age, chances are good you'll hit some health snag which confines you to an assisted living facility of some kind. That would wipe out the assets of all but the very wealthiest among us. Nothing you can do about that. But consider that, at some age, living in a publicly-funded facility might not be so bad.

Many of us have been packed into government-funded housing with a bunch of our peers (think military) and survived.

If the worst case isn't so bad, then consider the other possibilities.

If you keep your health AND live a long life, your expenses will eventually decline. At some point you just don't get out so much any more.

Finally, if you don't live a long life, do you really want to leave all those assets on the table when you die?

I take all retirement calculators with a grain of salt. What passes for common wisdom in this field is often created by financial "advisers" who work on commission, and perpetuated by folks like us who want a 100% guarantee about the future.

My contention is that you DON'T need to work yourself to death to guarantee your current spending levels into retirement and for the rest of your life. Your time on this planet is far too precious to trade it for an illusory 100% guarantee of financial security.

Anyone who tells you that you must is either already financially secure themselves (and so doesn't have to make that trade), or is after a commission.

[NomDeER]

Quote:

Originally Posted by CaptTom So, pick a "worst case" number for health insurance. Go to Kaiser Family Foundation or some such web site and plug in numbers until you get a reasonable range, then add 10%, or 25%, or whatever number your gut tells you. Assume that with a lower income, you'll be paying lower taxes. Possibly by quite a bit. Again, you can go to various free tax web sites and plug in numbers.

The bill that just passed the House would raise my premiums by more than 100%. I doubt that it will pass the Senate and I don't want to get into the politics of it. My point is that it is very difficult to estimate expenses and whether retirement is feasible without having at least a rough idea of what insurance would cost. Similarly, since there is supposed to be tax reform soon and since I don't know what state I'll be in, it is very difficult to estimate taxes. (It doesn't help that I know very little about taxes. I work and fill out Turbotax, and that's it. So, the place where I will start is learning about how I can plan for taxes under the current system.)

Quote:

Originally Posted by CaptTom One more thing to combat the stress: Many of the calculators, and much of the advice you'll receive, assume you want to die with all your savings and investments intact, and that your expenses will still be the same if you live to an advanced age.

Is that true with FIRECALC? With FIRECALC is "failure" being broke?

[bmcgonig]

Quote:

Originally Posted by CaptTom So, pick a "worst case" number for health insurance. Go to Kaiser Family Foundation or some such web site and plug in numbers until you get a reasonable range, then add 10%, or 25%, or whatever number your gut tells you. Assume that with a lower income, you'll be paying lower taxes. Possibly by quite a bit. Again, you can go to various free tax web sites and plug in numbers. One more thing to combat the stress: Many of the calculators, and much of the advice you'll receive, assume you want to die with all your savings and investments intact, and that your expenses will still be the same if you live to an advanced age. These assumptions may not apply to you. Think about the worst case. If you live to an advanced age, chances are good you'll hit some health snag which confines you to an assisted living facility of some kind. That would wipe out the assets of all but the very wealthiest among us. Nothing you can do about that. But consider that, at some age, living in a publicly-funded facility might not be so bad. Many of us have been packed into government-funded housing with a bunch of our peers (think military) and survived. If the worst case isn't so bad, then consider the other possibilities. If you keep your health AND live a long life, your expenses will eventually decline. At some point you just don't get out so much any more. Finally, if you don't live a long life, do you really want to leave all those assets on the table when you die? I take all retirement calculators with a grain of salt. What passes for common wisdom in this field is often created by financial "advisers" who work on commission, and perpetuated by folks like us who want a 100% guarantee about the future. My contention is that you DON'T need to work yourself to death to guarantee your current spending levels into retirement and for the rest of your life. Your time on this planet is far too precious to trade it for an illusory 100% guarantee of financial security. Anyone who tells you that you must is either already financially secure themselves (and so doesn't have to make that trade), or is after a commission.

"Many of us have been packed into government-funded housing with a bunch of our peers (think military) and survived."

Yes..I survived 14 weeks of boot camp at age 20. Not so sure at age 80 ☺

[bmcgonig]

Quote:

Originally Posted by NomDeER The bill that just passed the House would raise my premiums by more than 100%. I doubt that it will pass the Senate and I don't want to get into the politics of it. My point is that it is very difficult to estimate expenses and whether retirement is feasible without having at least a rough idea of what insurance would cost. Similarly, since there is supposed to be tax reform soon and since I don't know what state I'll be in, it is very difficult to estimate taxes. (It doesn't help that I know very little about taxes. I work and fill out Turbotax, and that's it. So, the place where I will start is learning about how I can plan for taxes under the current system.) Is that true with FIRECALC? With FIRECALC is "failure" being broke?

Taxes. Pull out last year's TurboTax and do a pro forma one for a year when you are only getting investment income. Estimate your divs etc. As a guess you could pick 2% of your portfolio of stocks and bonds for divs.

Since you live in CA that's probably the worst case scenario for state taxes. Remember that you'll be paying much less in taxes than you're used to, no SS or Medicare, and unless you're doing Roth conversions you will probably pay next to nothing all in all.

[CaptTom]

Quote:

Originally Posted by bmcgonig "Many of us have been packed into government-funded housing with a bunch of our peers (think military) and survived." Yes..I survived 14 weeks of boot camp at age 20. Not so sure at age 80 ☺

I'm not saying it's a great solution. I'm saying that, as worst-case, maybe it's not so bad.

Short of being wealthy enough to pay for a private nursing home, most people don't really have much choice anyway.

My contention is that the value of w*rking for an extra 10, 15 or 20 years to afford a glorious nursing home is far outweighed by the value of living your life NOW, while you still have the mobility to get out and enjoy it.

[NomDeER]

Quote:

Originally Posted by bmcgonig Remember that you'll be paying much less in taxes than you're used to, no SS or Medicare, and unless you're doing Roth conversions you will probably pay next to nothing all in all.

I realize that I'll be paying much less in taxes, but I'll definitely be paying some when I sell my mutual funds, get my pension, withdraw from my retirement funds, possibly pay property taxes, etc. It won't be nothing. So, I want to be able to realistically estimate how much I'll be paying in taxes. I know some people can sleep at night not worrying about whether the money will be there for them, but I'm not one of those people.

Quote:

Originally Posted by CaptTom I'm not saying it's a great solution. I'm saying that, as worst-case, maybe it's not so bad. Short of being wealthy enough to pay for a private nursing home, most people don't really have much choice anyway. My contention is that the value of w*rking for an extra 10, 15 or 20 years to afford a glorious nursing home is far outweighed by the value of living your life NOW, while you still have the mobility to get out and enjoy it.

Even if I were fine with being in a crap nursing home in my eighties, going without health insurance beginning in a couple of years risks much more than that. Under the House plan, it is almost certain that I would not be able to afford health insurance. What happens if I need surgery or if I end up with cancer, a stroke, or a heart attack before I'm on Medicare in 13 years? I know people who don't worry about these things or would just refuse to pay all those bills. I'm not one of those people. It would be far too stressful for me. Someone can tell me to get past it, but it's not that simple. The stress would be intolerable for me. So, before I commit to retirement, I need to have a much better understanding of what my insurance costs will be or if I will even be able to get insurance.

[CaptTom]

Quote:

Originally Posted by NomDeER Even if I were fine with being in a crap nursing home in my eighties, going without health insurance beginning in a couple of years risks much more than that.

Totally agree. Health insurance is a necessity. I was only talking about long-term care that's not covered by normal health insurance. And I agree that it's hard to predict how much it'll cost. But we don't want to go into politics...

[evilanne]

Quote:

Originally Posted by bmcgonig "Many of us have been packed into government-funded housing with a bunch of our peers (think military) and survived." Yes..I survived 14 weeks of boot camp at age 20. Not so sure at age 80 ☺

If you served during wartime, VA has some benefits available
https://www.elderlawanswers.com/long...g-spouses-6158

[slv1]

You have 1.4 million. Some of which you will need in cash and some that you can't touch until 59.5. If you can live on 50 to 60 K per year you can pull it off.

You can work part time. You (just an example) can drive lift or uber and make 20 bucks an hour in california. Supplement it with the money you can get out of the market now until your tax deferred accounts kick in and then pension and social.

Once you can access the entire 1.4 or at least the part in the market, you can take out 2.5 to 4%. I like the 2.5%.

[MikeWillRetire]

Quote:

Originally Posted by RobbieB The whole central valley of CA is affordable. It's a big place. Good food too. I've been here for 30 years and not planning to move.

RobbieB, could you name some central valley cities/towns? I would like to look into this area too.
Mike

[copyright1997reloaded]

Since no one has really commented on this, I will comment on your original question. Given the ability to collect unemployment, you should almost always take this route and do not "retire" - at least until the unemployment runs out.