Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Anything to Do during My Last Year of Earnings?
Old 07-04-2020, 03:58 AM   #1
Recycles dryer sheets
 
Join Date: Nov 2007
Posts: 167
Anything to Do during My Last Year of Earnings?

I'm probably overthinking this, but I'll just put it out there. If all goes right, I will retire 10/1/2021, and husband will retire approx. 11/1/2022. According to financial planner, retirement calculator, etc., we will have enough money to retire and outlive our money and leave something for our 1 child... the only thing we didn't account for is long term care, but I applied and was rejected, and my husband decided he didn't want to buy it.

Here's my question: during this final year of earnings for me, is there anything extra I should be doing? For example, try to live on 4% of our retirement income (which we're probably doing already)? Track our expenses (failed in doing this at the beginning of each year? Sweep any extra money into a separate account to ensure we don't piddle it away? I guess COVID-19 is helping since we're not spending any money Or just let it go?

I just feel like there's something more I should be doing to prepare. As usual, thanks in advance. You folks are the best!
__________________

retiringby50 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-04-2020, 04:39 AM   #2
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: No Country for Old Men
Posts: 47,030
An old thread on that very subject with many things you should consider, especially post #9.

https://www.early-retirement.org/for...-er-20952.html
__________________

__________________
Numbers is hard

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 07-04-2020, 05:23 AM   #3
Full time employment: Posting here.
 
Join Date: Jul 2013
Posts: 957
How can you know if you have enough to retire when you don't know what your expenses are?
mrfeh is offline   Reply With Quote
Old 07-04-2020, 06:23 AM   #4
Thinks s/he gets paid by the post
 
Join Date: Aug 2016
Location: Northern Virginia
Posts: 1,924
Will your tax bracket change dramatically post retirement?

If so you may want to double up on charitable contributions or set up a donor advised fund.

Max out tax favored savings if that makes sense relative to your financial plans.

Consider getting a home refi or home equity line of credit while earned income is there.

You must know your expenses. That is the most important thing.
Montecfo is offline   Reply With Quote
Old 07-04-2020, 06:50 AM   #5
Moderator
Aerides's Avatar
 
Join Date: Nov 2015
Posts: 5,940
Quote:
Originally Posted by retiringby50 View Post
For example, try to live on 4% of our retirement income (which we're probably doing already)? Track our expenses (failed in doing this at the beginning of each year?
You don't need to "start" this anytime. You can do it now, and go back a few years, at least at a macro level. Go look at whatever accounts you pay things out of - say your main checking account(s). Tally those up. You'll then get at least an understanding of how much money you typically spend. Don't retire until you have that "probably" well understood.

And shame on your financial planner for not reinforcing that with you while telling you that you are ready to retire.
Aerides is offline   Reply With Quote
Old 07-04-2020, 07:25 AM   #6
Full time employment: Posting here.
Bryan Barnfellow's Avatar
 
Join Date: Feb 2004
Location: Switzerland
Posts: 665
I will jump on this important bandwagon: being very confident of your projected retirement period expenses is job one. Without that, you are just throwing darts in the dark.

If you have company healthcare/dental care/eye care that will not continue in retirement, consider using it now for elective procedures.

If you have company supplied equipment such as a laptop or a mobile phone that are fairly new and in good condition, ask if you can buy them at a discounted cost. Always worth a try.

If you haven't drawn up wills and other documents yet, make that a goal. It's easy to forget/procrastinate when you are retired and having fun.

-BB
__________________
FIREd, April 1, 2015. My Retirement Benefits Package includes: 6 months vacation, twice a year.
Bryan Barnfellow is offline   Reply With Quote
Old 07-04-2020, 07:35 AM   #7
Thinks s/he gets paid by the post
 
Join Date: Jun 2016
Posts: 3,979
Create a budget using both of these approaches and you’ll end up being close.
1. Top down. Take you income minus savings and that is what you spend each year.
2. Track or guess everything you spend on, including taxes, future vehicle purchases, future medical, etc and that is what you will spend.

Without a grasp of expenses, you are a ship without a rudder.
COcheesehead is offline   Reply With Quote
Old 07-04-2020, 07:52 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 26,591
+1 Easiest is top down... take your take-home pay less any after-tax savings and presumably that is what you spent... then adjust if necessary for any unusual items for that year and any expected changes going forward (for example if you paid off your mortgage or a car loan or add retirement travel). Also useful to do bottoms up budget.

Many of us self-insure for LTC... to me the value proposition of LTC insurance isn't very compelling.

While it i probably good to try to live on your retirement budget with appropriate adjustments, it isn't really necessary. One thing to do is to get your physicals, dental, vision all up-to-date while you still have employer coverage, as applicable.

You don't say how old you are or where your assets are located (taxable, tax-deferred, tax-free), but there is commonly a period of time from ER until pensions and SS start that you will be in a low tax bracket and stra that is an ideal time to do low cost Roth conversions from tax-deferred accounts. Over the last 7 years I converted almost $390k and only paid $33k in federal tax.... 8.5% vs 22% later... saving over $50k by converting when I had low tax rates.

Another thing to start to think about is your SS claiming strategy.... check out opensocialsecurity.com and check the Advanced Options box at the top of the page.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...target 65/35/0 AA TBD
pb4uski is offline   Reply With Quote
Old 07-04-2020, 10:44 AM   #9
Thinks s/he gets paid by the post
 
Join Date: Jul 2003
Location: Pasadena CA
Posts: 2,898
If you want to keep a financial alternative, get a Home Loan Line of Credit now while working, it gets a lot harder when not working, You never have to use it but it is there if you want finance something.
__________________
T.S. Eliot:
Old men ought to be explorers
yakers is offline   Reply With Quote
Old 07-04-2020, 11:07 AM   #10
Thinks s/he gets paid by the post
Marita40's Avatar
 
Join Date: May 2011
Location: St. Paul
Posts: 1,422
I'm retiring this year and in the market for a HELOC, if anyone knows one with good rates/low fees. I kind of hate the idea of paying an annual fee for something I quite probably won't use, but I'm not seeing alternatives. Debating whether I really want to do this at all.
Marita40 is offline   Reply With Quote
Old 07-04-2020, 11:14 AM   #11
Thinks s/he gets paid by the post
 
Join Date: Jun 2016
Posts: 3,979
Ask for credit line increases on your credit cards. Great double secret short term emergency fund.
Explore living on a 3% withdrawal rate.
COcheesehead is offline   Reply With Quote
Old 07-04-2020, 11:16 AM   #12
Thinks s/he gets paid by the post
 
Join Date: Apr 2015
Posts: 1,588
Under the Forum FAQs, there is a sticky "Questions to answer before you retire"
Review that and honestly answer all of the questions, it will give you insight on where you stand, and what you may still need to do.
At least it did for me.
__________________
Give me a fish, I will eat for a day. Teach me to fish, I will eat for a lifetime.
pacergal is offline   Reply With Quote
Old 07-04-2020, 12:29 PM   #13
Recycles dryer sheets
 
Join Date: Oct 2012
Location: Salt Lake City, UT
Posts: 295
Determine your ACA subsidy strategy. If you are going to utilize the subsidy, you need an income plan to stay below the cliff. You will need to harvest money to live off of while recognizing income below the cliff.

In my last year, I aggressively adjusted the cost basis of my taxable portfolio by selling securities and buying back the equivalent. Now, I can sell and not have a huge capital gain.

For DW and I, our cliff is around $65K. I recognize about $61K in income. About $20K in dividends, $20K from Capital gains and $20K from IRA distributions.

I'm a big fan of budgeting and planning and use quicken to track everything.
UtahSkier is offline   Reply With Quote
Old 07-04-2020, 03:00 PM   #14
Recycles dryer sheets
 
Join Date: Nov 2007
Posts: 167
Quote:
Originally Posted by REWahoo View Post
An old thread on that very subject with many things you should consider, especially post #9.

https://www.early-retirement.org/for...-er-20952.html
Thank you all... I will check out the link and review your comments... that was way more than I was expecting. We've hardly lived on a budget because we normally spend within our means. Our financial planner projected our retirement use at about 6% because he didn't believe we'd only spend about 4%. Obviously he's a rich dude with a higher standard of living.

At retirement I'll be 55 and husband at 57 (he'll be 58 when he retires), and unless I get fired before retiring, we have retiree medical, which means we'll have access to employer plan coverage, and retiree medical benefits will pay about half the premiums.

We have a HELOC (not using but have) of $250K and just closed a credit card where I was able to transfer credit line to another account. Hopefully I'll never need that much but good point... i'll ask for credit limit increase on all the other cards too.

Oh taxes and will... we were supposed to consult with estate attorneys and then COVID hit. That was the biggest item for this year.
retiringby50 is offline   Reply With Quote
Old 07-05-2020, 03:17 AM   #15
Thinks s/he gets paid by the post
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 4,380
Minor thing, but if your employer(s) have Flexible Spending Accounts, sometimes called cafeteria plans for use-it-or-lose-it medical reimbursements, you can select an amount, use it up, and then not have to pay back the extra for the months you don't work.

So for example, select $100 a month starting January, have $1200 of medical expenses reimbursed in the summer, retire in the fall, and not have to pay that $100 in November/December.

Also, review any retirement savings contributions in your last calendar year. I know many people want to max out their 401(k) and IRA one last time, and I understand that feeling. In my case, I retired early in the year, so my income was relatively low, so I elected to only defer enough to get the match, and then do a Roth IRA contribution and pad my taxable instead of maxing my 401(k).

+47 on getting your expenses understood very well.
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is online now   Reply With Quote
Old 07-05-2020, 05:38 AM   #16
Thinks s/he gets paid by the post
 
Join Date: Jan 2011
Location: Fair Lawn
Posts: 1,921
I'll echo others' comments and suggest you get a hard figure on your expenses.
If you want to get LTC, don't presume a rejection is final. I have a preexisting condition, was rejected, and I appealed. They reversed the rejection and gave me the pleasure of giving them a lot of money every year
mystang52 is offline   Reply With Quote
Old 07-05-2020, 06:40 AM   #17
Thinks s/he gets paid by the post
street's Avatar
 
Join Date: Nov 2016
Posts: 3,312
LTC is an insurance like any other insurance you have in your everyday life now. Remember LTC can start at any age not not when you are 80 plus (an accident etc.) I have seen many families ruined finically because a member had to be places in a facility.

I have not ever made a claim on a vehicle in 40 plus years of owning and driving. Do I need auto insurance? I could of bought a few new one with the money I have spent on auto insurance.
street is offline   Reply With Quote
Old 07-05-2020, 07:09 AM   #18
Thinks s/he gets paid by the post
 
Join Date: Jun 2016
Posts: 3,979
Trivial stuff, but I stopped buying work clothes and shoes and actually started selling off some of my work related items on eBay.
We also ramped up small, passive income streams: Ibotta, eBay, paid research.
Bought recreational items while we still had pay checks. Couple of bikes, golf clubs.
Got all our exams: doctor, dentist, eye doctor. Bought new glasses.
COcheesehead is offline   Reply With Quote
Old 07-05-2020, 11:22 AM   #19
Recycles dryer sheets
 
Join Date: Feb 2012
Posts: 109
Consider getting a home refi or home equity line of credit while earned income is there.


+1 on this...We learned the hard way that in ER, even though you are in a better financial position that any other time in your life, you may easily learn you do not qualify.
Rex is offline   Reply With Quote
Old 07-05-2020, 12:37 PM   #20
Recycles dryer sheets
Go-NoGo's Avatar
 
Join Date: Oct 2016
Posts: 237
Quote:
Originally Posted by Marita40 View Post
I'm retiring this year and in the market for a HELOC, if anyone knows one with good rates/low fees. I kind of hate the idea of paying an annual fee for something I quite probably won't use, but I'm not seeing alternatives. Debating whether I really want to do this at all.
Check out the HELOC's from Alliant credit union:
https://www.alliantcreditunion.org/b...line-of-credit

They do not have any closing costs or appraisal fees of any kind. it takes about 4 weeks from application to the HELOC becoming available. Definitely do it while you have a job as they will verify your income
__________________

Go-NoGo is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Did anything significant happen in year 27 of your life? 97guns Other topics 44 06-24-2018 07:23 AM
% of Lifetime Earnings Saved based on SSA Medicare Earnings REattempt FIRE and Money 17 08-01-2013 06:51 PM
so my A type mind has me out of the house during the day, set time out during week retiringat50 Life after FIRE 37 03-25-2008 08:55 AM
Anything, ANYTHING Cheap Out There? Craig FIRE and Money 15 01-06-2006 07:28 PM
See @ Last, See @ Last, Thank God I Can See @ Last Beachbumz Other topics 24 02-18-2005 08:16 PM

» Quick Links

 
All times are GMT -6. The time now is 02:35 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.
×