How do you live after FIRE ?

[NewToEverything]

For those with no more jobs(Not while one spouse still has PT/FT jobs), is it through dividends/interest ? Rental income ? What else ? Trying to get some idea what successful FIRE people do to live before SS.

What about health insurance(Again not if one spouse still has a job and covers insurance) before Medicare ?

 

[RobbieB]

I have my equities broker sweep all my dividends to my checking account. I have my bond broker do it with a phone call. If I need more dough I sell equities.

 

[NW-Bound]

My wife quit work at 50, and myself at 55.

We lived off after-tax investment until 59-1/2, then started IRA withdrawal. My wife started SS at 62, while I am waiting till 70 before taking SS.

Due to the bull market, our stash grew despite the withdrawal, which was not excessive at 3.5%/year, and down to 2% now.

 

[NewToEverything]

Do you mean traditional IRA ? I can start withdrawing traditional IRA penalty-free at 59.5 ? What about taxes - is this withdrawal taxed at ordinary rate ?

 

[NW-Bound]

IRA withdrawal is penalty-free at 59.5, but you have to pay regular income tax.

401k may be withdrawn penalty-free at 55 under the right conditions, and taxed as above.

PS. We rolled over our larger 401k's into the traditional IRA accounts. Due to specific circumstances, we could not tap our 401k at 55 anyway. Else, it would be better to keep the 401k separate from the IRA.

 

[Ronstar]

I have lived on after tax investments since I retired 5 years ago. Probably going to start taking enough out of IRA to stay within 12% bracket this year - income will be half from ira and half after tax for the next 2.5 years when I will start SS at fra. DW has a pension and we are on her retirement health insurance.

 

[NW-Bound]

Regarding health insurance, we initially bought our own private insurance which was possible because we were healthy with no pre-existing conditions.

With ACA, it is a lot easier to get insurance now.

 

[scrabbler1]

I live off 12 monthly bond fund dividends and 4 quarterly stock fund dividends which pay my expenses including my ACA individual health insurance policy I buy through the state marketplace. I have been living this way for most of the last 11 years after I ERed in 2008 at age 45.


These 16 dividend payments provide me with a surplus, or cushion, which allows me to cover any smaller, unforeseen expenses.

 

[Just_Steve]

Pension and 401k bridge to FRA SS, healthcare provided by former employer.
Life is easy peasy.

 

[Drake3287]

Almost embarrassed to say and I certainly don't bring it up in casual conversation with friends and family. Retired at 54 with a state retirement pension paying 100% of my final years pay including a 2% yearly COLA. Retirement also includes 100% paid medical and dental through employer for myself and spouse. Also, just over a million in cash and various investments.

And before you jump all over me, this retirement system no longer offers this overly generous retirement, I'm lucky I started when I did. Newer employees have a much different plan now and Yes, I know how lucky I am.

 

[Just_Steve]

Almost embarrassed to say and I certainly don't bring it up in casual conversation with friends and family. Retired at 54 with a state retirement pension paying 100% of my final years pay including a 2% yearly COLA. Retirement also includes 100% paid medical and dental through employer for myself and spouse. Also, just over a million in cash and various investments.

And before you jump all over me, this retirement system no longer offers this overly generous retirement, I'm lucky I started when I did. Newer employees have a much different plan now and Yes, I know how lucky I am.

I worked for the wrong state.

 

[rk911]

both retired at 55, both took SS at 62. until SS we lived on our pensions and a small inheritance. we had minor PT jobs that amounted to pocket money. wife had no-premium health coverage from employer. i had employer health coverage but had to pay single premium (~$550 p/m). zero debt at retirement.

 

[swakyaby]

No pension or retiree health benefits. All investment earnings go into my checking account. Additional funds come from liquidating equities or bond funds or money market funds to bring my asset allocation back to 60:35:5, while keeping withdrawals to 3-3.5%. Upon reaching 70.5, begin required minimum withdrawals from IRAs and social security. First 12 months, paid for COBRA health insurance $2,100/month for 2. Currently paying $545/month for subsidized ACA ppo plan.

 

[FreeBear]

DW and I retired without pensions or retiree healthcare. We are burning taxable savings (equity and bond index funds as well as cash) and managing income for ACA health insurance. We're recently started tapping an IRA, but slowly to minimize impact on ACA subsidy. Our withdrawal rate has been 4-4.5% over the last several years. We plan to pull early SS, although may hold off if the economy remains strong. Even with SS, our IRA's will fund most of our expenses. With SS online, we hope to get our withdrawal rate down to about 3.5% given that we have 36+ year planning horizon.

As a practical matter, we sell bonds or equities in our taxable accounts roughly twice a year, with some effort to time for market peaks. We hold 1-2 years in cash, in part to wait for these peaks, but mainly to sleep better at night. Most of the cash is with an online savings bank yielding 2%+, with monthly transfers to a brick & sticks checking account for bill pay.

 

[DrRoy]

Small pension, interest and dividends, sell off a little as needed. No SS for 10 more years.

 

[FIREd]

At the moment, I live on interests and eating through my capital.

 

[jollystomper]

We currently live on pension + cash. We set enough enough cash so that we are not forced to sell equities before we choose to take SS.

My pension hits our checking account the first of the month. All bills are paid with a day or two of that event. This shows up how much we may have to withdraw from cash for our planned expenditures for the month. It looks like we will only spend about 30% of the cash we thought we would for this first year of FIRE. We are still reinvesting most of our dividends and capital gains

For health insurance we have cheap COBRA through the end of this year. My pensions makes us ineligible for any ACA subsidy. We are willing to pay a little more for retiree insurance through Megacorp than any ACA plan, as we will not have to change our current doctors. Included in our cash is roughly $100K in anticipation of health insurance/expenses for the 3 years before we are eligible for Medicare (it likely will come it less than that, we will see once we know what our premiums are for next year).

 

[ShokWaveRider]

Cash. withdraw as needed.

 

[nativenewenglander]

I call myself 70% retired my DW says I am 95% retired. She's probably right and usually is. She still works 3 days a week and we run a small home based business we started 21 years ago. I doesn't make a ton of money, but gives us good write offs. We live mainly on dividends from investments. Next year I can start withdrawing from my Keogh and IRA as I turn 59-1/2. I may let it ride since we don't really need the extra income.

 

[bobandsherry]

Almost embarrassed to say and I certainly don't bring it up in casual conversation with friends and family. Retired at 54 with a state retirement pension paying 100% of my final years pay including a 2% yearly COLA. Retirement also includes 100% paid medical and dental through employer for myself and spouse. Also, just over a million in cash and various investments.

And before you jump all over me, this retirement system no longer offers this overly generous retirement, I'm lucky I started when I did. Newer employees have a much different plan now and Yes, I know how lucky I am.

Wow.... Must be from IL... saying this as they have a big pension mess on their hands.

 

[rodi]

For those with no more jobs(Not while one spouse still has PT/FT jobs), is it through dividends/interest ? Rental income ? What else ? Trying to get some idea what successful FIRE people do to live before SS.

What about health insurance(Again not if one spouse still has a job and covers insurance) before Medicare ?

Yes. Investments, rental income, two micro small non COLAd pensions (less than $500/mo) and DH gets SS. About half of our spending comes from our investments

We get health insurance from the ACA exchange... Well... DH gets his from Medicare now.

 

[RunningBum]

@NewToEverything, it might be helpful if you introduce yourself more completely with a "Hi, I am" post where you describe your situation. Some of this was kind of answered in one of your other threads, http://www.early-retirement.org/for...vidend-yield-or-total-stock-market-97128.html, though not really completely. The quality of the answers you'll get is related to the quality and completeness of your questions.

 

[street]

CD's

 

[karen1972]

Taxable account for as long as it lasts, then ROTH until 59 1/2 and then a mix of tIRA and ROTH. Dividends plus some stock sale each year covers most of it. Occasionally I'll buy an IPO and do a day trade on day 1.. like Roku, Beyond Meat, usually 1 or 2 a year that nets me a couple thousand a trade and I have a tiny $2k/yr pension with no COLA so better off day trading.

Health care is bought on the health exchange, doing Roth conversions so paying full market rates. Right now its better to focus on Roth conversions than worry about subsidies as the premium costs for a 40 something isn't too bad.. once I get closer to 50+ that equation will change as the price goes up with age and the need to convert goes down.

While I do have a BF that has a job, we don't share expenses or income in a way that changes the above answer.

 

[kgtest]

For those with no more jobs(Not while one spouse still has PT/FT jobs), is it through dividends/interest ? Rental income ? What else ? Trying to get some idea what successful FIRE people do to live before SS.

What about health insurance(Again not if one spouse still has a job and covers insurance) before Medicare ?

My plan is to pay the piper for health insurance (unless DW is not quite ready to retire) then we could potentially use hers (She is a cpl years younger and does not share my early retirement dreams, but does contribute to our FI party).

I want to ER at 50. So that means I need 9 years of living expenses covered somehow. I know that a lot can happen in 9 years though. So basically taxable broker account, CDs, cash, and potentially some inheritance is how I plan to do it. Honestly, by the time we become eligible for SS I am almost positive it would just be 'extra' for us.

Some build CD ladders, some build bond ladders, some have employer healthcare. I think the hardest scenario to ER under would be no pension, no SS, no employee healthcare and no real access to 401k. My DFIL did it but he was a Dr that basically just paid tax on his investments. It's my understanding all of their assets are in Roth IRA. That is probably the holy grail. To have paid all the taxes ahead of your retirement.