Re-retiring?

[RetiringAt55]

Hello everyone! I posted on here in the past, but life got complicated. I retired in 2019 but went through a divorce in mid-2021 that forced me out of retirement. (Believe me it was worth every penny to get rid of my abusive ex-husband.)

I am a software developer and was able to find a good job I enjoyed, but was recently laid off along with other tech in the US. I negotiated a few months of severance but would like to retire again.

Here are my financials:
Expected SS at age 70 of $45K.
Approximately $1M in retirement accounts
3/4 in 401K with most of the rest in Roth
50/50 Asset Allocation
Annual expenses with tax around $60K after downsizing my house
Good retiree medical coverage from old employer

I am 58 but can access my 401K as I left my employer after age 55.

Selling my paid off home will get my expenses down to the $60K budget and give me a travel/RV fund not included in the number above. The budget included replacement/repair costs for home and auto.

I've run things in Fidelity, FireCalc, i-orp, fi calc, and FRP and all say I am over 95% to retire.

What do you all think? There is a possible addition of SS survivor's benefit before age 70 if my unhealthy ex-spouse were to pass away, but I'm not counting that. I do not feel I need to leave a big inheritance for my son.

Life is further complicated in that I have been dating New Guy for a year. We have discussed moving in together once our kids have moved out so it is possible my expenses could go down in a couple years. I am not counting this in my planning as you can't count on anything in life. New Guy is also very responsible financially and considering retiring early with similar assets. If things with New Guy don't last, I doubt I would need my travel/RV budget as I don't see myself traveling alone.

I am beginning to look for a new job, but I really want to be DONE with w*rk again. I was not bored for a minute when I retired the first time. I am planning on only accepting a job that is inspiring to me, hopefully part-time, for just a year max, but again I really want to be done.

What do you think?

 

[bloom2708]

You could always take SS at 65 or 67. You could un-retire again or work part time.

Plot spending from portfolio to 62, 65 (Medicare), 67 and 70.

Make sure your investments are not too stock heavy. 40-50% stocks max I think so close.

Good luck!

 

[skyking1]

That is good advice^
We planned on my taking SS @70, but I turned 62 and realized that it is really a year to year consideration. Run some alternate scenarios.

 

[Finance Dave]

First off, congrats on getting out of a bad relationship.

Lots of ways to look at this...but here's one using VERY rough math:
1) Since you will be 12 years (from 58 to 70) without SS, you're entire budget will have to come from savings. That's 12 years x $60k, or $720k.
2) From an annual perspective, let's assume your portfolio earns 5%. $1M x 5% = $50k/year. Your budget is $60k, so you'll have to reduce your savings by $10k/year until you reach 70....which will take your $1M down to about $880k.
3) Let's use the 4% rule on the $880k after 70, which means you'll withdraw about $35k/year. add that to your $45k SS and you'll have $80k/year available...which will more than support your lifestyle.
4) I did not figure in any inflation...so consider that
5) You will have to pay more for health insurance until age 65, so make sure you consider that...plans on the market can vary significantly in cost...we pay about $540/mo for a silver plan...and that's ONLY THE PREMIUMS.

Overall I think you could stop working now, but there are a lot of variables so I'd be careful. Some other options would be to take SS a bit earlier, work PT for 2-3 years to "pad" your numbers, or keep working until you learn more about what will happen with "new guy" and how this might affect your finances.

Good luck!

 

[Exchme]

I don't understand how selling your home reduces your expenses? You still have to live somewhere, unless rent is for a place that is a big step down, rent seems likely to exceed the out of pocket costs of home ownership.

Have you figured taxes in your expenses? With 75% of your assets in tax deferred, you will owe some taxes along the way.

 

[pb4uski]

I don't get 95% with FIRECalc, I only get 74.1% and safe spending at 95% of $53,657, so I would be cautious.

Taxes is another big consideration. For 2023 for a single person under 65 in Illinois, if you withdraw $60,000, you'll only have $51,685 to spend after paying Illinois and federal income taxes. If you move to a not tax state then the spending increases to $54,540.

Can you live on those amounts?

 

[Koolau]

I always hate to suggest w*rking a big longer, but my gut tells me you'd be in for a cut in expenses with your current stash. We do have members here living on less than 20K so cutting back to say 50K sounds doable and then take SS early maybe.

I think you are close if you stay flexible. Good luck and check back often.

 

[RetiringAt55]

More Info

Thank you for your responses.

Finance Dave, I have good retiree health care already. I only pay $200 a month for a good PPO. After I get to Medicare age, it then provides money towards a Medicare supplement plan. So I've already included medical costs in my budget.

Exchme, The reason that downsizing makes a big difference is that property tax is so high here. My current home is 3700 sq ft and I pay over $12K a year in property tax. A downsized home would be around 2000 sq ft and only cost me around $8K a year in tax. Also utilities, insurance, and maintenance cost will be less. I think it would be around $10K a year cheaper. Selling my current home and buying a smaller one should net me around $140K for an RV, travel, and wiggle room, after paying selling costs and costs to fix up a new home.

pb4uski, some clarifications, I am already adding in taxes to my budget. Note that in Illinois there is NO state tax on SS or retirement asset withdrawals. Also, I just reran with firecalc and am still seeing 100%. On the first tab, I am using $59K for expenses (which includes tax on my budget amount of $52044), 1040000 for Portfolio, and 30 years. On Other Income, I am using $46356 for SS starting in 2034. On Your Portfolio, I am using 50% for equities. Am I missing something in firecalc? (35 years on the Start Here tab also works.)

bloom2708 and skyking1, I believe taking SS at 70 makes the most sense for me. I am a single woman who is relatively healthy, so there is longevity risk. I've run the numbers and the best results if you are planning to age 95 is to wait until age 70 to take SS. In addition, if my ex-husband who is older and has many health issues passes away, I can collect survivor's benefit as early as age 60 on his record, while letting mine grow to its max.

Koolau, I think my budget of $4337 a month is reasonable. I put numbers in Quicken for 5 years to arrive at good estimates but I could be missing something. Here are my numbers if anyone is curious. Adding up the Total items comes to the $4337/month.

Total Housing $1,767
Mortgage $0
Home Insurance $150
Real Estate Taxes $700
Utilities $315
House Repairs $200
Cell Phone $100
HOA $150
Internet/Streaming $152

Total Transportation $530
Car Insurance $100
Gas $80
Vehicle Replacement $300
Car Maintenance $50

Total Food $600

Total Medical $300

Total Personal $247
Life Insurance $0
Gifts $100
Clothing $50
Personal Items $60
Crafts & Books $15
Grooming $22

Total Household $400
Pets $0
House Upgrades $400

Total Entertainment $493
Vacations $400
Movies/Theater $50
Other $43

Total Monthly $4,337

Am I missing anything that you can see? My clothing and food budget may seem low but I generally buy clothes at thrift stores and do not eat out much or drink alcohol often.

 

[38Chevy454]

I think it depends on whether you can find a good replacement job. If that is found and you like it, work 2-3 years and then you will be in great shape with more cushion. But if you do just retire, I think you can make it. The big variable is housing, reduce that and it makes it better. Great that you get good medical for low cost. Living expenses may go down if you get serious with new guy. You can always go back to a job if finances get too tight.

In your spot I would probably try retiring and have a backup plan B.

 

[pb4uski]

... pb4uski, some clarifications, I am already adding in taxes to my budget. Note that in Illinois there is NO state tax on SS or retirement asset withdrawals. Also, I just reran with firecalc and am still seeing 100%. On the first tab, I am using $59K for expenses (which includes tax on my budget amount of $52044), 1040000 for Portfolio, and 30 years. On Other Income, I am using $46356 for SS starting in 2034. On Your Portfolio, I am using 50% for equities. Am I missing something in firecalc? (35 years on the Start Here tab also works.) ...

I misread your OP and thought you were 55 rather than 58 so would not start SS until your were 70 in 2037 (2022+70-55) rather than 2034 (2022+70-58). 3 year difference dings the success rate by about 17% from 99.1% to 82.1%.

I also used 40 years rather than 30 or 35.

But changing the SS year to 2034 and time horizon to 40 years is 99.1%, so I think you are all set as long as you keep an eagle eye on spending.

 

[Koolau]

I misread your OP and thought you were 55 rather than 58 so would not start SS until your were 70 in 2037 (2022+70-55) rather than 2034 (2022+70-58). 3 year difference dings the success rate by about 17% from 99.1% to 82.1%.

I also used 40 years rather than 30 or 35.

But changing the SS year to 2034 and time horizon to 40 years is 99.1%, so I think you are all set as long as you keep an eagle eye on spending.

So, please forget what I said!

 

[MarieIG]

I would like to see your budget after you have sold and downsized. A bird in the hand, and all that . . . Your numbers re: the sale of the old house and the acquisition of the new, could be spot on, or, due to unanticipated circumstances, they might not be.

If you find a temporary, part-time job, after a few months hiatus, I think that's fine but I wouldn't take something that stresses you out. You've had enough stress.

Re the New Guy, there is just no rush. Don't loose your independence, and don't put your financial security at risk. (Just my opinion of course.)

Enjoy each and every day.

 

[RetiringAt55]

Re the New Guy, there is just no rush. Don't loose your independence, and don't put your financial security at risk. (Just my opinion of course.)

Enjoy each and every day.

Absolutely! I have been burnt too many times to put my financial security at risk ever again!

 

[MarieIG]

Absolutely! I have been burnt too many times to put my financial security at risk ever again!

Very glad to hear that!

 

[mebden]

Absolutely! I have been burnt too many times to put my financial security at risk ever again!

Hey, Retiring I've been thru the same stuff you're going thru now I was married for 20 years lost over half my life savings had all the intentions to be retired in 2023 at 57. I got divorced in 2015 with a son just about 16 so on top of losing that above I had to pay child support for 2 years at almost $600 a month but since those days I maxed out every place I could put money and then we have a market year like this last. I will never trust anyone unless they have more saved than me to even think about getting in a relationship and by the way I have my Motorhome paid for its older as of a 2007 and once I hit my number it won't be no million and then I'm selling everything and going full time in my RV.

 

[badatmath]

Your budget seems low or I missed it regarding household stuff. Like I just replaced a very standard gas water heater $1700.

What about a roof, an HVAC, etc?

 

[RetiringAt55]

Your budget seems low or I missed it regarding household stuff. Like I just replaced a very standard gas water heater $1700.

What about a roof, an HVAC, etc?

What do you estimate per month for household repairs? I thought $200/month was reasonable. I also had $400/month for upgrades like new carpet.

 

[Sunset]

What do you estimate per month for household repairs? I thought $200/month was reasonable. I also had $400/month for upgrades like new carpet.

I think $200/mo is fine for house repairs. They are very lumpy, so you can go 10 years just fine, and then have to do a few things together that exceed the yearly $2,400 by a lot, but the money will be there as is already calculated.

 

[badatmath]

What do you estimate per month for household repairs? I thought $200/month was reasonable. I also had $400/month for upgrades like new carpet.

IDK but it would take you over 4 years to pay for a roof at that rate. . . (assumed 10K which may be low for your situation). That is not something I'd like because I can pretty well assume my life is not going to go 4 years without other house repairs (even if not a lot).

 

[copyright1997reloaded]

IDK but it would take you over 4 years to pay for a roof at that rate. . . (assumed 10K which may be low for your situation). That is not something I'd like because I can pretty well assume my life is not going to go 4 years without other house repairs (even if not a lot).

Bingo.
I paid 22K for a roof 5+ years ago.
I am replacing skylights to the tune of 12K (if they ever get made).
I redid front plantings MYSELF (so no labor cost) and that was easily $3K just for garden mix, compost, plants....and that was using my truck and buying the soil/compost/mulch by the truckload. (I did pay to have some stumps removed and a bit of tree work done).

House crap adds up quickly. The old rule of thumb for a house in good shape is to assume about 1% per year. On a 400K house that would be 4k/year. Given my recent experiences, I'd say that is low.

 

[Bigdawg]

My 2 cents regarding the RV: Do you have experience with RV's? 2 things I see folks our age (50's) have issues with, RV's and motorcycles. Motorcycles are mostly men. They have never ridden of haven't ridden in a long time, then go out and get a Harley and either ride a few times and done or crash. With RV's many people don't under stand the lifestyle and costs. Many RV's just sit and sit after some initial use. Best of luck to you. You are thinking everything through. Please keep the group updated. We love good news stories. I also agree on SS. Just because you are planning on 70 doesn't mean you can't change your mind and take it earlier if circumstances change.

 

[RetiringAt55]

I spent 10 years RVing frequently with first a trailer, then a Class A, and finally a Class B. I drove all of them confidently, did most of the trip planning, and some of the repairs since I am very handy and an engineer.

I want to get a Class B van again someday as that fit my lifestyle. I would estimate 5 years of heavy travel (national parks, state parks, and BLM land) followed by another 5 years of occasional travel. Somewhere in there New Guy wants to also go sailing at places around the world, so we shall see what really happens in my life.

My life has seen so many life changes this last year with the devastating deaths of two very close family members. I am scared financially but I am also aware that life changes in an instant, and you have to go after what you want before it's too late. You have to be flexible and just keep swimming!

 

[badatmath]

Also, you may not be as much able to DIY in 10 or 20 years so some of that may need outsourced.

 

[mebden]

I spent 10 years RVing frequently with first a trailer, then a Class A, and finally a Class B. I drove all of them confidently, did most of the trip planning, and some of the repairs since I am very handy and an engineer.

I want to get a Class B van again someday as that fit my lifestyle. I would estimate 5 years of heavy travel (national parks, state parks, and BLM land) followed by another 5 years of occasional travel. Somewhere in there New Guy wants to also go sailing at places around the world, so we shall see what really happens in my life.

My life has seen so many life changes this last year with the devastating deaths of two very close family members. I am scared financially but I am also aware that life changes in an instant, and you have to go after what you want before it's too late. You have to be flexible and just keep swimming!

Hey, RetiringAt55, Myself I have had 2 class A gas motorhomes since 2010 and have pretty much fixed everything that has broken on them or was ready to break. Except my AC compressor that had went out but wanted to make the system was completely dried out before being fixed so I brought that in as I didn't have that equipment but everything else, I have fixed myself. I'm just tired of not being able to use it enough as working 50+ hours a week tough to get out with it and it definitely not good to just let them sit they need to be used I've towed cars and trucks behind them to and did all my own setups of that. So, myself I'm not worried about the mechanical side of motor homing just having the time is my biggest issue for me

 

[SJhawkins]

Your budget seems low or I missed it regarding household stuff. Like I just replaced a very standard gas water heater $1700.

What about a roof, an HVAC, etc?

I think somplace to start is 1% of the homes value per year to cover maintenance cost. Then pray its all good for the first 5 years!