Longtime lurker almost ready to hang it up

[pullmyfinger]

Hello! I have been following this forum off and on for several years. DH and I actually did a "trial" ER 7 years ago but we got scared and went back to work. In retrospect we really weren't ready then and it was for the best. Fast forward 7 years and we think it's time. Here are the stats:

Me 45, DH 47, no kids, no debts
1.3M in taxable accounts
900K in retirement accounts
House paid off worth 500-600K?? - doesn't cost much to live in

I have a 20% service connected disability so VA pays me 3K/yr
We will both have tiny pensions:
Me - 8K/yr starting at age 65 state pension
DH - 6k/yr starting at age 65 corporate pension

Our annual expenses over the last 7 years have averaged between 24K and 28K. Obviously we are frugal. Our biggest expenses are property taxes and insurance which total 7k/yr but we have whittled these down as much as we are comfortable. After that our biggest expense is food but we are vegetarian/non drinkers and I'm not willing to give up some small luxuries.

DH is in a corporate job that is in flux, he is really burned out. He may be subject to a layoff (which we would welcome) otherwise he will probably quit by the end of the year. I am an RN working in the best job of my career, but alas, I too have had enough and am dreading work. My biggest worry is that once I hang it up I am not going back to nursing so I need to make sure that we are really set. In a perfect world I would like to work until October 1 2015, but we shall see. I work 7 on/7 off so DH and I would have a lot of time together while I am still working. I would also like to stagger our retirements a little so that we don't promptly kill each other before we get into routines.

I have run Fire Calc obsessively over the past few years as well as the Fidelity calculator all with 100% percent results. Our Fidelity guy wonders how we spend so little. Our investment style is cautious so we can't anticipate huge returns

A big unknown will be heath care. We are so grateful that the ACA is in place, but are not sure if we will qualify for subsidies. We are planning for at least 10K/yr for health care expenses.

What do you think? Any thoughts are appreciated. Thanks for reading.

 

[Richard4444]

So you have $2.2 M ($1.3 M taxable and 900 K retirement), $3000 annually more, live in a $550K +/- home and only spend $27,000 annually for both of you including all taxes?? If you stay even with inflation, and I am dividing $2.2M / $27,000, you can live another 81.5 years (plus you will be getting $14,000 annually more in your 60s). If that is so, you're beyond 100%, even with health ins until age 65. There will however be many unexpected new expenses, I would think. Rich

 

[pullmyfinger]

Thanks Rich for your reply. Yes, I am pretty OCD. I know that our expenses won't necessarily stay that low, we will of course have to fund our health care for starters. I am assuming that our spending will stay the same at least for a few years until we figure it all out and get comfortable. We'd like to have a big buffer - maybe 20k/yr in case of some emergency. Hopefully, not an emergency every year!

 

[Golden sunsets]

Thanks Rich for your reply. Yes, I am pretty OCD. I know that our expenses won't necessarily stay that low, we will of course have to fund our health care for starters. I am assuming that our spending will stay the same at least for a few years until we figure it all out and get comfortable. We'd like to have a big buffer - maybe 20k/yr in case of some emergency. Hopefully, not an emergency every year!

Pullmyfinger; With retirement assets of 2.2M if you start with a 3% withdrawal rate, you would pull out $66,000 the first year, more than you need by a big margin even when adding in HC with no subsidy. I would think thought that you would qualify for a subsidy. And what about SS when you are FRA, or perhaps waiting until 70? You may want to consider Roth Conversions up to the 15% tax bracket as well, or to whatever level would enable you to still qualify for subsidies.

 

[pullmyfinger]

Thank you Golden Sunsets. Yes we are definitely planning on Roth conversions once we both quit working. As far as SS, we will see where we are at the time as far as when to file. If we can wait until 70 that would probably be our preference.

I know our numbers, especially the low expenses make it look like no-brainer, but we, like I'm sure many on this board have agonized about making these decisions. It's funny that 7 years ago we impulsively quit our jobs, but now that we have doubled the portfolio (and have 7 fewer years to fund) we are having a hard time. I really appreciate the imput from those who are of the same mindset that we are.

Just to add, I am also a hospice nurse so I routinely see people younger than me who are at the end of life. It kind of skews my perceptions.

 

[Live And Learn]

I am budgeting 2% annual maintenance on my house. That would include setting aside money each year to fund future "big ticket" items like a new roof, new HVAC, etc. For me that is 4k / year.

I commend you on your 28k annual spend. I think I spent more than that annually when we were first married 30 years ago !

 

[robnplunder]

You have plenty to retire and maintain your life style. I suspect you know that already. It just takes a leap of faith. In your case, it won't be such a big leap. Good luck.

 

[pullmyfinger]

You have plenty to retire and maintain your life style. I suspect you know that already. It just takes a leap of faith. In your case, it won't be such a big leap. Good luck.

Thanks Robnplunder for your kind words. Yes, having run the numbers ad nauseum I should know that we will be fine. I am still feeling anxious about the whole thing. However, this has been a bad week at work so I may be looking to ER earlier than I thought! I'm just trying to make decisions based on our best interests rather than being impulsive. The BS factor may push me to make the decision first....

 

[pullmyfinger]

I am budgeting 2% annual maintenance on my house. That would include setting aside money each year to fund future "big ticket" items like a new roof, new HVAC, etc. For me that is 4k / year.

I commend you on your 28k annual spend. I think I spent more than that annually when we were first married 30 years ago !

Thank you Live and Learn for your reply. Yes our spending is definitely small. I'm sure my coworkers think I am pretty strange. I prefer the term eccentric. My 21 year old Civic had dashboard lights flashing this morning, but I'm still hoping to drive it as long as possible!

I hadn't thought about earmarking specific amounts for home repairs, just allowing a big cushion for any unexpected big expense whether it is medical, home repairs, etc. Obviously a lot of the big home expenses are expected so your strategy makes perfect sense.

 

[Live And Learn]

A big unknown will be heath care. We are so grateful that the ACA is in place, but are not sure if we will qualify for subsidies. We are planning for at least 10K/yr for health care expenses.

I'm not counting on any ACA subsidies in my plans. In fact, even tho we are 50 & 55 I've used my ACA site and have budgeted as if we are both 63. I've also included the full out of pocket max (12.6k) in my budget. I've assumed no subsidity. My budget for the two of us is therefore 26k / year.

I am probably too conservative, but personally my biggest worry is running out of money in old age (no kids, no close relatives to take care of us).

On the plus side, I have a small travel budget and if it looks like I was wrong I can use the money to take a couple of big trips.

 

[NW-Bound]

Just to add, I am also a hospice nurse so I routinely see people younger than me who are at the end of life. It kind of skews my perceptions.

Well, then what are you waiting for? Life is short, and a lot more uncertain than most people realize or want to admit.

 

[GTFan]

I'm not counting on any ACA subsidies in my plans. In fact, even tho we are 50 & 55 I've used my ACA site and have budgeted as if we are both 63. I've also included the full out of pocket max (12.6k) in my budget. I've assumed no subsidity. My budget for the two of us is therefore 26k / year.

Wow, that's a lot of healthcare spend to budget for, is that because you're worried that reported income will be higher than 400% FPL?

ACA subsidies and Silver plan cost-sharing for staying below 200% FPL will mean our out of pocket costs will be less than $4500 a year. And I don't see any real issues staying below 200% FPL for MAGI given that we also live below our means.

 

[Totoro]

Yes, having run the numbers ad nauseum I should know that we will be fine. I am still feeling anxious about the whole thing.

The hard part sometimes is letting go.

Would you still go to work if you weren't getting paid? If the answer is no, quit asap.

Right now, you are working for whoever will receive your inheritance in the hopefully very distant future.

Sounds like DH is in the most pain, set him free! Make it an early christmas present.

 

[heeyy_joe]

Hospice- my favorite charity.

 

[Live And Learn]

Wow, that's a lot of healthcare spend to budget for, is that because you're worried that reported income will be higher than 400% FPL?

ACA subsidies and Silver plan cost-sharing for staying below 200% FPL will mean our out of pocket costs will be less than $4500 a year. And I don't see any real issues staying below 200% FPL for MAGI given that we also live below our means.

I am planning no subsidies because I don't trust them to be there for the long haul. Retirement at age 50 is pretty much a one-way street. For me to sleep at night I need to make sure I've covered as many "known" bases as I can.

 

[marinauser]

I also think a good plan would be to not count on ACA subsidies . At some point, ACA could go away, or other taxpayers look and ask why am I subsidizing someone with $2,000,000 or more in the bank and living in a $500,000 house. Not trying to make it personal and as long as that is the law, I don't have any problem with someone taking advantage of that. It is the same as any other tax rule you can use to save money. But that doesn't mean people won't work to change that.