Retired in Key Largo but Wifey wants out...

[Homeby5]

Hey guys,
I had a stroke about 10 years ago so I retried SSDI in 2009. Wife is a Nurse and is 55 years old. She would like to retire later this year.
Bottom line is we have hardly no debt (about $80k) and all debt can be paid off if needed at wife's retirement. Home is our main asset and is paid off and will use the equity to live off of later in life if we need to. Screw the kids This hopefully will lesson our need for a high income post retirement.
Also...we have an apartment in Key Largo that we will use for income. My parents live there now but will probably generate about 1800/month currently.
Anyway...like most we want to travel some and live OK. Probably will like to pull out about $2500 per month out of around $500K in stock/bond funds to start off and will need less about 7 years from now when my wife claims some SS income.
Anyway.....that's our plan and we will see how it goes. I have loads to learn (draw down advice, post retirement investment advice, etc..) and look fwd to kicking it around with you guys.

 

[24601NoMore]

Isn't $2,500/mo about a 6% WR on a $500K portfolio? If so, you're ~2% and potentially more above "safe withdrawal rate" of 3.5 - 4%..and if we're in a down market scenario to start, that withdrawal percentage would only increase..

 

[pb4uski]

What does FIRECalc say? firecalc.com

Put in your info on the Start Here tab and each of the other tabs along the top of the input area... Other Income/Spending, Not Retired?, Spending Models, Your Portfolio, Portfolio Changes, etc.

Taking out 6% WR for the first 7 years (55-62 for your wife) seems very risky to me.... with that plan you may need to eventually move in with the kids.

 

[Golden sunsets]

I echo the views of those who have posted. Pulling $30,000 from a base of $500,000 would deplete your nest egg too quickly. You are also at risk for sequence of returns turning negative, given the age of this bull market. How much is the condo in Key West worth? Are your parents paying you rent now? If not, the sale of that asset and adding it to your investment portfolio might change the math, ...or not.

 

[ER2B]

How much are you getting from SSDI?

 

[Homeby5]

I'm pulling about $2100 a month from SSDI. And yes the parents are kicking in 1300/month now.

I've plugged in the numbers in two calculators and talked to a "professional" money planner and all agreed that I was more than OK. Now...I won't be worth millions at age 85 but who cares?
I think the kicker is I should only be taking out $30,000/year or 6% WR of my base for about 6 years. This is when we are young enough to enjoy retirement by travelling. In six years...at age 62, I will reduce it to about $15,000/year or 3% WR of my base. Plus...my fail safe is my homes value (right now $800,000) that I can dip into the equity if I absolutely need to. I don't plan on leaving a million plus to my kids all the while having my wife to work longer. If I can use the equity in my home and leave my kids less....so be it.
Finally....I don't need $6k a month to live. That's giving me about $2000 a month to spend on travel. As I get older and/or things turn south....I can live on my income stream (both my wifes and my SS and my rental property) without pulling any money out of my retirement funds if I had to to get through down years.

Am I missing something obvious? I want to pick your brains.

 

[RunningBum]

I feel like it depends on how much all of your SS is. You can easily take 6% now if SS covers nearly everything later.

$2500 doesn't seem like a lot for a couple who wants to travel. I'd be just as worried that $2500 isn't a reasonable figure.

The title thread says the wife wants out of Key Largo but I hear no mention of that in the plan. Or do you just mean she wants out to travel other places once in awhile?

 

[RunningBum]

I see, it's $2500 + $2100 SSDI + $1300 rental income. That's more reasonable.

 

[MarieIG]

The issue is not leaving an inheritance for the kiddos.

The issue is what is left for wifey if you pass first, i.e. what will her standard of living be. I see you have her claiming SS as early as possible; have you looked at what she would receive if waiting until age 70?

 

[Homeby5]

I see, it's $2500 + $2100 SSDI + $1300 rental income. That's more reasonable.

Yeah....except it's $2500 + $2100 SSDI + $1800 rental income (parents will be gone when wife retires). Then another $1300 SS for wife at age 62 or so in todays dollars.

As far as travel money...We spend about $10k a year now. I am figuring double the value when we retire. I can't imagine spending more than that unless we are full time travelers. We could do that by renting both my home and apartment out...which would bring about $5000 per month but not planning on that right away.

 

[Homeby5]

The issue is not leaving an inheritance for the kiddos.

The issue is what is left for wifey if you pass first, i.e. what will her standard of living be. I see you have her claiming SS as early as possible; have you looked at what she would receive if waiting until age 70?

Not sure what she will get at age 70? If I pass...wife will be set because she will either sell home or rent both places in Key Largo and move to a much cheaper place. Plus....she is a nurse and could always go back to work. My measly SSDI isn't a make or break when figuring our budget right now. The home is where the real value is at.

 

[Homeby5]

As far as the Fire Calc...I can't figure out how to put in enough variables. I must be doing something wrong. I have been using this one
https://financialmentor.com/calculator/best-retirement-calculator

 

[Dtail]

Not sure what she will get at age 70? If I pass...wife will be set because she will either sell home or rent both places in Key Largo and move to a much cheaper place. Plus....she is a nurse and could always go back to work. My measly SSDI isn't a make or break when figuring our budget right now. The home is where the real value is at.

Check out the SS estimated benefits calculator. Easy peasy to figure out what she will receive at 70.

https://www.ssa.gov/benefits/retirement/estimator.html

 

[Dtail]

Yeah....except it's $2500 + $2100 SSDI + $1800 rental income (parents will be gone when wife retires). Then another $1300 SS for wife at age 62 or so in todays dollars.

As far as travel money...We spend about $10k a year now. I am figuring double the value when we retire. I can't imagine spending more than that unless we are full time travelers. We could do that by renting both my home and apartment out...which would bring about $5000 per month but not planning on that right away.

So your spending budget is in the ~90k range?

 

[MarieIG]

Not sure what she will get at age 70? If I pass...wife will be set because she will either sell home or rent both places in Key Largo and move to a much cheaper place. Plus....she is a nurse and could always go back to work. My measly SSDI isn't a make or break when figuring our budget right now. The home is where the real value is at.

Nursing can be grueling work; especially as one gets older. A plan based upon her returning to work at age 70+ after a long hiatus when she is tired now? Also, who knows what the housing market will be when she is in such a position that she is forced to sell. Think 2009.

 

[CaliKid]

What about moving to lower cost of living place now? Might be option to consider!?

 

[pb4uski]

....I think the kicker is I should only be taking out $30,000/year or 6% WR of my base for about 6 years. This is when we are young enough to enjoy retirement by travelling. In six years...at age 62, I will reduce it to about $15,000/year or 3% WR of my base. ...

That seems more sensible. You're taking out $15,000 a year (inflation adjusted) for life and an extra $15,000 a year for the first six years.

So if you segregate the extra in the first 6 years and put aside $90... you have $410k left... and $15k withdrawals on $410k is only 3.66%... which should be fine as long as your spending estimates are realistic of what it costs you to live.

 

[Bamaman]

$2,000 a month for travel ($24K per year) is a lot of traveling. My wife and I go on two international trips per year, and we don't spend nearly that much on travel. Other than those two trips, we do no domestic travel in the U.S. other than going to the NE GA Mountains to our RV.

If you go ahead with your wife's retirement, keep your current travel budget for the time being. With careful spending, you can travel adequately on much less money.

 

[Calico]

Nursing can be grueling work; especially as one gets older. A plan based upon her returning to work at age 70+ after a long hiatus when she is tired now? Also, who knows what the housing market will be when she is in such a position that she is forced to sell. Think 2009.

^^^^This. All of it.

 

[Homeby5]

So your spending budget is in the ~90k range?

No...our budget needs are $72K per year and that includes between 2000 and 2500 per month for travelling. To keep it simple think of it this way..... we can pay all of our necessities on our post retirement income streams without touching our retirement savings. The money we take out of our retirement accounts is for our spending only. And again...we are not even considering the fail safe fallback of our home that is paid off and today is worth $800K so I can have access to about $450K in equity.
This is why I am a little surprised that many don't think it is enough? What am I missing? I understand that yes...the world can turn upside down and the home values can be cut in half and the market can drop 50%. Believe me...I went through that in 2008 where I lost a Keys home worth $1.8 mil right before the crash and I had a stroke which cost me my business. But I have over $100k in cash/bonds to get me through 3-5 years of hard times. I also understand that my wife could wait a few years and we would be better off financially but we are not really materialistic. We value our time more than we value a better financial nest egg. OTOH...we are not irresponsible and realize we need a certain amount to survive at the level that we desire.
As far as wife not being able to go back to work when she is 70....I don't see why this is a concern. If I drop dead she can sell the home and live almost anywhere in the country for 400% cheaper than the Keys so again...she would be set financially. Hell...if we sold today, we could buy 4 homes just 30 minutes off of the Keys in Homestead/Florida City and rent 3 out and we wouldn't be having this conversation. But I like the Keys.
Please understand...I am not arguing per sey...I am just offering my retirement plan and if someone can show me details where I am not figuring correct or am missing something then I am all ears. That's why I joined this forum. Than ks again guys

 

[Teacher Terry]

I totally agree not worrying about leaving money for kids. Since you had a stroke young you never know what the future holds. Your wife should retire and you guys travel and have fun.

 

[kgtest]

Numbers seem fine. In a down market you have equity to help you out like you said. I think you built up enough nest egg. How is Health Care looking?

 

[footenote]

Agree with kgtest that you need to consider healthcare options and costs.

While I expect you're ok if everything goes well, I'd worry about asset allocation. That was the #1 motivation when we downsized: getting real estate (primary residence) from 40% of net worth down to 20%. (It's also been great for reducing maintenance and property taxes.)

We are lean-ish RE until my SS FRA. At that point, combined SS will cover 90% of normal expenses. While we could rationalize a 6-7% WR before my FRA (every calculator tells me so!), testing survivor scenarios has convinced me to stick to 4% if we can.

 

[ncbill]

OP & spouse are fine.

With SSDI, OP is probably already on Medicare, so his health care costs are known.

Nothing wrong with a higher WR before a nice SS benefit kicks in...statistically few of us will be able to travel extensively in our 80s, so no time like the present...especially with OP's health history.

 

[Lakewood90712]

Happy wife = happy life .