Can I swing it now?

[Goodprovider]

Okay, this is now my current situation:

- Almost 47 years old
- Divorced
- 2 kids who will be college age in 3 years - I pay for half
- Paid-off house worth about 900k
- About 900k in 401k / profit sharing
- Another 1.2M in liquid assets (555k in savings remainder in equities)
- No debt; net worth is about 3 million
- Expenses are about 60k per year
- Only certain retirement income would be social security and dividends, though may be in line for inheritances

My job is stressful, and frankly I just think I'd welcome a radical change in my life.

When I factor in social security, FIRECALC says I should be fine 100% of the time. College expense is not included in my budget, though health care is. Frankly, I pay so much in taxes now, simply eliminating that cuts my spending nearly in half. I figure I could simply live off my savings until age 59 when I can then start accessing my 401k without penalty. The only factor really giving me pause is my kids' college expense.

I'd also consider moving to a low cost of living area to make my savings go further when my kids are out of the house. What are some good places for that?

Thanks in advance for any feedback. This board and its members are a tremendous resource.

 

[aaronc879]

Are the kids living with you/covered under your health insurance? You may not have enough income to qualify for the ACA with just ~$650K invested in taxable equities.

 

[Goodprovider]

They're covered under my ex-wife's insurance. Hmm, how much more income would I need to qualify? You're suggesting that I up my dividend income?

 

[RetiredHappy]

They're covered under my ex-wife's insurance. Hmm, how much more income would I need to qualify? You're suggesting that I up my dividend income?

If your income is below the ACA threshold, you will be put on Medicaid. It depends on the state. For example, in CA, Kaiser is a very good HMO which takes Medicaid. You get the same excellent care for wait for it... free! No premium, no co-pay for PCP.

 

[Letj]

Looks good to go if you’re sure about expenses. You can certainly qualify for a nice ACA subsidy since you have savings you can live off which should take your budget down depending on what you’re budgeting for HI. I retired at 50 and words cannot describe the difference that made in my life. I have done so much including exploring many hobbies. Go live the rest of your life without someone else controlling your time. Good luck.

 

[aaronc879]

They're covered under my ex-wife's insurance. Hmm, how much more income would I need to qualify? You're suggesting that I up my dividend income?

Depending on which state you live in you need to make a minimum or $12,880 or $17,775. That's either 100% or 138% of the federal poverty level. You need to make at least that much to get ACA subsidies otherwise you would have to go on Medicaid which most people don't think is a good idea if it can be avoided. I believe S&P 500 index fund is only paying around 1.6% right now and you have around $650K in equities so that's $10,400. Just something to look into before you pull the plug. Chances are you have stocks that are up right now so selling them would give you capital gains to add to your income.

 

[Goodprovider]

This is great advice. I really appreciate it. I wasn't aware of the ACA implications. Seems like some say it's better to just go with Medicaid. Either way, it looks like my budgeted health care costs will be less than anticipated.

 

[skyking1]

The 60K spend is great. That does not sound like outrageous COL, so maybe the difference in selling what you have to buy in a lower COL would be the real money. It pays twice, in the money saved and then the future taxes.

 

[Morgan22]

This is great advice. I really appreciate it. I wasn't aware of the ACA implications. Seems like some say it's better to just go with Medicaid. Either way, it looks like my budgeted health care costs will be less than anticipated.

Actually this may be a good time to do some small Roth conversions to get up to 150% FPL. Where I am from, if at 150% FPL, the 2 lowest cost silver plans are $0 premiums per month, $5 co-pay and only $800 max OOP for an individual. Very affordable and you get to move some dollars out of your pre-tax holdings.

 

[RetiredAt49]

OP you are just a couple years younger than me and we are in a similar situation. Divorced… but I only have 1 kid left at home. I sold my home and have approx. 1.8 million in a taxable brokerage account (100% equities with a wealth management company - at least for now), a rental worth $250,000, and about $350,000 in a traditional IRA. I did however remarry and my wife has approx. $1.5 million in rental properties + getting $6,400/month business buyout for next 8 years + owns home (value $500,000) and cabin (value $500,000) and I’m about to pull the plug myself cuz work is majorly stressing me out (along with ex-wife)

 

[aaronc879]

Actually this may be a good time to do some small Roth conversions to get up to 150% FPL. Where I am from, if at 150% FPL, the 2 lowest cost silver plans are $0 premiums per month, $5 co-pay and only $800 max OOP for an individual. Very affordable and you get to move some dollars out of your pre-tax holdings.

This is more or less what I plan to do when I retire to get my income high enough for ACA. I don't know why I didn't think of this earlier. This is a very good option for the OP.

 

[OneMarcilV]

Okay, this is now my current situation:

- Almost 47 years old
- Divorced
- 2 kids who will be college age in 3 years - I pay for half
- Paid-off house worth about 900k
- About 900k in 401k / profit sharing
- Another 1.2M in liquid assets (555k in savings remainder in equities)
- No debt; net worth is about 3 million
- Expenses are about 60k per year
- Only certain retirement income would be social security and dividends, though may be in line for inheritances

My job is stressful, and frankly I just think I'd welcome a radical change in my life.

When I factor in social security, FIRECALC says I should be fine 100% of the time. College expense is not included in my budget, though health care is. Frankly, I pay so much in taxes now, simply eliminating that cuts my spending nearly in half. I figure I could simply live off my savings until age 59 when I can then start accessing my 401k without penalty. The only factor really giving me pause is my kids' college expense.

I'd also consider moving to a low cost of living area to make my savings go further when my kids are out of the house. What are some good places for that?

Thanks in advance for any feedback. This board and its members are a tremendous resource.

If your net worth is 3 million dollars. No reason to stay on with a job that you do not like.

When I retired my net worth was 2505.00. That was quite a bit on monies to live on.

If you get too low on monies the companies you can not afford to pay will let you pay late.

I wrote this in another forum but I ended up owing Social Security cause I made too much monies last year. So there 2 1/2 social security payments with held from me.

So that knocked my new worth down to about 327.00.

I was able to cancel my life insurance policy and then I received 1587.00..

I was lucky I had a credit card that I lived off of for awhile.

So you could do this if needed.

 

[USGrant1962]

You look good to go when you want to. A few thoughts:

• As everyone here will tell you, make sure you have good handle on your expenses/spending including lumpy expenses.
• You already recognize that taxes will drop substantially, also make sure you are accounting for not saving for retirement. Lots of ER-type folks are saving (spending) 15%+ towards retirement, which they won't be "spending" in retirement.
• In FIRECalc, try using 75% of your SS as a conservative assumption.
• You say your job is stressful and would welcome a change - is part time or freelance or consulting work an option? Even small incomes can really help with SORR and just your confidence/comfort level.

 

[cyber888]

2 million x 3% = 60,000 a year .. looks fine to me, considering it's not all in equities.

 

[Dash man]

Have you looked at social security after adjusting future earnings to zero? They assume your earnings will continue in the estimate provided in your statement.

 

[Ready]

Have you tried subtracting your anticipated college expenses and running Firecalc with the balance remaining?

 

[Vacation4us]

If you have agreed to pay for half of 2 kids college expenses you best figure that out before pulling the plug. As an ex who pays 100% of college I think with your assets there is no reason to short change the kids.

My vote is find a new job that you like better and retire when your obligations to the kids are covered.

PS. I am retired 55 and paying for one kids college currently but have a separate account plus 529 to pay her expenses.

 

[pacergal]

I agree, wait until you have the college paid for. Or figure out what it will likely be and subtract that to re run Firecalc with remaining--what Ready says.

 

[money4wells]

Have you looked at social security after adjusting future earnings to zero? They assume your earnings will continue in the estimate provided in your statement.

How would this be done? Can you do it in the Social Security login? Or do you have to manually calculate somehow?

 

[JohnC12]

How would this be done? Can you do it in the Social Security login? Or do you have to manually calculate somehow?

militaryman was kind enough to post this link in another thread...

https://www.ssa.gov/benefits/retirement/planner/AnypiaApplet.html

This was extremely helpful for me as I had assumed that my SS statement showed me my benefits if I stopped working and retired today. I had assumed that I had "earned my 40 work credits" and I was vested. Not the case! In fact, my monthly SS benefit reduced by roughly $600 per month retiring at 48 rather than 62.

Thank you militaryman for posting this link!

 

[Drewjd]

You mentioned living off savings until 59 and then accessing your 401(k). You can actually get to that money earlier by doing Roth conversions. Look up “Roth conversion ladder.”

The very simple explanation is that you can access the amount you convert to a Roth IRA after 5 years (only the contribution amount, not any gains), even before 59.5. You’d have to pay ordinary income tax on the amount of the conversion, but if you’re going to stop working, your tax rate will be a lot lower. And of course no taxes on Roth withdrawals after 59.5 and no required minimum distributions, unlike a 401k or traditional IRA.

I’m 49 and about to retire, as within the next few months. I have enough after tax investments to make it to 59.5, but I’m planning to do Roth conversions as a backstop and for its other benefits.

Just another tool to consider.