Considering to FIRE next year but still a bit hesitated

[Leon Q]

I am considering to FIRE next year but still a bit hesitated to tend my resignation.

I am 58 and wife is 55 retired, son is independent.

Our resources:
401k/tIRA: 1.2M
Roth: 500K
taxable(checking/savings/brokerage): 330K
Home 350K just paid in full recently.

I think our base expenses will be less than 45K since no mortgage. I have used FIRECalc and seems we can be FIRE'ed if we want.

I need some critique on my strategy:
For the next few years, I planned to spend down our taxable accounts to 0(COL + Health Insurance + tax on converting 401k to Roth).

Two Questions:
1. We are planning to move to a warmer state like NC. And if we buy a new home there(hopefully within 550k), we are still likely
need to get a loan initially, without a job this can be an issue, right?

2. Health Insurance: we are still healthy, we don't visit Doctors a lot other than annual check-ups.
What is the optimal Roth coversion amount for us to avoid paying super high premium?

 

[RetiredHappy]

1) Lender wants to see income and that there is sufficient income to make monthly mortgage payment. If you are doing ROTH conversion, it will show up as income and you will need to find out how much is needed to meet lender's income criterion.

2) You want to look at the lowest amount which will qualify you for maximum premium subsidy, as well as share of cost subsidy. 4 years ago when I looked at ACA it was something like household income of $24K which would keep us out of Medicaid and gave highest subsidies. I don't know the numbers anymore

(1) and (2) are in conflict because (1) requires more income while (2) needs less income to give you maximum subsidies.

 

[RunningBum]

I don't have experience with #1 so I'll let others comment.

On #2, until this year the key was to stay under 400% Federal Poverty level based on your family size. One dollar extra could cost you thousands. That cliff has gone away for the next two years, so basically what you convert costs you 8.5% in reduced subsidy, so you have to weigh the advantage of paying a lower rate now than when you take SS and have RMDs vs. that 8.5% loss.

A second goal might be to stay under 250% FPL so that you can get cost sharing reductions. I have no chance to keep my income that low so I don't know just how much that is worth.

My own strategy had been to stay as close to 400% FPL without going over until this year, when I pushed conversions a little bit more to the point where my qualified dividends would be taxed. Everyone's situation is different so run your own numbers. In some cases it may not make sense to convert at all. In others it makes sense to forego the subsidy and convert a bunch, especially if your subsidy would be pretty small.

 

[qwerty3656]

I'm trying to understand why you still need a mortgage. Is it just the arbitrage of to making more than the mortgage rate by investing the money or is there something else? Also, you're selling a house for $350k and buying a house for $550k - most people look to downsize

 

[Leon Q]

Yes, one reason is I want to take the adavantage of low rate, and keep more cash at hand to be safe. The other reason is NC housing is
more expensive than here in MN. Similar(or smaller) one to mine often costs 100K more, and hard to get. I know a couple of people
still can't find a right one in their price range months after their house sold.

 

[Surewhitey]

Maybe get the loan just before leaving the j*b, say in the winter / spring, then resign early spring after making appx $30k (maximize your subsidies for HC).

Years after that, maximize your Roth conversions to the best outcome for subsidies.