Hi, I am 57 thinking of retiring next year.

I'm a little surprised nobody's asked this question:
"How much longer do your kids have before graduation? Any plans for a post-doc?"

BTW, one aspect of considering inflation is that your medical premiums may (probably will) rise, so make sure if you FIRE, you know what your co-pays and caps (and EVERY policy has caps on what it will pay in specific categories) are.

Getting a cancer diagnosis is not the time to find out your medical insurance only covers certain procedures or prescriptives up to a specified amount.
 
2 kids in college? How much longer and how much "overhead" for that? And after college, are they "off your payroll"? IMO those are expenses to consider.
 
I retired at 57 10 years ago. Always good to retire in the middle of a bull market.
A couple of things we did right. Had a nice cash cushion so we could keep our taxable income low to maximize ACA subsidy. Hire an advisor to talk big financial decisions with. Didn’t do it often but saved 10s of thousands in avoiding poor decisions. Stay frugal. Enjoy life.
 
Retired at 57 in 2020. Survived two bear markets. Understand SORR and plan for it. Know that there are ACA subsidies, but almost any income will get you PTCs - premium tax credits so there is less incentive to minimize income these days. Enjoy life, it’s what you saved for. Don’t waste money on a financial planner. Too much good information everywhere here and elsewhere.
 
Thanks again for all the great inputs.


Financially we are ready. Psychologically is another issue.

I believe I have considered all the financial issues that people have addressed here- healthcare; sequence of returns risk; inflation; taxes; boomerang kids; long term care; one spouse passing; etc. Even giving ourselves a 30% increase in net montly income we get 95%+ success rates in FireCalc.

Psychologically it's scary. Is it REALLY enough? How much are we losing out by retiring now? What IF?
 
Jimonlimon said:
Thanks again for all the great inputs.


Financially we are ready. Psychologically is another issue.

I believe I have considered all the financial issues that people have addressed here- healthcare; sequence of returns risk; inflation; taxes; boomerang kids; long term care; one spouse passing; etc. Even giving ourselves a 30% increase in net montly income we get 95%+ success rates in FireCalc.

Psychologically it's scary. Is it REALLY enough? How much are we losing out by retiring now? What IF?
Click to expand...

Most of us went through these doubts and concerns. Most of us get over such things rather quickly. You will too. Keep us posted on your progress.
 
I’ve got a friend pushing 60 who just found out he has cancer basically all over his body. He had been losing weight but his doctor chalked it up to a thyroid issue. He has plenty of money too which is good for his wife but it won’t buy him good health.

Obviously you need to be confident of your finances but if good….time is precious. I retired at 52 fwiw. No regrets.
 
Similar situation to us.

Jimonlimon said:
I know many think "Retire Early" is probably younger than me, but I still hope to gain valuable info from this forum. Currently planning to retire either age 58 or 59.

Stats:

Married, both age 57, two kids in college, one income.

I'll draw my state government pension as soon as I retire- it also includes 80% of my health insurance premium and continues subsidy for Medicare. We will both have Social Security benefits with mine being more than hers, so probably wait until close to 70 to draw mine and start hers earlier.

We have enough in our 401k's to bridge the gap to starting Social Security but it's a bit scary to plan 10-12 years of withdrawals.

My pension would increase by about 8% for every year I wait from now until age 63 so my spouse thinks I should wait; I feel my youth slipping every day I sit on my butt at work and want to retire sooner.

I'm looking forward to reading these forums for advice, inspiration, and cautionary tales.
Click to expand...

DH retired last year at 58 & I this year at 56--both with 30-35 yrs in teaching.
3 kids, only 1 left in college, tho his 529 fully covers all his expenses & he does not live at home.
We have excellent pensions.
We have a nice chunk of investments.
We have NO debt.
Our fixed expenses are only utilities, insurance, gas, taxes.
Our biggest OUCH is health insurance...and it will be a bit higher until May.
$1700--but covers our 2 youngest as it was the best option for them.
It will drop to $1400 then. Still ouch. Can't wait for Medicare!

Our retirement goals are TRAVEL (well, DH also says GOLF...).
Some events this year made us realize there are NO GUARANTEES!
Our pensions will easily cover living expenses at any point with plenty to spare. (when one dies, the other will still get a decent chunk from the spouse)
So we realize that we do not need our investments to last until we die...just until we cannot travel anymore.
So we are traveling!

It's all about priorities.
 
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Now retirement is no longer "next year", rather the end of THIS year! :)

Some numbers:
One-income household. With two kids in college we are currently spending about $9k per month which is $1k more than my net paycheck.

I'm not ready to do a zero-base budget; that will require a bunch of long sit-downs with my spouse/financial manager. Instead I'm thinking about changes from the current annual $108k spending (after taxes). I broke it down like this:
  • First 5 years of retirement when we will be traveling more, the kids will either be in college, grad school, or just starting their careers. Also our cars are 10 and 20 years old so at least one, possibly two new cars.
    $40k extra first year for a new car. (Mostly covered by cashing out my accrued leave when I retire)
    $144k/year. Current $108k base plus: $12k for big ticket items like new appliances, HVAC, next new car; $6k extra for kids (one moving off-campus next year); $12k extra for increased travel. $6k left for good deeds.
  • Next 10 years when kids will be hopefully on their own and we will still do quite a bit of travel.
    $132k/year. Previous $144k base minus $30k college expenses; plus $18k for good deeds, grandchildren 529, even more travel, etc.
  • Then considering less travel so fewer needs as we get older.
    $120k/year. Reduce spending by $12k/yr.

Death of one of us would reduce net income by $24k/year which will likely be offset by reduced expenses.

Health insurance and Medicare supplements are included in my pension and is outside of these estimates. Potential long term care costs would reduce our children's inheritance but isn't otherwise separately funded.

Income sources are state government pension, SS x 2, 401k. (mostly all taxable:( ) Fairly pessimistic estimates work with the above numbers.
 
Looks like a good plan. I would replace the 20 year old car now since you are still working - easier to get a loan with a job.
 
Al18 said:
Looks like a good plan. I would replace the 20 year old car now since you are still working - easier to get a loan with a job.
Click to expand...

We will likely pay cash for the new car. Although money is tight now the day I retire I will receive cash out of accrued leave and have penalty-free access to my 401k. My wife will have access to her 401k a year later.
 
Jimonlimon said:
Now retirement is no longer "next year", rather the end of THIS year! :)

Some numbers:
One-income household. With two kids in college we are currently spending about $9k per month which is $1k more than my net paycheck.

I'm not ready to do a zero-base budget; that will require a bunch of long sit-downs with my spouse/financial manager. Instead I'm thinking about changes from the current annual $108k spending (after taxes). I broke it down like this:
  • First 5 years of retirement when we will be traveling more, the kids will either be in college, grad school, or just starting their careers. Also our cars are 10 and 20 years old so at least one, possibly two new cars.
    $40k extra first year for a new car. (Mostly covered by cashing out my accrued leave when I retire)
    $144k/year. Current $108k base plus: $12k for big ticket items like new appliances, HVAC, next new car; $6k extra for kids (one moving off-campus next year); $12k extra for increased travel. $6k left for good deeds.
  • Next 10 years when kids will be hopefully on their own and we will still do quite a bit of travel.
    $132k/year. Previous $144k base minus $30k college expenses; plus $18k for good deeds, grandchildren 529, even more travel, etc.
  • Then considering less travel so fewer needs as we get older.
    $120k/year. Reduce spending by $12k/yr.

Death of one of us would reduce net income by $24k/year which will likely be offset by reduced expenses.

Health insurance and Medicare supplements are included in my pension and is outside of these estimates. Potential long term care costs would reduce our children's inheritance but isn't otherwise separately funded.

Income sources are state government pension, SS x 2, 401k. (mostly all taxable:( ) Fairly pessimistic estimates work with the above numbers.
Click to expand...

Keep in mind that when one person (of a couple) passes, there are unpleasant changes in your personal tax situation and "cliffs" for ACA and/or MC, etc. etc. Be aware and plan for those. Something I've been looking into but have not yet finalized a plan (other than spending more - a lot more of my stash to reduce future RMDs.)
 
Teacher Terry said:
A discussion with your wife should be a priority to determine why she doesn’t want you to retire. It might put some of her fears to rest. If she doesn’t want to share the home space all day she can get a job.

None of us know how much time we have left and few people want to work until they die. 8 of my friends never lived to 70 despite all living healthy lifestyles. Some people are just unlucky. Plus you want to hike, etc and the younger the better for that.
Click to expand...

I went at 58/59. Money was not an issue. I got a golden handshake. Subsequently had opportunities. I was burnt out, tired of my industry.

I had a list of travel. I wanted to change our lifestyle before it was too late....living arrangements, health, etc.

I had an example. My father retired at 59. Active until he passed at 88. He never regretted the decision or the hit he took on his DB pension.

A colleague asked me one day how I would view the decision not to retire early if I passed away in my sixties. Or if a medical issue made it impossible or improbable that I would be able to do some of the post retirement things that I had enunciated. That, plus my spouse saying do it (but not believing that I could walk away from my working life for more than six months).

So, I did it. Never looked back. Ten years later my only regret is that I could have done it at 55 and did not. C'est la vie.

Over the past years I have had several former colleagues pass away. Some in their late fifties/early sixties and still working. Others within a year or two of retiring at 64/65.

It was different for us. Children gone, nothing to hold us back.

Once we made the decision we started down two parallel paths. The first was getting our home ready for sale/downsize. The second was where to travel on our first six or seven month international trip.

Not certain if it is right for you. Only you and your spouse know the answer to that. It could be that you simply need a career change. I don't know,,,,only you know. All I can say is that neither of us has any regrets...financial, lifestyle or otherwise. If in your heart you know it is time to pull the plug, and the numbers work, then make like the Nike advert says and just do it.

No one that I know aspires to be the wealthiest person in the nursing home or retirement home.
 
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A question and some numbers

Summary question:
  • What's a good way to manage 401k funds used as bridge from starting retirement to beginning Social Security (SS) draw?
  • We want enough left after this bridge for early inheritance for our kids and to help with long term care if needed.
  • Ideas
  • Keep in 401k account with mixed stock/index funds and bond/stable principal funds and draw as needed from whichever is doing better? (Risk)
  • Buy a guaranteed annuity? (Low returns but peace of mind)
  • Bond ladders within 401k? (Somewhat better returns?)
  • Other, better ideas?

Still undecided on:
  • When to start SS, which obviously affects how much we will receive.
  • Income goals prior to starting SS.


Background. Not sure if this information really adds to the question. (all in today's US Dollar values):
  • Current annual pre-tax pay is approx $134k after FICA, pension contribution, and some other minor payroll deductions. Net after state/federal income taxes approx $110k.
  • Planning to retire in a year when my spouse and I are both 58-1/2.
  • Will start pension immediately, which also includes health insurance subsidy. Pension is $108k/yr with 2% annual COLA cap and supplemental COLA to keep purchasing power at least 75% of the original- so even after years of high inflation my purchasing power will be at least $81k in 2024 dollars.
  • Self SS @age 67 FRA $41k/yr
  • Spouse SS @age 67 FRA $27k/yr
  • Self 401k approx $500k, available immediately upon retirement per "rule of 55"
  • Spouse 401k approx $500k, available at 59-1/2
  • $50k before taxes cash out of accrued leave upon retirement, to be used to buy new car.
  • No other liquid assets, individual stocks or stock/bond funds outside of 401k.
  • Home worth $900k with $140k mortgage, $1k/month running another 18 years. Probably won't pay off before starting SS.

Goal:
  • Use funds from 401k to bridge from starting retirement to starting SS. I would like to give ourselves a significant income boost for at least the first decade of retirement.
  • After starting SS we shouldn't need to spend money from the 401k for regular expenses, since even if my pension loses against inflation the combination of pension and SS drawn at 63 will match our current income.
  • Want to still have at least $300k at age 85 if needed for long term care; if it looks like we're way ahead of this would plan to give money to our kids right after starting SS (ideally draw another $300k, but this isn't a requirement).
  • Obviously the later we defer SS the more we will get every month; but also delaying it means drawing down the 401k's more.
  • Currently considering having spouse start SS at 62-64 and me starting 66-70.
 
I'm going to post the previous question as a new thread in "Fire and Money"
 
My answers to: Some important questions to answer before asking Can I Retire

Some of my ideas are evolving but thought I should answer the questions.

  • 1. Current Expenses:$116,000/year. Just slightly more than net salary income.
    We don't track categories of expenditure (but could go back through checkbook & CC statements)
  • 2. Retirement Expenses including Healthcare:Health care is included in my pension. With kids still on the plan our share is $120/month including dental. After kids go off it's $30. Once we start Medicare it's $10 for A-D and dental; includes reimbursement for IRMAA.
    I plan for expenses to go up, but they should be easily covered by net income of about $144k/year which is $32k/year more than current income to start, then tapering off to an end-state of $130k while we both survive, dropping to $100k when one passes.
    Mortgage will have 15 years remaining with $1013/mo payments. Probably keep it until starting SS then consider paying off.
  • 3. Money for kids or surprises:Current expenses include two kids in college who will each have 1-1/2 more years to go. Most of the college expenses are covered by scholarships, aid, and kids' separate income. Scholarship money does add to our tax burden. I estimate our current expenditure to be about $20k/year but only expect it to drop by $10k after they graduate.
    Budgeting $200k net ($300k gross) to help with home purchase down payments in about 10 years. Budgeting another $200k net in about 25 years for early inheritance and/or grandkids' college if it's not needed for LTC self-insurance.
    Budgeting $10k/year for new HVAC, appliances, furniture, cars, or other big-ticket items. Will use $35k net from accrued leave cash-out to buy a new car shortly after retirment. (Our last brand new car was 2003 so spouse deserves it!)
  • 4. Lifestyle upgrade?Lots more travel. Estimating additional $20k/year for the first decade of retirement. We probably spend about $10k now.
  • 5. Income?Virtually all taxable! Age 58-67 Pension & 401k draws; Age 67-103 Pension & SS with 401k remainder for big-ticket items and inheritance.
    Expect to use about 1/2 the 401k to bridge the 9 years from retirement to starting SS.
  • 6. Pension?$107k/year with 2% COLA's. If purchasing power drops to 75% of original, extra is added (PPP) to keep it at 75%, or $80k in today's dollars. Pension includes healthcare coverage. Surviving spouse 100%. I use 3% annual inflation for modeling.
  • 7. SSA estimates: Used SSA.gov. and ssa.tools. Both FRA at 67, or 8-1/2 years after retirement. Self $3400/mo, spouse $2300/mo for $68k/yr. No GPO or WEP. It seems prudent for spouse to draw earlier and self to draw later for best survivor protection.
  • 8. Taxes?I use Federal and California 2023 tables and standard deductions with a simple scale for inflation. Assumed current rates, which obviously may change.
    Initial net income estimated at $144k/yr. After inflation has fully depleted pension to $80k equivalent, net after taxes of pension and SS is $130k/yr. Once we start SS our marginal rate will drop as it's 85% Federally taxable and 0% California. Probably do Roth conversions or pay off remaining mortgage at this point. (Pension includes reimbursement for IRMAA cost). I'm not afraid of RMD's but will try to avoid bumping too high in the tax brackets.
  • 9 Nest Egg?$850k in the house we plan to keep living in; very little in the bank; $30k in Roth; $1,050,000 in 401k.
  • 10. Lifespan?Some grandparents lived to 70, others lived to 102. After starting SS no additional draws from 401k planned for routine expenses.
  • 11. FIRECalc?Yes. It looks very optimistic. Doesn't play nicely with my pension so I put 75% of the pension amount in.
  • 12. One dies before the other.If one of us is deceased the survivor will lose $2300/mo SS and go to single tax rates for ~$100k/yr net.
    If LTC is needed it may be tax deductible so most of $120k/yr gross could be available.
    Planning to have at least $200k remaining investments plus house or proceeds from house. No LTC insurance.
 
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It’s getting real! Retirement will be this Christmas, next May, or possibly July. I’ve had a job hanging over me for 37 years and am so ready to be done.

I was sitting in a work meeting where staff was rolling out a new system that I’ve lobbied for 10 years. I realized I’m happy but don’t really care anymore.

Kids college financial aid is still an issue and the FAFSA deadlines are changing for this year which may put a sabot in the machine, but I’m undaunted. We have a workaround which will only cost a couple thousand dollars.

My wife and I are working together on a plan and will hopefully have a final decision within a couple weeks.
 
That sounds good. I RE'd at age 57 and 37 years.
 
Running the numbers:

Retiring this Christmas gives us plenty of secure income.

Working 4 more months increases my daily net retirement income by $3.42. Working through next Christmas adds another $10/day.

In other words if I work 4 months I can buy a cup of drip coffee everyday. If I work a year I can buy an extra burrito.

I think it’s about time!.
 
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Congratulations! It's hard to make the decision, but it certainly sounds like you and DW have planned well and are covered. Once you're out, you'll wonder why it took this long.
 
Jimonlimon said:
Running the numbers:

Retiring this Christmas gives us plenty of secure income.

Working 4 more months increases my daily net retirement income by $3.42. Working through next Christmas adds another $10/day.

In other words if I work 4 months I can buy a cup of drip coffee everyday. If I work a year I can buy an extra burrito.

I think it’s about time!.
Click to expand...


I'll put in my plug for "This Christmas" - forget the coffee and burrito!:LOL:
 
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