Nervously contemplating ER

[BeachOrCity]

I use mint to track expenses. I charge virtually everything on a fidelity cc for cash back. You are in good financial shape but in retirement you're gonna get killed in taxes once you hit 70. I would get some professional advice while you still have some time to plan. There are things you can do to mitigate this. Go read about required minimum distribution. Between that pensions and ss half your dough will go to taxes.

As an almost RE of 52... How does one optimize taxes when they need to do the following:
-- Try to get ACA premium tax credits from 52-64
-- Try to avoid SSA taxation of up to 85% of benefits
-- Optimize SSA claim age
-- Try to avoid RMD taxation



I kind of think it just makes most sense to just optimize for taxes in the short term, and deal with the other issues later? Or if someone has a method I am all ears. Seems like too many variables and unknowns (long term tax rules) to try to optimize now for?

 

[Ready]

You would have to have some crazy high expenses to not be completely set for ER today. I would try to get a handle on what they are so you can realistically assess your situation, but with the portfolio you have saved, along with the pensions and SS, you are on the very high end of the curve for this forum.

 

[Doc0]

Phil DeMuth of Conservative Wealth is my financial advisor. He wrote a book called "The Overtaxed Investor" last year. It is specifically about this issue. He's written a dozen books and is a contributor to Forbes, has been on CNBC etc. I say that to kind of fix his credentials in financial space. He's no joke (but extremely funny) and not just someone trying to sell annuities. I would buy that book as a start, and read it. It's on Amazon. The way I chose him was I read 3 or 4 of his books and his style meshed with mine, so I called him up, and then hired him. Choosing an advisor is difficult because Wall Street is full of every kind of predator you can think of, but the Government is worse. That propeller head at the IRS gets paid the same whether he's reviewing JP Morgans finances or yours. Who do you think is the easy catch? I use Phil for management but also for "insurance". I have a younger wife and 2 kids who don't know much about investing and taxes. If I croak I know they will be properly taken care of. That planning in itself is worth what I pay him.

Retirement is not about what you make it's about what you keep.

Best

 

[WestUniversity]

Stress

Both of us are getting fully stressed at work and it seems to be affecting our basic outlook on life if not our health. I hope RE does not become too much of a surrogate stress point.

I work for mega mega corp for 28 years -- it is insane.

I'm right there with you. I have worked for MegaCorp for longer than I care to think about. The ever increasing stress has affected the health of several former co-workers (who retired because of it) and its affecting my health as well. I'm planning to FIRE in the next 10 - 15 months. The mere thought of that brings a smile to my face...

 

[BeachOrCity]

I'm right there with you. I have worked for MegaCorp for longer than I care to think about. The ever increasing stress has affected the health of several former co-workers (who retired because of it) and its affecting my health as well. I'm planning to FIRE in the next 10 - 15 months. The mere thought of that brings a smile to my face...

Sometimes I think we all work for the same megacorp!

 

[WestUniversity]

No Doubt

Sometimes I think we all work for the same megacorp!

I used to absolutely LOVE my job. However too many mergers, acquisitions, system conversions, realignments, consultants, retirements, management changes, and layoffs/right-sizings have ground me down. The growth of my responsibilities has far outpaced the compensation and the recognition.

However, there are issues internal and external to my j*b and MegaCorp that will fall into place in 2018, which will most likely be my FIRE year...

 

[RothReady2Retire]

Well, you should get a number that you can live on and go from there. If it were me I would be gone tomorrow with your portfolio.

If it were me I would have gone $3M ago.

 

[aida2003]

If you are nervous contemplating your potential retirement with your assets and pensions, then other people with *way smaller* assets should be shaking in their boots while being *happily* early retired. I'm not there yet, but I hear that attitude and expenses are the biggest drivers before jumping the ship.

 

[ace8]

Have you studied §72(t)(2)(A)(v) withdrawals as a bridge to ameliorate tax exposure to rmds? Just starting to think about it.

"ameliorate" - Nice word

You have a lot of tax planning to do. You have 1 pension starting shortly and a second in 10 years?

The general guidance would be to spend down your post tax $ in ER and do Roth conversions to smooth your tax ride.

To do this, you have to estimate future tax rules and cash flow. RMDs are just one variable.

 

[The Onceler]

Phil DeMuth of Conservative Wealth is my financial advisor. He wrote a book called "The Overtaxed Investor" last year. It is specifically about this issue. He's written a dozen books and is a contributor to Forbes, has been on CNBC etc. I say that to kind of fix his credentials in financial space. He's no joke (but extremely funny) and not just someone trying to sell annuities. I would buy that book as a start, and read it. It's on Amazon.
Best

Thanks -- I bought it today for Kindle. $9. Should be fair shot at being worth it.

 

[CaliKid]

Pensions plus assets plus no kids. You are golden! Enjoy it!

 

[The Onceler]

Thanks all. I really appreciate your insight and support. We are really close to making a relatively firm mental commitment to making 57-1/2 (DW) and 57-2/12 (me) work. I'm pretty confident that we can tailor our expenses (over pension and any SS) to our portfolio performance. But will track for now. I don't need to formally commit until July 1. DW is good to go at any time.

 

[Sun456]

Honestly, I thought I was good but you have me beat solid. I think you are insane for staying one day longer. The truck of doom could take one of you out and then what would all the savings be for? Or a stress related health problem could develop. I suggest you change your time frame to Nov. 1 2017 or as soon as you can practically make it.

To get a handle on expenses put what you think you are spending in a separate checking account and put all your auto pays onto that account. Only write expense related checks from that account. Then see if you have to goose up the account at any point in the year.

I know you can track the details with apps and such but I use the above method and it gives me a great deal of confidence knowing that I haven't forgot anything and I don't have to do any extra work tracking anything.

Also work through something like Fidelity's planner or similar. Having a visual picture of what you have will likely have you smacking your head and saying why not now?!? They have a yellow bar that shows lifetime income, an orange line that shows essential expenses and a red line that shows discretionary. I would be very surprised that for your expected lifetime you aren't in the yellow all the way through.

Congratulations!

 

[Pellice]

I used to absolutely LOVE my job. However too many mergers, acquisitions, system conversions, realignments, consultants, retirements, management changes, and layoffs/right-sizings have ground me down. The growth of my responsibilities has far outpaced the compensation and the recognition.

However, there are issues internal and external to my j*b and MegaCorp that will fall into place in 2018, which will most likely be my FIRE year...

West University, if you like, join up with the "Class of 2018" thread in the Life after FIRE forum, and share the countdown!

 

[WestUniversity]

West University, if you like, join up with the "Class of 2018" thread in the Life after FIRE forum, and share the countdown!

Thanks. I’m not sure how to do that however.,,

 

[Walt34]

Thanks. I’m not sure how to do that however.,,

Easy, just click the link:

http://www.early-retirement.org/forums/f29/class-of-2018-a-64512.html

 

[kimcdougc]

OP, you are golden. Monday would be a great day to hand in both of your resignations. Then you can really begin the "rest of your life." Good job and happy trails.

 

[The Onceler]

OP, you are golden. Monday would be a great day to hand in both of your resignations. Then you can really begin the "rest of your life." Good job and happy trails.

Thanks! We have, with help here and from our financial advisor, basically decided it will be end of 2018 for me. That in itself is a giant relief. I’ll need the time to disentangle gracefully from my work commitments after 28 years. DW has similar issues but can probably chuck it a bit sooner.

Advisor looked at projected cash flow and said with rmds looming in about 15 years we are going to have some planning work to do as many of you observed.

We have started to plan next phase. Going to join class of 2018 although technically I think my date is 1/1/2019.

 

[Aerides]

Why so long? Disentangling from work (even if you are C-class) should not take nearly that long. You'll find many threads here from folks who gave long notice only to realize their employers squandered it, replacing them with barely a month left or asking them for more time.

Shoe on the other foot, how much warning would they give you?

Your decision of course, but that extra year won't make any difference in your finances, and a year at 57 is worth a lot to most of us.

 

[The Onceler]

Thanks. Hard to explain completely. It isn’t about money; it’s mostly a matter of commitment and responsibility and reputation. A graceful exit that does not jeopardize my place of work for 28 years is important. It is not a bad place, just a stressful one. I’m more "they" in that I can pretty much chart my own path. Doesn’t make it much less stressful. While not exactly a victory lap, a year spent with a commitment to retire at the end will be worlds away from a year without. There is a good bit of fringe benefit to be enjoyed if one throttles back on the working day a bit. (Also, my contract requires 6 months’ notice, which probably would be waived if I ask politely).