Our First Year of Retirement!

mountainsoft

Thinks s/he gets paid by the post
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Nov 14, 2016
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Washington State
I can't believe it has already been a year since we retired. Retirement is awesome, but the time has passed so quickly. The first six months were sort of our "honeymoon" phase, with lots of outings locally and a couple of road trips. Great times! Once winter set in we mostly just hung around home. I think our biggest surprise is just how busy we are. I worried we would be bored with nothing to do, but we're constantly running errands, working on projects, or tending to our elderly parents. We often wonder how we ever had time to work.

One downside is keeping track of the days in retirement. My wife's work schedule basically defined Monday through Friday, with weekends to relax and get things done around home. Now every day is Saturday so we often forget which day of the week it is. :) With no alarm clock to worry about, we typically go to bed around 10pm and wake up around 7am or 8am.

I tracked all of our expenses in detail for about 5-7 years before we retired. We have no mortgage or other debt and spent an average of 40-45K per year while working. I assumed we would spend about the same after retiring, adjusting for inflation. In reality a lot of costs went away, like gas, work clothing, etc. but I figured that would be balanced out with more travel and activities. I also planned an additional 5K per year for the first five years to allow for a little extra fun starting out.

I wanted to keep our taxable income as low as possible in retirement, so I converted all of my traditional IRA to a Roth IRA over a period of about 5 years. About half is in CD's, the rest is in S&P 500. We also started a Roth IRA for my wife about 3 years before we retired. Combined we only had about 189K in our retirement accounts and 56K in savings when we retired. I know, shockingly low, definitely LEAN FIRE. :)

My wife retired at 54 with a nice pension of around 30K per year. I was 59 at the time and sort of semi-retired from my self-employed business. Other than answering a few emails and taking care of finances, I am no longer actively working. But, it still brings in a few hundred dollars each month as a side gig.

My wife couldn't start her pension until she was 55, so we lived off of our personal savings for the first 5 months. She did receive a 16K final check from work for unused vacation and sick leave which helped get through those first months.

Healthcare was kind of a hassle starting out. We lost her work sponsored health plan, but without taxable income we didn't make enough to qualify for ACA coverage. COBRA was way too expensive, so we were forced to take an extended Medicaid plan until we could sign up for ACA in October. There were a lot of applications, denials, and reapplications, but it all worked out. Now we're on an ACA plan with zero premiums and only a few copays and minor drug costs. We had to find new doctors and learn the healthcare system beyond Kaiser, but we're settled in now.

Despite the stigma, Medicaid was fine. We were able to keep our same doctors with Kaiser, and being on Medicaid qualified us for the Affordable Connectivity Program which lowered our internet bill by $30. Combined with a new internet plan, we actually had a few months of negative internet bills. Unfortunately, we no longer qualify and the ACP is ending, so our internet will go back to around $70 next month.

Thanks to our low income I can also apply for a property tax reduction after my birthday this year which should freeze our property value and lower our property taxes from 5K to around 2-3K per year going forward. We might qualify for deductions on our electric bill also once I turn 62, but that's still a couple years out. I will continue seeking out any other low income benefits we might be eligible for. Why not? :)

We're both planning to take our social security around 62 or 63. After deducting 30% for the possible SS funding problems, I should bring in about 6K annually, and she'll get about 16K annually. When the time comes we'll review if we can delay SS, but my calculations don't show any real benefit to waiting. It would provide higher SS payments but would mean spending down more of our portfolio. Cash flow is all that matters, and SS ends when we die. Better to leave the portfolio for the surviving spouse or our daughter, or to cover emergencies.

We did have a lot of major expenses this year we weren't expecting. We had a few significant car repairs, needed new tires for two cars, our well pump failed, we replaced our water heater, and a few other big ticket items. All were things I had planned for, I just didn't think they would all occur in a four month period. :) So that was a hit to our budget, forcing us to scale back some of our recreational plans this year. On the upside, we shouldn't have to worry about these things now for a few years.

One year later our savings is only down about 10K and our retirement accounts are up over 29K. Overall we have more money than we started retirement with. We haven't needed to touch the retirement accounts, and I doubt we will need to this year either. If I start social security in a couple years we'll bring in around 36K of steady income, which would only require 4-9K from our savings/retirement. That will jump to 56K annually when my wife starts SS in 7 years, well beyond our needs. We do have some extra expenses starting this year, but it's possible we may not even need to touch our retirement accounts. We'll see, life happens.

Just looking at the numbers we look poor on paper, but we're enjoying life and definitely feel blessed and a little spoiled. We live a fairly minimal life anyway, but purchase whatever we need without giving it much thought. We go on lots of little dates and have a small vacation planned next month. Life is good!

We have both loved being home together 24/7 now. I have worked from home for over 20 years so not much has changed for me, but my wife is still settling into her new retirement life. She hasn't really developed a routine or taken up the crafts she expected to do, but she'll get there. She has been more involved with friends and family than either of us expected, which is an adjustment for me as an introvert, but we're slowly working it out.

Overall our first year of retirement has been wonderful. We have no regrets and are excited about the years to come. Hopefully we have many more years ahead.
 
What a terrific retirement story! Thanks for sharing. Wishing you many more happy retired years.
 
A great first year! Thanks for sharing your story.
 
I’m glad your retirement is going so well!! These will be some of the best years of your life.
 
I can't believe it has already been a year since we retired. Retirement is awesome, but the time has passed so quickly. ...

We have both loved being ... together 24/7 now. ...

Overall our first year of retirement has been wonderful. We have no regrets and are excited about the years to come. Hopefully we have many more years ahead.
Excellent. Thanks for posting! We retired at 57/56, almost 7 years ago. These particular points are definitely true for us as well!

Hope that it continues for you as it has for us.
 
Great story.

I know what you mean when you say that its hard to remember what day it is. I can tell the first thing in the morning when I go to my pill box....
 
Thanks so much for telling your story. It's encouraging to me and I'm sure to others that have not yet taken this upcoming step . Nice write up.
 
Now every day is Saturday so we often forget which day of the week it is. :)
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This takes care of that! ?
 
Great story.

I know what you mean when you say that its hard to remember what day it is. I can tell the first thing in the morning when I go to my pill box....
Funny you should say that. We both use our pill boxes to figure out what day of the week it is too. First thing each day... Oh, I guess it's a Tuesday. :)

Still, we have forgotten to put our garbage cans out a couple times already because we forgot what day of the week it was.
 
Great first year retirement story! May you have many more to share.
 
Terrific, my inlaws retired with $200K (with SS and a small pension) and a paid off house around 65 and lived into their 90's and never were hurting for anything. Of course that was years ago, but even then it was touchy.
 
Congrats. We sometimes forget the day of the week. 7th year of retirement and couldn't be happier, although dealing with a minor injury now which prevents playing Pickleball currently.
 
I almost always remember the day but the date can be off by a couple of days or so from time to time. Fortunately, my computer always displays the date.
 
Funny you should say that. We both use our pill boxes to figure out what day of the week it is too. First thing each day... Oh, I guess it's a Tuesday. :)

Still, we have forgotten to put our garbage cans out a couple times already because we forgot what day of the week it was.
Our town uses the Recycle Coach app. Notifies us each afternoon prior to garbage and recycling days. Otherwise, mark garbage day on your pillbox the day prior ?
 
Great story and it will give confidence to those without a massive pile of money saved for retirement. You will enjoy and adjust as necessary. I think you will live the good life and enjoy!!
 
Combined we only had about 189K in our retirement accounts and 56K in savings when we retired. I know, shockingly low, definitely LEAN FIRE. :)

IMHO, you are not really LEAN FIRE. There are lots of articles out there on "what's the average retirement nest egg". Here's one. It says for 55 to 64 year olds, the average 401k balance is $208k, and the median 401k balance is $71k. So, either way you cut it, you have more than half the sample population. Plus, your wife has a pension! Well done!
 
I think you are correct that cash flow (especially "guaranteed" cash flow and - cherry on top - also COLA'd) is the key. If that cash flow is enough, you are probably golden.
 
Thanks for sharing your story. As fellow Washingtonians it was good to hear how the health care shuffle played out for you.
 
IMHO, you are not really LEAN FIRE. There are lots of articles out there on "what's the average retirement nest egg". Here's one. It says for 55 to 64 year olds, the average 401k balance is $208k, and the median 401k balance is $71k. So, either way you cut it, you have more than half the sample population. Plus, your wife has a pension! Well done!
Yeah, from our perspective we feel wealthy. We don't need much. We drive 20+ year old used cars, live in a small 1456 sq/ft house we built ourselves (never had a mortgage), and generally own little in the way of "toys". No boats, motorcycles, fancy cars, expensive jewelry, etc. My woodworking tools are probably some of our most expensive possessions but those balance out somewhat by building most of our own furniture. Even if we had a few million in savings, I doubt we would live our life any differently.
 
I think you are correct that cash flow (especially "guaranteed" cash flow and - cherry on top - also COLA'd) is the key. If that cash flow is enough, you are probably golden.
We are really fortunate to have my wife's pension with annual cost of living adjustments (max 3% per year, but it banks up if inflation is higher and can be used in following years with lower inflation). We will each have SS income with COLA's, though I never made much money so mine will be a lot lower.

I have about half of my Roth IRA invested in CD's to guarantee income for the seven years till she starts her SS. So even if the stock market tanks, we'll be covered.
 
Yeah, from our perspective we feel wealthy. We don't need much. We drive 20+ year old used cars, live in a small 1456 sq/ft house we built ourselves (never had a mortgage), and generally own little in the way of "toys". No boats, motorcycles, fancy cars, expensive jewelry, etc. My woodworking tools are probably some of our most expensive possessions but those balance out somewhat by building most of our own furniture. Even if we had a few million in savings, I doubt we would live our life any differently.
Congratulations on a wonderful first year and thank you for sharing!

We have a similar budget and the lack of motorized and glittery things makes it more than sufficient. For us, the expensive stuff is gear --bikes, skis, and camping-- and even that isn't particularly expensive.
 
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