Spouse Older - Retiring Together or Separate

[Sojourner]

Certainly, the mandatory includes the usual suspects:
[...]
- Tithing (not mandatory for many, but we willingly do it)

You consider giving 10% of your income to a church mandatory, but you don't list things like groceries/food, out-of-pocket medical and dental expenses, clothes, and lumpy costs like replacing your car(s) or major appliances as mandatory. Interesting.

If your annual spending is roughly $165K, then your income must be (at least a bit) higher than that. Let's say it's $170K. Is your annual tithe, then, something like $17,000?

 

[tbis]

OP here, well, I have to admit, this has been a helpful post as it forced me to look more closely at my expenses and the calculators I've been using. I also looked a lot more closely at my predicted income tax burden in retirement which, frankly (and somewhat embarrassingly), I had just been ballparking and, I THINK, way overestimating. As a result, I think my expenses (based on 2020 actuals and some estimating) look like the chart below:

Category	Annual Amount	Comments
Healthcare	$18,000	Includes 12k premiums for personal policy pre-medicare for one of us
Income Taxes	$16,500	401k (100% taxable) and SS (85% taxable)
Travel	$14,000
Auto	$13,300	Includes predicted car loans, maint, and auto insurance
Home	$13,000	Includes maintenance, yard, trees, repairs, decorating, insurance, etc.
Charitable Contributions	$12,000	Church and misc other charities
Property Taxes	$12,000	Home (Texas)
Dining Out / Entertainment	$11,000
Groceries	$10,000	Includes just about everything from grocery store
Utilities	$8,500	Phone, Internet, TV, electric, water, and gas
Personal Care/Clothing	$4,200
Gifts	$2,800
Life Insurance	$2,500
Hobbies	$2,000
Misc	$2,000
		Minus income taxes
Total	$141,800	$125,300
Mandatory @ 85%	$120,530	$106,505
Discretionary @ 15%	$21,270	$18,795

A couple key assumptions::
- I am assuming one of us (DW) has made it to 65 for Medicare in the table above and thus only I am paying private health insurance premiums. So basically, this is a DH-56 / DW-65 scenario
- We do not have a car payment now, but our 2 cars are 8 and 9 years old so I am assuming car payments in that Auto number

So I am actually at around $142K in expenses with, conservatively 85% of that being "mandatory" (note: we could go into super lean mode or super duper lean mode and shave even more of course). My income taxes seem paltry compared to what I pay now (note: our gross income is double our expenses today).

As to the calculators, I use Fidelity's and Firecalcs. For Fidelity's I was including the taxes in the expense section, when in reality it calculates those separately so I was inadvertently double-counting those. Firecalc requires the taxes be included in expenses, but is a little more challenging dealing with two different age spouses and the start/stop of their social security so I am conservatively using mine at a 62 start date (and not including hers). I suppose I could get a lifetime combined estimate from opensocialsecurity.com and just take the average of that and plug it in at 62 for me.

Fidelity actually indicates I make it to 90 (money runs out at 91) with their "substantially below market" (which isn't that substantial).

Firecalc's passing scenarios are:

70% - Retire Now
85% - I retire at 57
96% - I retire at 59
99% - I retire at 60 (only 1 scenario fails)

Overall, I'm already more pleased than I was when I started this thread.

Anyway, let the flaming begin!

 

[ivinsfan]

You are a brave soul OP,


What's the 2500 a year for life insurance?


Between your dining out/food you are at 21K that's a number where you could do some deep digging to save money. Are you willing to keep working to be able to go out to dinner? Or to put it another way your travel budget is only 3K higher then your eating out budget.


Consider putting a lump of living expenses in cash instead of investing for a year or two if you live off after tax money you could probably dramatically lower your health insurance costs with subsidy money.



Now it's your money spend it as you see fit...

 

[Katsmeow]

OP here, well, I have to admit, this has been a helpful post as it forced me to look more closely at my expenses and the calculators I've been using. I also looked a lot more closely at my predicted income tax burden in retirement which, frankly (and somewhat embarrassingly), I had just been ballparking and, I THINK, way overestimating. As a result, I think my expenses (based on 2020 actuals and some estimating) look like the chart below:

If you have 16 times $165,000 then that is $2,640,000. Plus your home which I assume is paid off as you don't mention a mortgage. Plus Social Security.

The vast majority of people retire with less money than that. The only real catch here is your current expenses. So consider how those expenses might change or could change. DH and I could have made more money if we both worked more years. And, in some ways that would have been nice. Pre-retirement our spending was more than yours. But, we decided we would rather retire sooner than later and decided to reduce expenses which we have done. Not saying that choice works for everyone. Just pointing out that it is a choice. Some people even more to a lower COL area or downsize.

Now -- your budget. I am not sure how much you are guesstimating actual expenses versus actually knowing them. Many people don't keep track and their estimates are off. If you are not already tracking spending I suggest using a program to track spending and then use that historic data to help you plan. I used YNAB but there are other options.\

Anyway - specific comments:

Healthcare $18k - Could be fine. Could be too much. Depends a lot on your personal medical needs and those of your wife. Check and see what an ACA policy would cost for the non-Medicare spouse and think about out of pocket expenses. Don't forget to include dental, eye glasses, etc. The stuff that isn't usually covered by insurance.

Travel - $14k - If you enjoy travel I would say that this is an area where you really need to keep track of what you are spending on it to see if this amount is enough or if it could be less.

Auto - Not sure why you are predicting car loans. You seem to have enough money not to get a car loan. But there are situations where you can get a low rate and it works well. I might split out the car acquisition costs from other costs and prepare for buying a car every X years.

Home - Even with no mortgage this seems sort of low. Be sure to include the expenses that are large but don't occur often. This year we are likely going to end up having over $10k in plumbing related expenses. Another year we had to put in a new $11k retaining wall. Stuff happens. Last year we had few repair expenses. Remember to budget for the occasional replacements such as HVAC, major appliances, roof, etc.

If you live in Texas (so do I) when one of gets to 65 there will be an over 65 exemption which is really a huge help on school taxes.

Dining out/Entertainment -- Really broad category. This is where monitoring expenses help. FWIW, we do less of this now than we used to and being retired I don't love dressing up much so we don't tend to go to restaurants that are expensive. Think about how you might change on these kinds of expenses later. Of course, some people might eat out more.

Groceries -- My first thought was that this was sort of low since it includes everything at the grocery store. On the other hand if you eat out every night then probably not. I find that when we eat out a lot our grocery expenses go down. Likewise if we don't eat out as much (last year) then grocery goes up

Personal Care/Clothing - Seems little low especially if your wife gets her hair professionally done. Many people do find their clothing costs are less in retirement. But you have a big travel budget and a bit dining out entertainment budget which might imply you will both dress up more than a lot of people do in retirement.

Hobbies - That $2k doesn't seem like much to me. Many people develop more interests and hobbies in retirement.

Miscellaneous - That is a terrible category. That is, for planning it helps to know what you are spending your money on.

OK -- things you haven't mentioned so may not be relevant.

I assume you have no children or other family members that will ever need financial help from you. I assume you have no pets. If either of those is not true then you need to consider them.

Technology related stuff - Computers, tablets, smartphones, printers, peripherals, game systems, software, online subscriptions, etc. Even if you only replace these things every few year they should be budgeted for.

Holiday stuff -- You may include this in gifts (although if you do that seems a little low). Do you decorate at Christmas or other holidays? Do you do holiday meals or take food to family events, etc. Do you go to other holiday events? Be sure to budget for those things.

Reading/music/video - I have more and more online stuff that I pay for. Do you subscribe to any newspapers or magazines. Pay for a music service. Buy books or videos, etc. This may be in hobbies but it easy for recurring stuff like this to add up and not be counted.

Anyway -- if you aren't actually tracking spending I recommend do that for at least a year and then use this to refine your data.

 

[NgineER]

+1
What are you insuring for? Loss of income? Seems like you won’t need that if you are retiring.

What's the 2500 a year for life insurance?

 

[daylatedollarshort]

What we did was look for ways to live better for less. There are probably hundreds, if not thousands of ways to lower expenses without lowering your quality of life, like low flow showerheads (the new ones feel the same as higher flow models), LED lights, energy efficient appliances, solar lights outside, weather stripping, last minute travel specials, seat filler tickets for concerts and plays, lunch and early bird specials for restaurants, college events for entertainment, keeping a price sheet for groceries, renegotiating the cable bill to get new customer rates every year, changing to a lower cost cell phone plan, etc.

Once we weren't working, we had a lot of free time for expense optimization.

 

[tbis]

Thanks all, we (well, DW) is tracking actual spending...has been for years so we do have those numbers. I got lazy a bit and started lumping some of the categories together vs. calling out the, as an example, $22 we spent on postage, $64.92 we spent on magazine subscriptions, $10.82 on music, etc. (those are actuals for 2020).

To answer a few of the questions:

1. Yes, about $2.56M in 401K
2. Yes, mortgage is paid off
3. Children are grown, moved out, gainfully employed and/or married...as to whether they might need assistance, well, not now but always possible of course.
4. Current plan on SS is for DW to draw at 70 (roughly $45K/yr), and me to draw at 62 (roughly $26K/yr)...assuming typical life expectancies, she will die before me and I will get my SS + survivor benefit (putting me at $45K for those years after her death).
5. As an aside, we do have $150K (beyond 401ks) set aside for long overdue home remodeling/updates...of course that money won't go as far as I think!

As to the budget items:

1. The $2500 life insurance - Consists of two term policies (DH - $1M, DW $200K), and very small ($70k) whole policy for DW. The term policies expire at our respective 65th bdays...most of the cost is my term so have another decade there (@ $1600/yr) - consider it a "safety net" for DW in case I stroke out at megacorp and got all this financial planning wrong...more for her peace of mind right now).

2. Budget shortfall for the big "every few years" expense - This is a good callout. I am so used to trying to FIX things I sometimes forget that isn't always possible (I'm not going to replace my own roof, paint the exterior of my house or replace our fence myself). I am also milking the A/C units...Hypothetically, I may or may not have gotten my HVAC license just so I can buy my own refrigerant! . Still, over a 35 year window, I know I'm going to encounter this stuff...and more than once!

3. Dining Out / Entertainment - Our current expenses have actually averaged $750/mo this year (aka $9K annually) so there is some flexibility there. It does include "food" on the one vacation we took this year and a few "pick up the tabs" for family gathering meals (Bdays, etc.). Still, it can be reduced.

4. Auto - I think I overshot a bit in this estimate, but wanted to be conservative. As a gearhead, I used to do all my own repairs and bought only used. Unfortunately, my "car guy" tastes took an unpredicted turn...to electric cars and now, while I can still do brakes, suspension, minor body work, etc. the mechanical is predominantly left to the manufacturer or dealer (ugh!)...which has me looking at more new cars than I have historically, DANG YOU FIRST WORLD PROBLEMS! Regardless, probably a bit high.

5. Property taxes - yep, looking forward to DW hitting 65 in 2023 for the over 65 exemption on school portion! Of course it would have been nice to have hit that BEFORE the recent skyrocket in real estate...oh well.

6. Other Items - All good points, will re-evaluate a few of those.

daylatedollarshort's comment about looking at every individual expense for opportunities to reduce is good as well. Indeed, I "cut the cord" earlier this year with regard to cable and dropped our home phone lines in the process. Just yesterday, I was shopping for lower cell phone rates. I suspect we'll begin doing our grocery shopping at Walmart soon enough (instead of Tom Thumb), to reduce expense there.

As noted in one of my posts above, as much as I now loathe my megacorp position, I cannot see me even considering pulling the trigger (for me) until DW hits 65 (only about 18 months away). Getting at least one of us on Medicare would give us both a better comfort level. DW will retire any time between now and mid-Summer next year...really all dependent upon when her position is eliminated. Heck, I've even considered solar, but the math never works out there (and our house isn't conducive). We also change electric providers every year to get the cheapest one.

I very much appreciate the feedback here!

 

[Sojourner]

Couple things that stand out to me:

$13,300/year on "auto" seems quite high. When I run the numbers for my household (two adults; no children; metro Atlanta, GA; two cars), I'm only budgeting for about $7,000/year for everything car related, including replacement costs. Unless you are buying/leasing brand new cars every few years or have expensive tastes in cars, your numbers seem quite high. Also, why are auto loans in your budget?

You are spending nearly $900/month on groceries, for two people. That seems very high to me, unless you're eating every meal at home and tend to buy the expensive name brands of everything (versus store brands/generics). DW and I spend only about $300/month, and we eat really well. We do utilize our store's digital coupons through their mobile app, and we also buy generics and store brands for items where the quality difference is negligible (milk, cheese, rice, beans, nuts, etc.).

I suspect both of these are areas where you could easily trim back a little without noticing much of a decrease in your quality of life. And, of course, to state the obvious, you could always reduce your tithing a bit. In any case, good luck!

 

[Katsmeow]

Thanks all, we (well, DW) is tracking actual spending...has been for years so we do have those numbers. I got lazy a bit and started lumping some of the categories together vs. calling out the, as an example, $22 we spent on postage, $64.92 we spent on magazine subscriptions, $10.82 on music, etc. (those are actuals for 2020).

OK. This is good. Since you have the number go back and specifically look at the irregular expenses over time. If I just looked at our home repair costs based upon last year, that would be a small number. But for this year it is a lot.

daylatedollarshort's comment about looking at every individual expense for opportunities to reduce is good as well. Indeed, I "cut the cord" earlier this year with regard to cable and dropped our home phone lines in the process. Just yesterday, I was shopping for lower cell phone rates. I suspect we'll begin doing our grocery shopping at Walmart soon enough (instead of Tom Thumb), to reduce expense there.

I have a Tom Thumb less than 5 minutes from my house and rarely shop there as it is so expensive compared to everywhere else (except Whole Foods) and rarely offers anything that I can't get elsewhere.

As a Texas I think that you have better choices than Walmart although it is OK for some things.

If you live in an area with an HEB near you (which you probably don't if you have Tom Thumbs near you) that will be your best choice with good product and just as economical as Walmart. Also if you have a Super Target they are usually on par with Walmart for price.

Surprisingly, though, Kroger is far more economical than Tom Thumb. We don't have HEB here and I find that Kroger (if you use Kroger card) is not much more than Walmart but has a far better selection and is much less than Tom Thumb.

 

[daylatedollarshort]

I have a Tom Thumb less than 5 minutes from my house and rarely shop there as it is so expensive compared to everywhere else (except Whole Foods) and rarely offers anything that I can't get elsewhere.

There actually are some products where Whole Foods is pretty competitively priced these days, mainly their 365 house brand items. Our closet WFs is actually cheaper for purple sweet potatoes than some of the ethnic markets. Their canned beans are about the same price as Walmart, but the WF cans are BPA free. We don't do our main shopping there, but we do get some select items one or twice a month with their free pickup service.

 

[daylatedollarshort]

Heck, I've even considered solar, but the math never works out there (and our house isn't conducive). We also change electric providers every year to get the cheapest one.

The numbers so far haven't worked our for solar for us either, but we did cut our energy bill in half just with lots of small changes that added up. because we are on a tiered system, our bill went down dollar-wise by almost two thirds. Like I bought a Presto table top pizza oven and it uses way less energy than the wall ovens, and doesn't heat up the house which can impact A/C usage like the wall ovens do. We hardly use any of the builtin appliances any more. They take a long time to heat up and are energy inefficient. Appliances like table top convection oven, an electric wok and an Instant pot heat up much quicker and use less energy for us.

If you get reports from your energy company you can see what times of day your energy usage spikes. Most of our energy spikes used to come from cooking.

 

[skyking1]

Not going to flame you OP, that was good to dump it all out there and it answers many questions about the spend you tossed out earlier. I am also happy that just posting it and the info you had garnered up to that point made you happier
So many times people don't hear what they want to and are less happy.

 

[BoldPelikan]

Time time time

Time won't wait.
My DW is 10 years and 3 months older than me. She is 66 and has had stage 4 cancer for the past 4 years. I worked for a public utility for 5 years and one month, just long enough to vest in a small pension. When my employer called us back to the office full time, I was more than thrilled to give my notice. That was 3 months ago. Best decision I could have made. You don't know how long you and your wife will have together, but speaking from my own perspective, I would be happy to eat rice and beans in my older age in exchange for this time right now. Good luck to you!

 

[Gumby]

A saying I learned when I was a sailor long, long ago: "Time and tide wait for no man."

 

[Koolau]

tbis, one question I often ask is whether you and DW are pretty much on the same page about retirement AND expenses. what about timing of retirement and willingness to cut expenses if need be? Other than taking a risky chance on "failure" it would seem you need more time in the w*rk place OR you need to cut expenses. We could admonish you all day about "you spend too much on xyz" but in reality, you and DW have to decide that.

Realistically, you have just a few variables to deal with:

1) When will you and DW retire? Call this the unknown.
2) How much will you spend in retirement?
3) How much will you have in your savings when you retire
4) How much SS or other income will you have?

With these inputs (I think that's it - trust me, if it's not someone will flog me! ) you can run FIRECalc with your revised numbers and solve for ages of retirement.

Just a few practical things: (no judgements - just to think about)

Do you need two cars (I mean really NEED two cars)

Would you be happy in a downsized house - especially one with low maintenance (we live in a condo - love never having outside maintenance!)

Which of your "extravagances" would you be willing to give up (or drastically cut back)?

1) Travel
2) Cars
3) Home
4) Dining Out
5) Groceries

Note: I didn't mention charitable giving as that appears to be non-negotiable! Good on you tbis!

Once again, we can suggest things but it always comes back to what you and DW want. Therefore, YMMV.

 

[Camas Lilly]

Time won't wait.
My DW is 10 years and 3 months older than me. She is 66 and has had stage 4 cancer for the past 4 years. I worked for a public utility for 5 years and one month, just long enough to vest in a small pension. When my employer called us back to the office full time, I was more than thrilled to give my notice. That was 3 months ago. Best decision I could have made. You don't know how long you and your wife will have together, but speaking from my own perspective, I would be happy to eat rice and beans in my older age in exchange for this time right now. Good luck to you!

I am so sorry about your wife. My prayers are with you.

You have a very good point. I am in a similar situation. DH is 7 years older and retired early, 6 years ago. As turns 70, one's priorities change and your time together becomes more valuable. I am still working, but will be retiring soon, no matter what, no more waiting. We will make it and can adjust expenses accordingly. Being able to spend some retirement years doing what we want together while we still can is more important than anything else.

 

[Starsky]

My DW and I have a similar age difference (11.5 yrs) and I always expected to retire early - my goal was 2020. Within 6 months of her retirement in 2014, I was also retired. It just didn't make sense not to, and I was (we were) ready.

I figured that whatever additional money I'd make working wasn't worth the irreplaceable time lost and wouldn't change our lives much when spread out over 25 years, as much as 6 extra years would in my 50's. At the time, I remember feeling that it was a existential decision I had to make for myself. At the time it was very difficult and DW was not happy about my decision to RE and felt we needed more than we had. She definitely doesn't feel that way anymore.

You may not need to worry about making that decision now. It's possible you will have a very different perspective and other things to consider once your DW has retired for a few months. It could make your decision a lot clearer, and easier for you to feel right about.

So much has changed since we retired 7 years ago, it's unbelievable! It makes it impossible to know or to count on just about anything over the long-term. Who knew I wouldn't even be allowed to enter the countries I wanted to travel to in retirement for two years!? It has reminded me of not to wait to do the things I want to do, lest I can't do them anymore.

 

[LakeRat1]

My DW retired at 59.5 from 38 years of Nursing...... I retired at 52 from 33 years of working in IT...... We are going on 8 years...... This is by far the best decision we had ever made together. NO Regrets .......

We have and continue to travel both within the US and Mexico, 6 to 8 weeks per year..... Own a home in Ft Myers, FL and at Lake of the Ozarks...... FL became our resident state

 

[W2R]

I had always planned to retire at age 61, in November 2009, the earliest time when I was eligible to do so.

Frank was only 55 in 2009, but much to my delight he decided to retire ASAP, only a couple of months later than me so that we could spend more time together.

Best decision ever for us! He cut back on his spending, and retired at that time. Everything worked out just fine. We have had a great time in retirement. Turns out, we had enough to fund a simple but happy retirement which is what we wanted.

I guess the best decision is whatever makes the two of you happiest.

 

[Teacher Terry]

I have lost 5 friends between the ages of 59-67. I would reduce your expenses and take the time. My own retirement took a big financial hit with a recent divorce but I made adjustments like selling the house and buying a condo and I am fine. I never considered returning to my career. I hope you and your wife have a long and great retirement.

 

[kcowan]

I retired 2 years before DW. She was not happy and felt that work waas her reason to get up in the morning. I offered to take over the bookkeeping acounting and taxes for her business. I saved her a bunch of money even after my nominal fees.

We focused on playing at things that took us away from her daily work. Finally she decided to join me fulltime. Best decision we ever made. Also one of the toughest because we both loved our work.

 

[Koolau]

DW actually retired first - sort of an unexpected thing since the 3rd generation wanted to buy out the second generation of the family business (DW was mgr.) We had hoped for a miracle like this (honestly, it's much easier to get INTO a business than it is to get OUT!) When the miracle came, we didn't second guess it but took the money and ran - well, DW did. I was still having "fun" so stayed until Megacorp caught on that I was enjoying myself too much. At that point, I did a crash dive and left. It was almost 3 years between our individual retirement dates and it worked out well. YMMV

 

[tbis]

I appreciate all of the additional comments on this thread (I sort of missed they were still coming in)! DW's retirement (forced or voluntary) could be imminent (megacorp Christmas RIF...who knows?). Anyway, where we are at right now is we will let her retire and monitor expenses more tightly than ever over the course of her first year to determine just how feasible my own retirement is (and when). This will also give us both a comfort level of what life looks like in retirement (for her anyway), and gets her to Medicare (a pre-requisite regardless). It also allows her to "get stuff done before you - me - retire".

FIRECALC basically says "60" is the magic age for me (100% FIRECALC), and while I think I could MAKE 57 or 58 "work", I am a bit concerned this insane market bubble could be an anomaly that MAYBE even FIRECALC hasn't seen (well, except for that last scenario that I'm sure you have all observed!).

Again, I appreciate the feedback and will try to keep you guys updated as the story progresses!

 

[Koolau]

Again, I appreciate the feedback and will try to keep you guys updated as the story progresses!

Please do. We love FIRE stories - especially when plans are made and work out. Best of luck to you. Check back often as you have questions or contributions. Aloha.

 

[tbis]

Well, as suspected, DW got her notice this past week (last day is 12/30), so the “clock” is officially ticking (or will be in a few weeks) for me now. Of course, also as noted, the market looks pretty tenuous right now too. I’m not really concerned, however, as my “soonest” date is at least 2 years away…we’ll see what these next couple of years look like.

Needless to say, DW is stoked!