akck
Full time employment: Posting here.
- Joined
- Mar 13, 2008
- Messages
- 875
Well it’s been 11 years since I retired and 8 years for DW. This is a report of what we did/didn’t do over those years and where we’re currently at in our plans. It’s a couple of months early, but nothing major should happen by year end.
Originally, we were going to pay off our mortgage over 3-5 years after retirement as the funds would come from our traditional IRAs and the need to manage income for taxes. Just before I retired, we refinanced with a low rate that it made more sense to keep the funds in the IRAs and continue to pay the mortgage. Year 11 is the year the mortgage is paid off and from this point forward we’ll never have another mortgage. Hence the reason for a year 11 vs year 10 update. We were scheduled to make our last payment in January 2026, but I got antsy and used reserves to pay it off this month.
During my first 2 years in retirement, I messed up on our withholdings causing us to pay penalties those years. As I recall, penalties were less than $20 each year, so not a big issue. Now, I maintain spreadsheets to tract income/taxes so I can withhold enough for taxes on any drawdowns. They’ve been fairly accurate, so we end up paying/receiving less than $50 each year. In addition to withholding for taxes, I can determine the amount of Roth conversions we can do. When I was planning for retirement, I did look into Roth conversions, but figured it was a push for taxes and did nothing. This year I learned about the death penalty, causing the surviving spouse to pay more income taxes than we currently pay. So now we’ll manage income with conversions in mind. Recent senior tax breaks will limit conversions for the next 3 years.
We currently have 2 traditional IRAs, one inherited IRA and now 2 Roth IRAs. When I was estimating expenses, I had something like $7,000 for travel each year (increasing each year for inflation). We actually spent 3-4 times that amount. Just before DW retired, she lost her father and inherited half of his IRA. We were able to utilize DW’s RMDs on that account instead of a 10 year payout, with the majority of withdrawals earmarked for travel to offset our travel being larger. Now, we’re planning on drawing down the inherited IRA for travel and other expenses and only making Roth conversions from the traditional IRAs. RMDs when they happen, beyond what we might use, will go into taxable investment accounts.
We each have pensions with some inflation protection. It includes medical coverage, so we don’t budget for it. We also collect Social Security, I started at 62 and DW started at full retirement age on my earnings (doesn’t have enough earnings on her own). So far with Medicare and retirement medical coverage, our out of pocket costs run under $1,000 each year, including prescriptions. We also pay separately for dental/vision/auditory coverage and LTCi through our pensions. So far, those premiums have not changed (DVA - $142/month, LTCi - $299/month total for both of us). DW keeps track of our net income (which is now more than we had while working), and budgeted expenses. She currently projects we could “save” $1,600/month, soon to be $3,100/month. Actual savings are far less as we’re usually over on travel.
We did major remodel/maintenance prior to retiring, including a new kitchen, new roof and outdoor painting. Just after retiring, I refinished 3 bedrooms and painted the main living area. After we were both retired, we updated our main bathroom. Originally, I thought we’d move before any of the above needs to be redone, but we haven’t found anywhere we like to relocate to. So we’re now looking at touching up the paint outdoors or a whole repaint job.
As mentioned above, pensions/Social Security income exceeds our budgeted expenses. Prior to each income stream coming online, we did make withdrawals from our IRAs exceeding 4%. That was planned as I assumed our withdrawal rate would drop as we got older, averaging out to around 3.4% annually. It’s looking like this will pan out. Currently, our retirement accounts are about the same market value as just after I retired. Granted the value has been much lower during down markets, but never to the point where we’d have to adjust spending.
One thing we’ve learned is that our kids don’t want any of our stuff. Downsizing is something we need to be more aggressive with, otherwise we’ll just be leaving a big mess for them to clean up. While DW realizes this, she’s not at the point where she can let things go. For instance, we have a wall of totes in thegarage filled mainly with the kids old toys. The thought was we could bring them out when the grandkids visited. Well, we have one granddaughter and almost no likelihood of any more. DW did send a bunch of Beanie Baby bears to a friend teacher, but she re-fell in love with the others. Unlikely they will be going soon. We have artwork and pottery, some of which has more value than the original cost that granted, we’re currently utilizing. We’ll need to deal with at some point.
So, what does the future hold? It’s looking good as we’ll have many years with income exceeding expenses. We have the ability to cut some expenses if needed. I foresee travel dropping as we get older, but if we do more foreign travel, it will be with a group tour versus us making individual plans on our own (i.e., no backpack trips across Europe). We have one trip to Japan in March. This will be our second carryon only trip. We tested it out on a trip to Houston this year to see if we could manage it, but we did check some luggage for the return trip. We find that we’re willing to BTD more now. I’ve purchased smaller travel items (packable raincoat, vacuum bags, small umbrella, etc.), and better travel backpacks and carryon luggage for the Japan trip, which we’ll test out on our next trip in November. DW wants me to get a robot lawnmower and at some point, we’ll need to replace a car. We currently have a 2004 Toyota 4Runner and a 2009 Rav4, both with less than 100,000 miles on them. So overall, I see us starting a new phase in our retirement.
Originally, we were going to pay off our mortgage over 3-5 years after retirement as the funds would come from our traditional IRAs and the need to manage income for taxes. Just before I retired, we refinanced with a low rate that it made more sense to keep the funds in the IRAs and continue to pay the mortgage. Year 11 is the year the mortgage is paid off and from this point forward we’ll never have another mortgage. Hence the reason for a year 11 vs year 10 update. We were scheduled to make our last payment in January 2026, but I got antsy and used reserves to pay it off this month.
During my first 2 years in retirement, I messed up on our withholdings causing us to pay penalties those years. As I recall, penalties were less than $20 each year, so not a big issue. Now, I maintain spreadsheets to tract income/taxes so I can withhold enough for taxes on any drawdowns. They’ve been fairly accurate, so we end up paying/receiving less than $50 each year. In addition to withholding for taxes, I can determine the amount of Roth conversions we can do. When I was planning for retirement, I did look into Roth conversions, but figured it was a push for taxes and did nothing. This year I learned about the death penalty, causing the surviving spouse to pay more income taxes than we currently pay. So now we’ll manage income with conversions in mind. Recent senior tax breaks will limit conversions for the next 3 years.
We currently have 2 traditional IRAs, one inherited IRA and now 2 Roth IRAs. When I was estimating expenses, I had something like $7,000 for travel each year (increasing each year for inflation). We actually spent 3-4 times that amount. Just before DW retired, she lost her father and inherited half of his IRA. We were able to utilize DW’s RMDs on that account instead of a 10 year payout, with the majority of withdrawals earmarked for travel to offset our travel being larger. Now, we’re planning on drawing down the inherited IRA for travel and other expenses and only making Roth conversions from the traditional IRAs. RMDs when they happen, beyond what we might use, will go into taxable investment accounts.
We each have pensions with some inflation protection. It includes medical coverage, so we don’t budget for it. We also collect Social Security, I started at 62 and DW started at full retirement age on my earnings (doesn’t have enough earnings on her own). So far with Medicare and retirement medical coverage, our out of pocket costs run under $1,000 each year, including prescriptions. We also pay separately for dental/vision/auditory coverage and LTCi through our pensions. So far, those premiums have not changed (DVA - $142/month, LTCi - $299/month total for both of us). DW keeps track of our net income (which is now more than we had while working), and budgeted expenses. She currently projects we could “save” $1,600/month, soon to be $3,100/month. Actual savings are far less as we’re usually over on travel.
We did major remodel/maintenance prior to retiring, including a new kitchen, new roof and outdoor painting. Just after retiring, I refinished 3 bedrooms and painted the main living area. After we were both retired, we updated our main bathroom. Originally, I thought we’d move before any of the above needs to be redone, but we haven’t found anywhere we like to relocate to. So we’re now looking at touching up the paint outdoors or a whole repaint job.
As mentioned above, pensions/Social Security income exceeds our budgeted expenses. Prior to each income stream coming online, we did make withdrawals from our IRAs exceeding 4%. That was planned as I assumed our withdrawal rate would drop as we got older, averaging out to around 3.4% annually. It’s looking like this will pan out. Currently, our retirement accounts are about the same market value as just after I retired. Granted the value has been much lower during down markets, but never to the point where we’d have to adjust spending.
One thing we’ve learned is that our kids don’t want any of our stuff. Downsizing is something we need to be more aggressive with, otherwise we’ll just be leaving a big mess for them to clean up. While DW realizes this, she’s not at the point where she can let things go. For instance, we have a wall of totes in thegarage filled mainly with the kids old toys. The thought was we could bring them out when the grandkids visited. Well, we have one granddaughter and almost no likelihood of any more. DW did send a bunch of Beanie Baby bears to a friend teacher, but she re-fell in love with the others. Unlikely they will be going soon. We have artwork and pottery, some of which has more value than the original cost that granted, we’re currently utilizing. We’ll need to deal with at some point.
So, what does the future hold? It’s looking good as we’ll have many years with income exceeding expenses. We have the ability to cut some expenses if needed. I foresee travel dropping as we get older, but if we do more foreign travel, it will be with a group tour versus us making individual plans on our own (i.e., no backpack trips across Europe). We have one trip to Japan in March. This will be our second carryon only trip. We tested it out on a trip to Houston this year to see if we could manage it, but we did check some luggage for the return trip. We find that we’re willing to BTD more now. I’ve purchased smaller travel items (packable raincoat, vacuum bags, small umbrella, etc.), and better travel backpacks and carryon luggage for the Japan trip, which we’ll test out on our next trip in November. DW wants me to get a robot lawnmower and at some point, we’ll need to replace a car. We currently have a 2004 Toyota 4Runner and a 2009 Rav4, both with less than 100,000 miles on them. So overall, I see us starting a new phase in our retirement.
