How Much Do You think You Need to Retire? What Age Will You/Spouse Retire? General Retirement Issues (Part 2)

Parent Cafe
9450

DH’s uncle was a union electrician, and he was able to put money into a medical plan for several years before his planned retirement, so the years before Medicare, he had the funds there for his wife and his health care plan through the union.

Always good to look ahead with the options. It was much easier for them to pay for this in his working income/cash flow years money coming in.

DH had to get out of his job (it was totally grating on him due to the boss he had) - and we had the retirement funds to do so. Since I worked enough hours, I had health care - so I picked up DH and my health care and saved us $1,000/month from what COBRA would have cost. DH retired at 64 1/2, and I retired right at 65 when we both qualified for Medicare. I also started drawing my SS right at 65 - working the sunset career put me where I drew more on my own SS account. DH drew his SS closer to age 66, and full SS for both of us would have been 66 and 8 months. It was worth drawing his SS when we did to not draw down retirement funds. When we turned on his SS we also turned on withdrawals w/o penalty from annuities - and that gave us good cash flow (neither of us has pensions). We did COBRA for dental, and after that ran out we did a dental agreement with our dentist (that has been discussed on this thread).

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9451

Probably why I can’t find any podcasts that resonate and provide consistently useful information. We aren’t and have never considered FIRE, just kind of stumbled into this possibility through a combination of dumb luck and good fortune.

I think we are years (20 or 30) away from considering any annuities. Annuities seem like a useful tool much much later. As suggested by BKSquared, there are many pitfalls with expecting an annuity to last that long.

9452

@parentkeith I’m unclear. Do you have a financial planner to work with? If not, I would suggest finding one who works with FIRE folks. While that might not be your ultimate end game, it’s sort of where you are at now.

You need to look at projected income streams for a number of years. Expenses as well. Current and future plans.

A good financial planner will help you create a roadmap for retiree financial success or guide you on what you need to otherwise do.

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9453

In our situation DH had a ‘good’ career to start - but his industry and companies changed (he had the same phone extension over 4 company changes) - and he tolerated a lot over the years. By the time the new company cut out the retirement plan, he was too old and earned too much for other employers in our city for a job change. So he hung in there until age 64 1/2. I gave up my excellent position that I worked hard to work my way up with relocation for DH, because DH had to start traveling nationally and internationally at the drop of a hat – and it was important to raise our children (no family where we live). Thankfully I knew how to manage DH’s 401k and then we got on with a great financial person/group to help diversity our portfolio risk and consolidate some of our various funds – eventually then converting IRAs to Roth IRAs. Took a tax hit one year to do so (should have spread doing the Roth IRA conversions over 2 or more years, but it was done). I still manage DH’s 401k – company pays for the plan overhead continuing into retirement.

For us, the goal was to keep working until 65. As soon as I was able to retire at 65 I did - it made it worthwhile with the health care plan and savings with that.

9454

I had every intention of working until 65, but a terrible boss prompted me to leave earlier. I had a series of bad bosses, but this one was the straw that broke the camel’s back. I did intend to find another job, but a series of life events occurred that made me realize that I didn’t want to work anymore. Fortunately, we were financially prepared. I was well aware that the health insurance piece could be an issue - I knew that the affordable retiree plan we had through H could be removed or become too expensive (I was just shy of 60). But it has worked out, and I will start Medicare in a couple months. I won’t pretend that I was certain that the retirement finances would work out, but I was relatively confident … and I figured that I could go back to work if necessary. It turned out that we don’t need as much monthly income as we had thought we’d need, so it’s fortunately all good.

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9455

In terms of saving in retirement, i know that since I’ve stopped working the previous “treats” of coffee shop chai latte, eating out, clothes shopping or home decor shopping don’t have that appeal any more. I used to go to one home decor store on Sunday afternoons just to see what was there as part of my mental preparation for Monday at a job I didn’t like. After retiring I found myself being disappointed in restaurant experiences because I could make something I liked as much or more at home for a lot less and I have the time to do it. It wasn’t the treat in a busy life that it was before. When I look at new clothes I think “I have all the clothes I need for the life I’m living now.” Small savings but they do help.

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9456

Per expense tracking, first pass does not need a lot of detail. A big chunk of it can be captured by looking at the annual report your credit card(s). Drill down on the detail if interested, but on first pass assume you will spend as much in retirement. Then total up your monthly regular bills / checks. If you still use cash, look at bank website and get an annual total.

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9457

Since my husband retired, we are definitely spending less on many spending categories. No lunches out, no commuting costs, no new work clothes, etc. We also downsized to an apartment. After the initial expenses to furnish it, we are not spending on decorating stuff. Our expenses are also more even now. Not owning a home, really cuts out the emergency expenses of home repairs.

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9458

Most definitely if you move out of a house it saves. (In our case we paid off the mortgage and accounted for that, keeping the portion for tax/insurance.) Work costs can be a factor for many couples, but for us it was small enough to ignore for retirement planning purposes.

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9459

Whereas we always spend more in the summers when H was not working. Our commutes are both ~5 minutes. Neither of us ever eat lunches out. He didn’t buy a single lunch in 32 years at school and used the same lunchbox every day! His ashes are going in that lunchbox. (not kidding) Work clothes? He wore superhero t-shirts and shorts. Pretty much the same as every day. I’m not any better. I wear the same stuff to work that I would wear on the weekends.

But he is a collector and loves to buy “things.” The more time he has to buy “things,” the more he will spend. Nothing to do? Run to walmart, target, lowes, etc. and he will find something that we “need.” And if not us, he’ll buy stuff for the kids, the neighbor’s dog (not kidding), random person on the street (OK kidding), lol… He got this from his mom. Fortunately, nothing is that expensive, but it does add up. In our poor days, it was a big problem in our marriage, as I had to be the money police. The last few years have been blessedly wonderful, because we can absorb such expenditures.

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9460

We have annuities that ‘mature’ in 6 - 12 years (we have 5 purchased at different times with different timelines). Two matured at 10 years and we purchased two others with different products/different companies (all have been with insurance companies that are well known and high rating on security).

I think you are thinking of an annuity product that may be buy in and it produces X amount of income per your lifetime.

There are a big range of products out there. We have a financial planner that was very good at analyzing the products - when it was a good time to purchase, and when it was not.

It sounds like there are some ‘what if’ scenarios to run with your situation.

If you are 50 or 55 (it was unclear when you said you were at a mid-spot and said 50).

If one has been very high-income earner and put a lot of money into investments, one possibly can be considered a FIRE candidate. Key is on spending, on what to do with ‘free time’ after all the tasks put off while working get taken care of (and possibly not have expensive hobbies).

Expenses in household may vary. Lots more situations can arise the further from what many gauge for retirement – Medicare and SS ages.

Pausing and jumping back in to earning power versus staying out and go a new direction.

Lots of variables to really get several good sources of local advising - paying for a sit-down with FA, going to various seminars and take a free individual meeting.

Food for thought.

Another thing to consider is your risk analysis with the change of your income. A FA probably will do a risk assessment tool – and your comfort level with ‘very aggressive investments’ may change.

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9461

I know there are a lot of smart financial folks on this thread so I have a question.

If you basically found $100K that you literally had no use in the immediate future where might one park those funds?

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9462

Personally I would probably park it in an S&P500 index fund and let it ride. Sure, it might get a bit rocky short term but overall lifetime it’s about a 10% average yearly rate of return.

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9463

Short term, a high yield money market fund, those are paying 5+% right now.

Long term, an index fund that mirrors the entire market.

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9464

Total Market Index Fund.

9465

A couple months ago, we had a complimentary meeting with a CFP at the brokerage firm we have most of our money parked at, and today we had the follow up meeting about the financial plan he put together. (I think it was complimentary because of the value of the assets we have with them, but otherwise I think it would’ve been about $300.) I’ve had a gut feeling that H could retire soon but no real numbers to convince him, and the meeting today confirmed my suspicions. It gave us peace of mind to have a professional planner run the numbers in various simulations in his software program (MoneyGuidePro), and show that we’ll be fine. We need some time to digest the information, and to think about what retirement would really look like. H is bad at not having something to do and he likes the day-to-day aspects of his current job, so I don’t think he even wants to be retired. We’re in our mid 50s now.

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9466

YMMV but we did not get good returns or real investment work by the name brand brokerage firm we had many years ago locally. When DH’s company was bought out (so new retirement plan with the new company), the stocks and funds he had in retirement had to be put somewhere. We had a short time, and if we didn’t direct, it could go into a brokerage account with this particular firm. Well, it turns out once we figured out where to have it go, we had a penalty for withdrawing from the brokerage firm - 3% first year, 2% second year and 1% third year. We got advice about a new investment, actually it was two. One advisor was very hot on, and the other was mild - Both Templeton Funds, new issue. Well, we put $8K in what she was hot about and $2K in what she was mild about. It turns out the $2K one was wildly successful and the stuff that was used in graphs. The ‘hot one’ was not so hot, Templeton Global. Key here is that the analysts were told to push this new issue - not what was best for us.

As soon as we could sell our other stock w/o penalty we did and rolled the money into IRA.

A few years later, the advisor we had left the firm, and we met with a new advisor.

Honestly, we didn’t feel like he had a clue.

We sold and got out, again rolling money into IRA.

Look at what brokerage has been doing for you.

We felt the name brand brokerage we used was totally for themselves.

Our FA is a fiduciary - essentially advising on what is best for us. We feel fortunate to have found this person/group – as over time (the last 11 years or so), we have set things up well with our retirement stream from purchased annuities. They manage our Roth IRA funds (helped consolidate our funds into IRAs and then we converted those funds to Roth IRAs), while we manage very sizable 401k. DH has learned a lot over our meetings as well as group semi-annual session as have I. DH’s former employer pays the fees on his 401k - they recently changed to EMPOWER (1 year ago) so learned the changes in investment choices and did a change (moved funds from two into one investment choice so now we have 3 instead of 4 investments – all diversified stock accounts).

IMHO, look around for financial advisors - often you will see about a free session about retirement, or we had a two-evening session on retirement following a purchased binder of material from a national financial industry group.

Look at what your returns are with your money over time. Are you truly having the brokerage working for you?

One does have to educate oneself.

We have some of our own personal funds in TD Ameritrade which is now Schwaab - we have it in a stock index fund.

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9467

If it really was unexpected bonus money, I’d consider gifting a small portion of it to the kids (or take them on a nice vacation). Of course that might not work with my own kids - they are quite independent, hesitant to accept parental help.

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9468

If I could persuade my husband. A blow out safari

Or a new kitchen.

Or if it would be needed later for retirement, I’d park it in a money market and try to figure out how to invest

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9469

We haven’t paid this brokerage a penny OOP so far, and certainly no 1% AUM fee or anything like that. Sure, the mutual funds and ETFs have expense ratios but that’s just unavoidable if one doesn’t want to have dozens of individual stocks. In fact we got a $1200 bonus for transferring accounts over to them. It really is just a parking place, and I manage all the transactions in our accounts (i.e. self-directed brokerage account). So any successes or failures there are all mine and H’s. Looks like our annualized return over the past 5 years is 8.57%. Not too exciting but not too terrible either.

Absolutely agree. It’s a long term project to do for someone who never had any classes in finance or taxes. And retirement planning is much more complicated than the growth/accumulation phase that has been our focus up til now.

I’m not sure exactly what brand you’re thinking of? If you’re talking about someplace like Edward James, I wouldn’t touch that with a ten foot pole, and we left Merrill Lynch because of the “fiduciary” fee. I have issues with calling oneself a “fiduciary” if one’s income is 1% of a client’s worth no matter if the worth goes up or down. I’m talking about using places like Schwab, Fidelity, Vanguard in a self-directed account.

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