How Much Do You think You Need to Retire? What Age Will You/Spouse Retire? Investment and General Retirement Issues (Part 3)

Parent Cafe
3924

I was just catching up on this thread. I want to say I do find this thread to have some good information.

I just updated my projections to see what life would look like zero SS. Looks like we could last to 90-92 with our current expected spending levels. I hadn’t done that type of projection in a long time.

I will say I feel lucky in that my job revolves around financial statements for small to mid-sized companies. I analyze expenses and revenues all the time. Part of what I do is run what-if scenarios especially for worst case scenarios.

That being said I am no expert in the market nor an expert in taxes. I always say I know just enough to be dangerous.

My wife and I are turning 54 this year. Our plan is to work until 63. She will get health insurance into retirement if she does that. I will have to figure something out for 2 years before medicare kicks in for me. That will probably be Cobra for 18 months. All of our projections have us spending more in retirement than we do now. I still find it hard to believe we will. Because we will move at retirement. Whatever we buy will be paid for so no mortgage. We plan on moving to a state with lower property taxes and most likely lower income tax. We won’t have some of the day to day spending we do.

All that being said I plan on having fun in retirement, especially early on. If I want to do something I will be doing it. We have been thrifty on spending for 32 years since getting our adult jobs, retirement will definitely be the time to do things. I don’t want to sit around and age in place like my folks and in-laws did.

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3925

I am thinking I will take it at full-retirement instead of at 70, but that’s as much because my family doesn’t seem to live long lives (mom and 3 siblings died @70) as anything political. I have actually thought of taking it even sooner, but I’m lucky enough not to need it, so want to hedge my bets.

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3926

I agree with what someone else said above - these are one time costs, vs something you will have to pay forever. Part of our retirement planning includes lots of travel. BUT, if the market tanks, we can easily adjust and take less expensive trips, and fewer of them.

I was just talking to a friend who’s been retired maybe 5 years. They plan to take 5 trips each year. Already she’s saying she’s done a lot of her bucket list and they may stop traveling so much. I can see us saying the same in a couple of years. We are 64/66 this year, and we’ve slowed down some already.

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3927

“We have been thrifty on spending for 32 years since getting our adult jobs, retirement will definitely be the time to do things. I don’t want to sit around and age in place like my folks and in-laws did.” With you at age 54, you have time to develop plans/ideas and also do some travel to explore areas you believe you might want to live as well as any bucket-list travel. Your parents’ generation had their own ideas and were comfortable in their choices or perhaps had other reasons (finances, were home bodies, just loved their routine in their community, didn’t like travel/stressful for them, poor health, family responsibilities - real or felt). My dad wanted to get a place in FL and be a snowbird, but mom didn’t want to give up her home to downsize - so he was fine with limited time in FL (and dad died at age 64). My parents were born in 1931 and 1933 (mom lived to be 77), and DH’s parents were born in 1929 - they lived to 92.

Where your children/grandchildren live potentially might be an area you would want to live (that fits the lower cost state when it comes to taxes). A lot can shape your ideas between now and retirement.

It is transitional for retirement - with a lot of things. I was glad we had time with DH retiring first, the home routine and our budget working, and then the transition on insurance and turning on our SS and annuities in phases (I took my SS right away, and we spend down cash we had and delayed DH’s SS with turning on annuities and his SS). we retired at age 64 1/2 (DH) and age 65 (me). We kept employer health insurance until Medicare and supplement (as soon as DH retired, we took out the similar health insurance my employer offered at the same cost - I turned 65 four months after DH). You may choose to spend a little more in the years before retirement (for travel and other enjoyment) and either utilize COBRA or retire at 65/Medicare and not spend the extra money for health insurance. DH had a cardiac issue and had to have a cardiac ablation for paroxysmal A-Fib in retirement – so it was an adjustment for him for having the cardiology care and medications. Now he just needs to see the cardiologist once a year, and DH is staying very active.

Some people in retirement immediately do the travel they had not had time to do with their limited time off from work or other responsibilities. They budget for that. I see that we will be moving but have a lot to do to make that happen - that perhaps will happen in the next two years (DH just turned 70 last week). That is a big transition for us - we will move to where DD1/SIL/5 grandchildren live, big city in another state (but a state we have lived in and will be fine living there). We built our home in 1992 and have lived in our area since 1983. We want to spend the time with family, and DD1 works FT and they can use the extra involvement of grandparents.

A number of seniors move to be near their children/grandchildren – that is a personal choice. If DD1/SIL only had one or two children, we would not feel the draw to move there. We already travel there for Christmas through New Year’s, and plan with other family events. DD2 is single and an airline flight away (and a one-day drive away from where we live now).

We see a number of people move to our area with children/grandchildren here. Most of these ‘seniors’ age in place here - they purchase a home that works for them and is near where their family lives. One couple I know moved here 7 years ago - their son/family are here and their son had melanoma of the face – it scared them all and the son’s parents decided to relocate in retirement from out-of-state. The physicians thought the melanoma was gotten rid of, but now this son has a large central brain tumor; the parents both active/healthy in their late 60’s/early 70’s - so they are a help to the son and his family. Prior to the cancer reoccurrence, the couple kept up with other family/friends with travel to FL and also back to home state enjoying retirement.

The travel @shawbridge does is phenomenal.

I survived aggressive cancer - diagnosed in 2009. Was released from medical oncologist after 14/15 years (was on oral medication for 10 years after intense/prolonged treatment period).

We all hope to live well beyond average life expectancy. Advances in medicine can help make that happen to a certain extent.

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3928

We are definitely planners especially myself. I would be floored if we end up with grandchildren. I am not saying it won’t happen but the outlook for various reasons is a bit slim at the moment.

I got a new job in 2023 that came with a big bump. My DW had gotten her Masters and the credentials needed for a new role in her world. We are by far at the highest earning point in our careers. DW stayed home for 7-8 years with the kids and came back to professional work slowly.

If retirement were to happen now we would be moving the Las Vegas. We have friends that have been out there since ‘05. We were there two months ago and had an early flight. We knew the room wouldn’t be ready so we lined up a realtor to take us around to 4 properties of different types and locations. And we saved on the taxi cost to the hotel. I would love to live in a high-rise close to the strip but DW would prefer a more suburban feel. We have time to sort that out. And we know the whole water situation might throw a monkey wrench into things but we have time to see how it plays out. I guess I will be watching the level of Lake Mead for the coming years.

We have started to do some traveling already. DW has had a falling out with a sister, so we now travel with the adult kids at Xmas. Which I highly recommend if you can. And later this year we are taking a river cruise in Europe. It will be our first time in Europe. We won’t do a big trip each year but probably every 2-3 years going forward.

As I say everything hinges on me staying employed for the next 9 years.

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3929

How is your husband adjusting to this potential move? I know he is pretty involved with a volunteer position in the city you live in now.

My husband is content where we are living now. I’m not as thrilled, I would like to try snowbirding and see how we like that. He’s not on board yet

Right now one of our kids is exploring job opportunities in another state. The other is settled in a city but I’m not sure that is a permanent stop. We also have my mil in our state, I don’t see moving while she’s still around.

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3930

This weekend was very sad. I had 3 Co workers who lost their husbands. One had been retired for 2 years, one died of cancer early 40’s and another in his 30’s had a heart attack and died while hiking leaving 3 young kids.

We are all planners and want a comfortable retirement but these losses have reminded me we have to balance our finances and priorities as none of us are guaranteed tomorrow.

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3931

DH totally understands being with our family - he really enjoys the grandkids as they get older and he can teach them things in the workshop. They enjoy spending time with him. DH has already ‘downsized’ a bit with his activities - we were gone in both April and May with travel, and he prepared the students/mentors/other professionals before he left and got caught up when we were back. Now the summer is lower key for him and he is focusing on having a great yard (which we do have). DH wants to make 100% sure that DD1/SIL do want us to live in their city. Waiting for SIL’s new job and him liking his new job (we anticipate a job start perhaps Sept/Oct after finishing his time in the Army) before seriously getting rid of stuff and getting the house packed up/house sold. I have not gotten excited for the transition yet. I guess I see it as one who doesn’t like to pack on a trip but once the packing is done, one is ready to go. The unknowns. Have had a really terrific house and anticipate not having great home choices in comparison.

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3932

“Balancing our stressors”.

I have been deferring some on investing money we have in our individual stock account; I have to be in the right frame of mind to go in and tackle it.

One has to determine if some funds get managed by FA and what gets done by us. I initially had our FA advisor manage this account along with the Fidelity accounts they manage (FA funds had by our choice gone over to Fidelity after TD Ameritrade was bought out by Schwab and Schwab was not giving FA the same transaction ‘deal’ they had but Fidelity would). FA manages our Roth IRAs that are Fidelity Institutional accounts.

Our individual stock account went to FA care Feb 2022; by August the valuation had dropped over 10% because bonds did the crazy dropping along with stocks dropping (which historically had not happened….) - but that was that - I wasn’t going to pay them fees to also have them lose that kind of money.

I had closely studied the breakout of specific traded investments and each position - as institutional type of investment, it is spread over a number of investments. As time went on, I got out of investments that sucked and into investments that align with better performance over time.

2026, like 2025 had a negative first quarter but then picked up from there. I go in with better confidence on doing a good job with rebalancing.

With pulling money out of 401k and into our personal stock account, we have had cash/money market to also invest. I just sold 5 investments - 2 will close out after next market close (one was nontraditional bonds, and one was high yield muni). Only one of the 5 had any gains over these 4 years; cutting the losses now and the one with a slight gain was a corporate bond fund and I can do better in a stock fund/ETF.

Still had a YTD gain of 9.21%. I have to read up/study up and determine if I want to add shares to the best specific investment option with what we hold now and what investment choices to add. Then over time, I can rebalance.

Checked our 401k - have the best 3 options there with almost all money in one fund but a small amount of money in the two others to easily get the Performance Reports off of Empower; still in the best lineup. First Quarter was down 8.55%, but YTD is 3.37% with good gains in April, May, and so far in June.

Taking a break and will do more diving into this ‘work’.

DH asked me “why are we using FA?” and I was able to answer. In addition to our Roth IRAs, they manage the annuities we purchase (neither of us have pensions, so we spin off money from 401k when that gets too big and lower our risk with purchase of annuities). We get market updates from them (short 2-minute videos about every other week), and semi-annual one hour seminar. Then we schedule an individual one-hour session with our FA. Those two things are happening in July.

3933

I’m considering converting a chunk of our traditional IRAs into Roth IRAs, mainly to help our kids so they don’t have to pull everything out over ten years. I went to a free Zoom presentation from Q3 Advisors; they specialize in Roth conversions and charge a flat fee (which is not small). Has anyone heard of them? Or know anything about them?? TIA.

3934

Someone else will need to verify, but I think they still need to pull everything out within ten years…the difference being they don’t have to do a withdrawal annually. They can wait until the last year…because Roths don’t require a RMD.

We are doing these conversions as well, but more for tax purposes for our kids.

Our regular CFP helps us with these conversions. We are trying very hard to keep the conversions below an amount that will trigger increased IRMAA, and a higher tax bracket for us.

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3935

And the bigger difference is that the withdrawals are tax free to the beneficiaries.

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3936

I thought the withdrawals were tax free for our beneficiaries since we will already have paid taxes on them when we do the conversions. But I could be wrong!

Are you saying these monies will be taxed again when our beneficiaries do withdrawals from these Roth accounts.

3937
  • Withdrawals from inherited Roth IRAs are typically tax-free.
  • Inherited Roth IRAs must be emptied 10 years after the owner’s death.

https://www.investopedia.com/inheriting-roth-ira-from-parent-5220471

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3938

have no info on Q3, but Roth conversions can be rather simple for many (W2 types who dont own a business). Before paying a fee, you might mosey over to Bogleheads where you can obtain plenty of info for free. And if the info that you find there doensn’t work for your family, you can always engage Q3 later. (or have you asked your tax person?)

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3939

A typo on my part… fixed it. My apologies…thanks for catching that for me.

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3940

You might compare returns to indexes of the same macro, in addition to looking at absolute return. For example, the 10% loss in Feb-Aug 2022 sounds reasonable to me, as both total US and total bond market type ETFs lost ~10% share price during this period. It doesn’t seem like a good reason to fire FA to me.

Your returns so far this year seem reasonable, if you have a good portion fixed income, but may be low for a large % equities. Major equity indexes are up 10-15% YTD, while bond indexes are generally ~2% YTD (price is down slightly, return is derived from yield).

Do you mean a net loss for the 4-year period from 2022 to 2026? If you purchased the fixed income products near start of 2022, this also seems reasonable. The federal funds rate was ~0% in start of 2022 and market expected low rates to continue, so if purchased near 2022 the contracted yield of the bond at time of purchase was probably ~1%/year. As such, I’m not surprised the return has been low. If duration was >4 years, and sold on secondary market before maturation, return was likely negative since fed rate increased more than market expected at time of purchase.

However, this is irrelevant to future equity vs bond decisions, as the treasury yield curve is 4-5% for all 1+ year durations – far higher than 2022.. If you purchase a treasury product and hold to maturity, you are for all practical purposes guaranteed to get this 4-5%/year rate. Whether you “can do better in a stock fund/ETF” depends on how much you value having this near guaranteed positive return in future vs an unknown return that will probably be higher than 4-5%/year, but may be a large loss. I wouldn’t base this decision on past 4 years of return since 2022.

If you enjoy doing this type of research and regularly switching positions based on what has had the best recent returns, it can be an interesting hobby. However, even among professionals, few active traders beat market indexes after fees, so there is often a more simple alternative. Example SPIVA stats are below.

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3941

My mom’s Vanguard advisor sent her a message, saying that they were doing a quarterly rebalance of her portfolio. She has both a brokerage account and IRA managed, and this message is for the brokerage account.

He said that the rebalance would generate 57K in capital gains, though a partial rebalance would generate 22K. I mean, what the heck? I can see why one would want to rebalance in an IRA, no tax consequence, but suck up that sort of capital gains and pay taxes just to rebalance? She will likely never dip into these funds, anyways. It just seems like a bad idea. Gotta check out her long term capital gains rate, though.

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3942

Trying to get sleepy head husband out of bed, packed up condo last night, hauled and prepacked most of car - long, boring drive back to Atlanta this morning. Happy to see my cats!

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3943

Or ask you financial planner.

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