Can we retire yet? And other related questions...

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Topic Author
reln
Posts: 18
Joined: Fri Apr 19, 2019 4:01 pm

Can we retire yet? And other related questions...

Post by reln » Fri Apr 19, 2019 5:49 pm

Emergency funds: 19 months of expenses
Debt: None, rent at 2300/mo

Tax Filing Status: Married

Tax Rate: 24% Federal, 6.37% State

State of Residence: NJ

Age: M62, F58

Desired Asset allocation: 100% stocks / 0% bonds

Desired International allocation: 30% of stocks

Portfolio: 3.2m (or 3.6m?)

Current retirement assets

His Taxable
0% cash
37%, 1.2m VDADX Vanguard Dividend Appreciation Index Fund (0.08%)

His 401k
37%, 1.2m S&P1500 index (0.02%)
20%, 0.6m World Dev index (0.055%)
6%, 0.2m Emerging market index (0.11%)

His Pension Options
1) 0.4m cash out, OR
2) 28.5k/yr M life only, OR
3) 20.4k/yr M&F life only

Contributions
Zero?

Available funds
NA

Questions:
1. Can we retire now? We spend about 94k/yr. We think we need about 135k/yr before tax to spend 94k.

2. Which pension option should we choose? We're both in excellent health. I have a 1M term life insurance policy on myself, none on my wife. No kids, but have nieces I'd like to leave something to besides college money too (have 77k in 529s for nieces).

3. It terms of annuities, we're thinking of rolling out 1.2m from 401k into a joint SPIA to get about 65k/yr to make up the difference between 135k and (social security + pension + VDADX dividends). Thoughts?

4. On social security, I have to be honest, I've read about 200 online pages and it's just a crazy mess of confusion for me. Should I take early? Delay? When does my wife get spousal benefits? What's optimal? Can someone make this simpler?

5. I'm ok with finances but my wife isn't. Should we use a trust to smooth out the transition in case I die first? I've been reading up on that too and it's even more complicated than SS.

Thanks in advance.

PS, we never rolled over into ROTH.

Freefun
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Re: Can we retire yet? And other related questions...

Post by Freefun » Fri Apr 19, 2019 6:02 pm

You will get great feedback from the good folks on this forum far wiser than me. My initial question is why you have an AA of 100% stocks when you are considering retirement. Are you willing to lose half your $ (or more) in a down market?
Remember when you wanted what you currently have?

Mr.BB
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Re: Can we retire yet? And other related questions...

Post by Mr.BB » Fri Apr 19, 2019 6:15 pm

For most people I like the Pension for both husband and wife. Even though it is a little bit less, you never know what the future will hold and it helps protect her more. I agree with the other poster, on reducing some of your 100% equity holdings. As far as SS is concern, you will basically get an 8% return on your money for every year you don't use it until age 70. Holding off even just 2-3 years can make a big difference.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

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Wiggums
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Re: Can we retire yet? And other related questions...

Post by Wiggums » Fri Apr 19, 2019 6:16 pm

Mr.BB wrote:
Fri Apr 19, 2019 6:15 pm
For most people I like the Pension for both husband and wife. Even though it is a little bit less, you never know what the future will hold and it helps protect her more. I agree with the other poster, on reducing some of your 100% equity holdings. As far as SS is concern, you will basically get an 8% return on your money for every year you don't use it until age 70. Holding off even just 2-3 years can make a big difference.
I agree

You have plenty of money to retire now. Congratulations.
Last edited by Wiggums on Fri Apr 19, 2019 6:20 pm, edited 1 time in total.

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David Jay
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Re: Can we retire yet? And other related questions...

Post by David Jay » Fri Apr 19, 2019 6:19 pm

Yes, you can retire. You have almost double what you need to pull 65,000 a year.

Regarding #4, I recommend “opensocialsecurity.com”, this is a SS simulator put together by a forum member who is a CPA. It will recommend an optimum filing date based on a naive (no special health conditions) life expectancy. But better than that, you can put in alternates and it will show you the difference.

For instance, it recommended that my wife (lower earner) take SS at age 62 and that I delay to age 70. But if I file at 68 there is a like a 3K difference in total benefits, so it makes little difference if I wait to 68, 69 or 70.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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willthrill81
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Re: Can we retire yet? And other related questions...

Post by willthrill81 » Fri Apr 19, 2019 6:25 pm

reln wrote:
Fri Apr 19, 2019 5:49 pm
Emergency funds: 19 months of expenses
Debt: None, rent at 2300/mo

Tax Filing Status: Married

Tax Rate: 24% Federal, 6.37% State

State of Residence: NJ

Age: M62, F58

Desired Asset allocation: 100% stocks / 0% bonds

Desired International allocation: 30% of stocks

Portfolio: 3.2m (or 3.6m?)

Current retirement assets

His Taxable
0% cash
37%, 1.2m VDADX Vanguard Dividend Appreciation Index Fund (0.08%)

His 401k
37%, 1.2m S&P1500 index (0.02%)
20%, 0.6m World Dev index (0.055%)
6%, 0.2m Emerging market index (0.11%)

His Pension Options
1) 0.4m cash out, OR
2) 28.5k/yr M life only, OR
3) 20.4k/yr M&F life only

Contributions
Zero?

Available funds
NA

Questions:
1. Can we retire now? We spend about 94k/yr. We think we need about 135k/yr before tax to spend 94k.
IMHO, absolutely. If you withdrew $135k, that would come out to a 3.75% withdrawal rate ($135k/$3.6m), assuming you cashed out the pension. And on top of that when your Social Security benefits kick in, your withdrawal rate will go down. Also, I think that you're overestimating what your tax rate will be in retirement.
reln wrote:
Fri Apr 19, 2019 5:49 pm
2. Which pension option should we choose? We're both in excellent health. I have a 1M term life insurance policy on myself, none on my wife. No kids, but have nieces I'd like to leave something to besides college money too (have 77k in 529s for nieces).
You didn't state whether your pension's annual payout options would be adjusted annually for inflation. If it is, then I would very likely take it and would select the M&F option. If it's not adjusted for inflation, then I would probably just take the cash out option and take your first three years of spending from the proceeds if you want to maintain your 100% stock allocation.
reln wrote:
Fri Apr 19, 2019 5:49 pm
3. It terms of annuities, we're thinking of rolling out 1.2m from 401k into a joint SPIA to get about 65k/yr to make up the difference between 135k and (social security + pension + VDADX dividends). Thoughts?
Since your withdrawal rate will be below 4% and you probably have room to reduce your withdrawals significantly if you really needed to, I wouldn't advise you to buy a SPIA. Only one provider offers SPIAs with an inflation-adjustment, and at your ages, long-term inflation is a big concern.
reln wrote:
Fri Apr 19, 2019 5:49 pm
4. On social security, I have to be honest, I've read about 200 online pages and it's just a crazy mess of confusion for me. Should I take early? Delay? When does my wife get spousal benefits? What's optimal? Can someone make this simpler?
There are many thoughts about how to manage this, but here's what I would do if I were you. Defer taking SS benefits until age 70 unless your portfolio suffers significantly between now and then. If it does, then you can start SS benefits in order to reduce your portfolio withdrawals.
reln wrote:
Fri Apr 19, 2019 5:49 pm
5. I'm ok with finances but my wife isn't. Should we use a trust to smooth out the transition in case I die first? I've been reading up on that too and it's even more complicated than SS.
A trust isn't necessary at all for this purpose. You can just provide her with detailed instructions about what to do in the event of your passing. This is what I've done, and my wife fully understands the instructions. If she still wouldn't feel comfortable with it, you may want to find a fee-only (i.e. flat rate fee, NOT someone who charges you asset under management fees) advisor who could follow your instructions for her.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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David Jay
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Re: Can we retire yet? And other related questions...

Post by David Jay » Fri Apr 19, 2019 6:30 pm

To continue, if there is a wide disparity in earnings for a married couple, it is almost always optimum financially for the lower earner to file early (62) and the high earner to delay to age 70.

The key is that the surviving spouse gets the larger of the two benefits, so the survivor gets the benefit of the delay, regardless of which spouse passes first. This is almost certainly the best “annuity” that one can purchase - spend some of your portfolio on living expenses in exchange for a larger, COLA protected joint-survivor benefit.

(I retired 3 months ago @ 62 so the topic is fresh in my mind).
Last edited by David Jay on Fri Apr 19, 2019 6:38 pm, edited 1 time in total.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

Trader Joe
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Re: Can we retire yet? And other related questions...

Post by Trader Joe » Fri Apr 19, 2019 6:32 pm

Yes you can retire. Enjoy your life.

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Wiggums
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Re: Can we retire yet? And other related questions...

Post by Wiggums » Fri Apr 19, 2019 6:32 pm

David Jay wrote:
Fri Apr 19, 2019 6:30 pm
To continue, if there is a wide disparity in earnings for a married couple, it is almost always optimum financially for the lower earner to file early (62) and the high earner to delay to age 70.

The key is that the surviving spouse gets the larger of the two benefits, so the survivor gets the benefit of the delay, regardless of which spouse passes first. This is almost certainly the best “annuity” that one can purchase - spend some of your portfolio on living expenses in exchange for a larger, COLA protected joint-survivor benefit.
+1

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wander
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Re: Can we retire yet? And other related questions...

Post by wander » Fri Apr 19, 2019 6:39 pm

It's an easy YES. Congratulations!

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Watty
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Re: Can we retire yet? And other related questions...

Post by Watty » Fri Apr 19, 2019 7:01 pm

Mr.BB wrote:
Fri Apr 19, 2019 6:15 pm
I agree with the other poster, on reducing some of your 100% equity holdings.
Another +1 on that. For comparison the Vanguard 2020 Target date fund is 55% stocks and 45% bonds.

https://investor.vanguard.com/mutual-fu ... file/VTWNX

100% stocks is way high.
reln wrote:
Fri Apr 19, 2019 5:49 pm
Debt: None, rent at 2300/mo
How does the rent compare to what you could buy(including maintenance and property taxes)?

Moving to a less expensive area could be an option an even if you don't want to move a long way housing might be a lot less expensive 30 minutes farther out of town.

One huge advantage of owning a home or condo is that you do not need to pay income taxes on the money you would need for rent. Another is that you will not have future rent increases. With the way that your Social Security will be taxed you might need something like $3,500 a month in income to pay your $2,300 a month in rent.

https://www.bogleheads.org/wiki/Taxatio ... y_benefits

I have a paid off house and part of our plan is that if long term care is ever needed then the house can be sold and the home equity can be used to help pay for the long term care.
reln wrote:
Fri Apr 19, 2019 5:49 pm
3. It terms of annuities, we're thinking of rolling out 1.2m from 401k into a joint SPIA to get about 65k/yr to make up the difference between 135k and (social security + pension + VDADX dividends). Thoughts?
I would be cautious about that since the annuity and pension would likely not be adjusted for inflation.

If you had a paid off house you would have a lot smaller gap to fund.

A SPIA can make sense as part of a retirement plan but often when they do buying one when you are in your 70s or older may be a good time to buy them. 58 is VERY young to buy a SPIA.

reln wrote:
Fri Apr 19, 2019 5:49 pm
4. On social security, I have to be honest, I've read about 200 online pages and it's just a crazy mess of confusion for me. Should I take early? Delay? When does my wife get spousal benefits? What's optimal? Can someone make this simpler?
Mike Piper who created the Open Social Security web site;

https://opensocialsecurity.com/

Also wrote a book, "Social Security Made Simple". :happy

https://www.amazon.com/Social-Security- ... 2-fkmrnull

JoeRetire
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Re: Can we retire yet? And other related questions...

Post by JoeRetire » Fri Apr 19, 2019 7:11 pm

reln wrote:
Fri Apr 19, 2019 5:49 pm
Desired Asset allocation: 100% stocks / 0% bonds
Why is that your desired allocation?

Questions:
1. Can we retire now?
Whenever anyone ever asks "can we retire now" the answer is always "Yes, of course!".

But I'm guessing what you are really asking is "does it make sense to retire now, give our assets, our plans, our goals?" That's more complicated.
Financially, you appear to be okay at first glance. How confident are you with your retirement expense estimate?

Have you purchased Long Term Care Insurance?

You haven't mentioned any goals at all. What do you want to do in retirement? Any expensive plans (vintage cars? big new house? world travel?)? Do you wish to leave a legacy?
4. On social security, I have to be honest, I've read about 200 online pages and it's just a crazy mess of confusion for me. Should I take early? Delay? When does my wife get spousal benefits? What's optimal? Can someone make this simpler?
You have to post some actual numbers if you want help analyzing your benefits or suggesting an optimal claiming strategy.
Or you could do it yourself here: https://opensocialsecurity.com/
5. I'm ok with finances but my wife isn't. Should we use a trust to smooth out the transition in case I die first? I've been reading up on that too and it's even more complicated than SS.
I;m not sure what you would have a trust do, as far as smoothing out a transition. One of the reasons I have a financial adviser is to help my wife when I'm gone. Maybe your wife won't need the help. Maybe she will.

printer86
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Re: Can we retire yet? And other related questions...

Post by printer86 » Fri Apr 19, 2019 7:18 pm

I would elect pension option #3 before I would shell out any money for a SPIA. $400k for $21k per year @ 58 years old is a good deal. I would also lower your stock percentage in your tax deferred accounts and buy a bond fund. And, as other have said, the higher wage earner should not claim SS until 70.

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Watty
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Re: Can we retire yet? And other related questions...

Post by Watty » Fri Apr 19, 2019 7:40 pm

One more thought. Delaying Social Security to get a larger check later is in effect buying an inflation adjusted annuity that is better than what you can buy. It likely would not make any sense to buy a SPIA if you are not delaying at least one of your Social Security start dates until you are 70.

Topic Author
reln
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Re: Can we retire yet? And other related questions...

Post by reln » Fri Apr 19, 2019 8:26 pm

Freefun wrote:
Fri Apr 19, 2019 6:02 pm
You will get great feedback from the good folks on this forum far wiser than me. My initial question is why you have an AA of 100% stocks when you are considering retirement. Are you willing to lose half your $ (or more) in a down market?
You were right, I did get some great feedback!

The reason I want 100% stocks in the financial side is that If I purchased the 1.2 SPIA, took one of the 0.4 pension payout options, included the SS (~0.7), that'd be the same as having 47% in stocks (3.6+0.7-0.7-1.2-0.4)/(3.6+0.7).

Indeed, if I don't buy a SPIA, take the payout pension, or include SS, then I would target a 50% stocks.

Thanks

Topic Author
reln
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Re: Can we retire yet? And other related questions...

Post by reln » Fri Apr 19, 2019 9:39 pm

David Jay wrote:
Fri Apr 19, 2019 6:19 pm
Yes, you can retire. You have almost double what you need to pull 65,000 a year.

Regarding #4, I recommend “opensocialsecurity.com”, this is a SS simulator put together by a forum member who is a CPA. It will recommend an optimum filing date based on a naive (no special health conditions) life expectancy. But better than that, you can put in alternates and it will show you the difference.

For instance, it recommended that my wife (lower earner) take SS at age 62 and that I delay to age 70. But if I file at 68 there is a like a 3K difference in total benefits, so it makes little difference if I wait to 68, 69 or 70.
I will check this out, thanks so much for the link.

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reln
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Re: Can we retire yet? And other related questions...

Post by reln » Sat Apr 20, 2019 6:37 am

David Jay wrote:
Fri Apr 19, 2019 6:19 pm
Yes, you can retire. You have almost double what you need to pull 65,000 a year.

Regarding #4, I recommend “opensocialsecurity.com”, this is a SS simulator put together by a forum member who is a CPA. It will recommend an optimum filing date based on a naive (no special health conditions) life expectancy. But better than that, you can put in alternates and it will show you the difference.

For instance, it recommended that my wife (lower earner) take SS at age 62 and that I delay to age 70. But if I file at 68 there is a like a 3K difference in total benefits, so it makes little difference if I wait to 68, 69 or 70.
This was awesome, thanks!
The tool said for us, wife files at 62y/1m, I file at 70y, wife files for spousal at 65y/4m.

Follow up question, does anyone know of a tool that can change the actual age versus legal age? My wife's actual age is different than her legal age (poor documentation of her home country).

ExitStageLeft
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Re: Can we retire yet? And other related questions...

Post by ExitStageLeft » Sat Apr 20, 2019 9:54 am

reln wrote:
Sat Apr 20, 2019 6:37 am
...
Follow up question, does anyone know of a tool that can change the actual age versus legal age? My wife's actual age is different than her legal age (poor documentation of her home country).
Interesting! If your wife is older than her legal age then the mortality table will not be accurate. For the OpenSocialSecurity tool you can select Advanced Options just below the blue banner. That allows you to select different mortality tables. I would experiment with the different tables and/or the assumed age at death and see if that changes the recommendations.

Topic Author
reln
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Re: Can we retire yet? And other related questions...

Post by reln » Sat Apr 20, 2019 11:29 am

IMHO, absolutely. If you withdrew $135k, that would come out to a 3.75% withdrawal rate ($135k/$3.6m), assuming you cashed out the pension. And on top of that when your Social Security benefits kick in, your withdrawal rate will go down. Also, I think that you're overestimating what your tax rate will be in retirement.
I agree that I'm overestimating my taxes (ie, dividends are taxed less than 401k withdrawals) but I'm overwhelmed with the tax strategies I read online. There's just too much to learn at this stage. So, we're trying to keep things simple and not depend on stock fluctuations to meet or miss our spending needs. This is one reason we want a SPIA to keep things predictable.
You didn't state whether your pension's annual payout options would be adjusted annually for inflation. If it is, then I would very likely take it and would select the M&F option. If it's not adjusted for inflation, then I would probably just take the cash out option and take your first three years of spending from the proceeds if you want to maintain your 100% stock allocation.
The pension is not inflation adjusted. One of my friends that retired a few years ago took the M only option and bought life insurance with some of the excess payout to cover his wife in case he dies early. I was thinking of doing this. Is there an online calculator that can tell us which option is better?
Since your withdrawal rate will be below 4% and you probably have room to reduce your withdrawals significantly if you really needed to, I wouldn't advise you to buy a SPIA. Only one provider offers SPIAs with an inflation-adjustment, and at your ages, long-term inflation is a big concern.
My wife and I discussed this, and she and I would prefer our lifestyle funded through guaranteed income. Is it reasonable to expect that the remaining stock portion would cover inflation?
A trust isn't necessary at all for this purpose. You can just provide her with detailed instructions about what to do in the event of your passing. This is what I've done, and my wife fully understands the instructions. If she still wouldn't feel comfortable with it, you may want to find a fee-only (i.e. flat rate fee, NOT someone who charges you asset under management fees) advisor who could follow your instructions for her.
I've interviewed several local financial advisors. Unfortunately, they all strike me as dishonest people that would take advantage of my wife after I die.

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reln
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Re: Can we retire yet? And other related questions...

Post by reln » Sat Apr 20, 2019 11:39 am

Another +1 on that. For comparison the Vanguard 2020 Target date fund is 55% stocks and 45% bonds.

https://investor.vanguard.com/mutual-fu ... file/VTWNX

100% stocks is way high.
I agree, 100% stocks is too high to stay at. I was waiting for the markets to recover to make a reallocation. So, that's why I'm considering it this weekend. If I make the moves above, my balance sheet would be 100% stocks but my actual stock/fixed allocation from the income side would be about 47%/53% initially.
reln wrote:
Fri Apr 19, 2019 5:49 pm
Debt: None, rent at 2300/mo
How does the rent compare to what you could buy(including maintenance and property taxes)?
We used to own a home. We sold it (and bought VDADX in a taxable account with the proceeds) after the new tax law made the (very high in NJ) property tax non-deductible. We have been renting ever since and we prefer to rent than own at this point as a lifestyle choice.

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beyou
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Re: Can we retire yet? And other related questions...

Post by beyou » Sat Apr 20, 2019 12:00 pm

Regarding the life insurance, I would be interested to hear what it would cost you and for how long you would set the term ?
I guess you need to think about the present value of the pension to your wife if you died.
If you assume 30 years of 28,500 payment, at 3% reinvestment rate, that is worth about $558k
So a policy over $500k would compensate her for the loss of your pension.
So the question is what does a $500k 30 year term policy cost you ? More or less than the M vs M/F $8k/year ?
I would think 30 year term at your age is expensive, and getting anything less than 30 years means you are not protecting
to her age of 88. Maybe you can get quotes on 15-20 year to protect her to age 73/78, knowing that you'll be getting SS max at that point.

Personally I would also consider taking the $400k from the pension and invest it or SPIA if that is your preferred method of investing.
I don't like depending on some employer pension plan unless it is a very secure one.
Regarding the never ending comments on SPIA and inflation, I would keep your non-SPIA assets as a combo of TIPS and Equities until
you reach SS and then you can consider the stream of SS as your fixed income, and reduce TIPS potentially.
There is much out there on lowering equity at retirement and increasing as you age.

https://www.kitces.com/blog/should-equi ... ly-better/

lakpr
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Re: Can we retire yet? And other related questions...

Post by lakpr » Sat Apr 20, 2019 12:06 pm

I live in NJ too, younger than you but in the same 24% + 6.37% tax bracket. I understand only too well what you mean by owning homes is a tax pit. The TCJA increased my tax bill by $4000 compared to 2017; and my raise in 2018 at my workplace was $3000! The tax hit more than took away my raise, it bit me big time!!

Coming to the point though, I would suggest moving almost all your 401k funds into Total bond Index funds, and NOT buy the SPIA. Your asset allocation will be 50:50, appropriate for your age, and instead of having the annuity insurance company access to your money, it will be in your immediate control and can be bequeathed to heirs or charities if no heirs. Keep withdrawing from 401k for your living expenses, use your taxable for any situations where controlling your income is necessary / tax loss harvesting /tax gain harvesting.

You have more than enough to retire today. Enjoy your retirement!!

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reln
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Re: Can we retire yet? And other related questions...

Post by reln » Sat Apr 20, 2019 2:36 pm

reln wrote:
Fri Apr 19, 2019 5:49 pm
Desired Asset allocation: 100% stocks / 0% bonds
Why is that your desired allocation?
From the income side, I want it to be about 50/50.
1. Can we retire now?
How confident are you with your retirement expense estimate?

Have you purchased Long Term Care Insurance?

You haven't mentioned any goals at all. What do you want to do in retirement? Any expensive plans (vintage cars? big new house? world travel?)? Do you wish to leave a legacy?
Really great questions, I've been reflecting on them last night and today.
* About expense estimate: I spent some time to dig up our expenses (banking history) since 2013. And we feel pretty confident that 94k/yr spending is accurate (if not a tad bit conservative). Our estimate that 135k/yr gross is based on a conservative estimate of taxation (94k/(1-24%-6.37%)).
* We have not purchased LTC. We've looked at several policies and they look horribly expensive (and the coverage amount seems tiny and restrictive). Feels like self insuring that risk would be a better bet at this point. IE, let the excess fixed income stay in 5 year CDs. Another option we've looked into (because a former coworker of mine did this) was to purchase a UL with LTC rider. The cost was comparable to that of the plain LTC. But, I'd rather self insure that risk. None of our older relatives had an LTC event.
* As for goals and expensive plans. Our altruistic goal is to continue to aide South American orphans with basic needs (food, clothing, medical, education). No expensive cars, we drive a Corolla (considering ditching it completely and Ubering everywhere). We travel occasionally, but always budget conscious (ie,offseason, price shopping). We're not big travel fans though, it's exhausting. As for a legacy, we have several nieces we'd like to pay college for; the rest can go to charities focused on children. BTW, anyone know of a good way to vet charities?

printer86
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Re: Can we retire yet? And other related questions...

Post by printer86 » Sat Apr 20, 2019 3:00 pm

On of the reasons not to convert your tax deferred accounts to an SPIA is for either person's long term care needs. The tax laws allow you to deduct the cost of medical expenses off your taxes, over a certain % of income. therefore, long term care expenses can be pulled from tax deferred accounts with no tax.

Topic Author
reln
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Re: Can we retire yet? And other related questions...

Post by reln » Sat Apr 20, 2019 3:23 pm

printer86 wrote:
Sat Apr 20, 2019 3:00 pm
On of the reasons not to convert your tax deferred accounts to an SPIA is for either person's long term care needs. The tax laws allow you to deduct the cost of medical expenses off your taxes, over a certain % of income. therefore, long term care expenses can be pulled from tax deferred accounts with no tax.
Oh that is good information! Thanks!

Topic Author
reln
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Re: Can we retire yet? And other related questions...

Post by reln » Sat Apr 20, 2019 3:29 pm

beyou wrote:
Sat Apr 20, 2019 12:00 pm
Regarding the life insurance, I would be interested to hear what it would cost you and for how long you would set the term ?
I guess you need to think about the present value of the pension to your wife if you died.
If you assume 30 years of 28,500 payment, at 3% reinvestment rate, that is worth about $558k
So a policy over $500k would compensate her for the loss of your pension.
So the question is what does a $500k 30 year term policy cost you ? More or less than the M vs M/F $8k/year ?
I would think 30 year term at your age is expensive, and getting anything less than 30 years means you are not protecting
to her age of 88. Maybe you can get quotes on 15-20 year to protect her to age 73/78, knowing that you'll be getting SS max at that point.

Personally I would also consider taking the $400k from the pension and invest it or SPIA if that is your preferred method of investing.
I don't like depending on some employer pension plan unless it is a very secure one.
Regarding the never ending comments on SPIA and inflation, I would keep your non-SPIA assets as a combo of TIPS and Equities until
you reach SS and then you can consider the stream of SS as your fixed income, and reduce TIPS potentially.
There is much out there on lowering equity at retirement and increasing as you age.

https://www.kitces.com/blog/should-equi ... ly-better/
My premium is 2475/yr for 10 years for 1m policy.

Those are great ideas. But they are more complex scenarios than I can figure out.

User avatar
burt
Posts: 727
Joined: Sun Feb 17, 2008 7:47 am

Re: Can we retire yet? And other related questions...

Post by burt » Sat Apr 20, 2019 3:30 pm

I stopped reading at age 62 with $3.2 million.
Yes, you can retire.

burt

Topic Author
reln
Posts: 18
Joined: Fri Apr 19, 2019 4:01 pm

Re: Can we retire yet? And other related questions...

Post by reln » Sat Apr 20, 2019 3:32 pm

lakpr wrote:
Sat Apr 20, 2019 12:06 pm
I live in NJ too, younger than you but in the same 24% + 6.37% tax bracket. I understand only too well what you mean by owning homes is a tax pit. The TCJA increased my tax bill by $4000 compared to 2017; and my raise in 2018 at my workplace was $3000! The tax hit more than took away my raise, it bit me big time!!

Coming to the point though, I would suggest moving almost all your 401k funds into Total bond Index funds, and NOT buy the SPIA. Your asset allocation will be 50:50, appropriate for your age, and instead of having the annuity insurance company access to your money, it will be in your immediate control and can be bequeathed to heirs or charities if no heirs. Keep withdrawing from 401k for your living expenses, use your taxable for any situations where controlling your income is necessary / tax loss harvesting /tax gain harvesting.

You have more than enough to retire today. Enjoy your retirement!!
Ouch. I don't recall the exact numbers but my taxes went up vs last year. Oh well.

Harvesting what now?

lakpr
Posts: 1860
Joined: Fri Mar 18, 2011 9:59 am

Re: Can we retire yet? And other related questions...

Post by lakpr » Sat Apr 20, 2019 7:34 pm

reln wrote:
Sat Apr 20, 2019 3:32 pm
Harvesting what now?
Tax loss harvesting:
https://www.bogleheads.org/wiki/Tax_loss_harvesting

Tax gain harvesting:
https://www.bogleheads.org/wiki/Tax_gain_harvesting

Topic Author
reln
Posts: 18
Joined: Fri Apr 19, 2019 4:01 pm

Re: Can we retire yet? And other related questions...

Post by reln » Sun Apr 21, 2019 8:51 am

lakpr wrote:
Sat Apr 20, 2019 7:34 pm
reln wrote:
Sat Apr 20, 2019 3:32 pm
Harvesting what now?
Tax loss harvesting:
https://www.bogleheads.org/wiki/Tax_loss_harvesting

Tax gain harvesting:
https://www.bogleheads.org/wiki/Tax_gain_harvesting
Oh thanks but that's not for us haha! We have no desire to monitor the stock market.

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