Need some guidance at retirement time

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Topic Author
NJT
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Need some guidance at retirement time

Post by NJT » Fri Nov 08, 2019 11:09 am

Will be retiring January 1st at age 62
Combined, my wife and I will receive $4500 per month in SS and pensions.(Assuming I take SS at 62). Wife is disabled and gets SSDI and a disability pension.Together we have $920K in savings.
- $60K of that is cash in bank checking/savings account drawing 0.25% interest
- The rest of the money is in IRA's/401a/457 type tax deferred accounts as follows:
$425K in traditional IRA Vanguard 2025 target date (exp ratio 0.17)
$270K in state employee defined contribution retirement plan (401a) Vanguard balanced index fund (exp ratio 0.07)
$170K in state employee 457 plan Blackrock 2025 target date fund (exp ratio 0.08)
Now comparing two options: 1) Consolidate all in the state run plan by transferring in Vanguard IRA's or 2) Consolidate all money with Vanguard by transferring money out of defined contribution plan and 457.
State plan is managed by ICMARC. They offer a wide range of low cost options. I'm leaning toward a 3-fund approach consolidated in the state/ICMARC plan as follows: 40% in Total Bond fund, 40% in Total stock market fund, and 20% in total International stock fund. Regular monthly withdrawals of $3K would come from bond fund and replenished/rebalanced yearly by moving money out of stock funds into bonds.
The ICMARC funds have slightly lower expenses and similar returns to equivalent vanguard funds.
Thoughts and advise?

delamer
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Re: Need some guidance at retirement time

Post by delamer » Fri Nov 08, 2019 11:27 am

Could you spell out more clearly which accounts belong to whom?

As I am sure you know, you can’t —for example — move you wife’s IRA into your 401a.

My bias is that it is a good idea to have money in a couple different places. That way, if one account is hacked or there is a temporary account access problem, then you still have access to your other monies. So you could put your accounts with Vanguard and your wife’s with the state plan (again, for example).

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JoeRetire
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Re: Need some guidance at retirement time

Post by JoeRetire » Fri Nov 08, 2019 11:36 am

NJT wrote:
Fri Nov 08, 2019 11:09 am
Will be retiring January 1st at age 62
Congratulations!
Combined, my wife and I will receive $4500 per month in SS and pensions.(Assuming I take SS at 62).

Thoughts and advise?
You should spend some time with https://opensocialsecurity.com/ before you decide when to start your Social Security benefits.

Have you estimated your expenses in retirement?
Don't be a lemming.

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RickBoglehead
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Re: Need some guidance at retirement time

Post by RickBoglehead » Fri Nov 08, 2019 11:40 am

And you should move that $60k to a higher interest account.

Assuming you move $50,000 to a 1.8% account, in a year that's at least $775. That's easy money.

I'd move what I could to Ally, then buy two $25,000 No Penalty CDs. 1.9% for $25,000.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

Topic Author
NJT
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Re: Need some guidance at retirement time

Post by NJT » Fri Nov 08, 2019 11:49 am

Thanks for the replies.
Additional info - the only account in my wife's name is $140K in traditional IRA invested with Vanguard 2025 account
- I have done a lot of thinking and reading exploring best alternatives on when to take SS. For me, the two biggest reasons for taking it now are that I want to maximize my income in the early years of retirement when my health is still good and I am able to travel and engage in activities of all types and 2nd, my first priority is to ensure that my wife has security after I am gone. Taking SS early means we will spend less of our shared savings if I were to die early and leave her behind. Her SSDI is high enough that she would not benefit from taking 1/2 of my SS when I pass on.
Monthly expenses (pre-tax) in first 3 years (until house is paid off and I qualify for Medicare)=$7500/mo. ; $5750/mo after that.
Hope that helps.

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Wiggums
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Re: Need some guidance at retirement time

Post by Wiggums » Fri Nov 08, 2019 12:02 pm

Congratulations on your retirement.

I don’t know anything about your 401a administer, but I did find this posting and the expense ratios this person posted are quite high. Perhaps your TDF is the exception with low ER?

viewtopic.php?t=188526

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Wiggums
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Re: Need some guidance at retirement time

Post by Wiggums » Fri Nov 08, 2019 12:06 pm

RickBoglehead wrote:
Fri Nov 08, 2019 11:40 am
And you should move that $60k to a higher interest account.

Assuming you move $50,000 to a 1.8% account, in a year that's at least $775. That's easy money.

I'd move what I could to Ally, then buy two $25,000 No Penalty CDs. 1.9% for $25,000.
+1000

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Wiggums
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Re: Need some guidance at retirement time

Post by Wiggums » Fri Nov 08, 2019 12:08 pm

NJT wrote:
Fri Nov 08, 2019 11:49 am
T by hanks for the replies.
Additional info - the only account in my wife's name is $140K in traditional IRA invested with Vanguard 2025 account
- I have done a lot of thinking and reading exploring best alternatives on when to take SS. For me, the two biggest reasons for taking it now are that I want to maximize my income in the early years of retirement when my health is still good and I am able to travel and engage in activities of all types and 2nd, my first priority is to ensure that my wife has security after I am gone. Taking SS early means we will spend less of our shared savings if I were to die early and leave her behind. Her SSDI is high enough that she would not benefit from taking 1/2 of my SS when I pass on.
Monthly expenses (pre-tax) in first 3 years (until house is paid off and I qualify for Medicare)=$7500/mo. ; $5750/mo after that.
Hope that helps.
The house will be paid off in three years?

Topic Author
NJT
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Re: Need some guidance at retirement time

Post by NJT » Fri Nov 08, 2019 12:11 pm

I am 7 years into a 10 year 3 1/8% mortgage. P&I $1,100/mo.
Balance on loan $39K

delamer
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Re: Need some guidance at retirement time

Post by delamer » Fri Nov 08, 2019 2:53 pm

NJT wrote:
Fri Nov 08, 2019 11:49 am
Thanks for the replies.
Additional info - the only account in my wife's name is $140K in traditional IRA invested with Vanguard 2025 account
- I have done a lot of thinking and reading exploring best alternatives on when to take SS. For me, the two biggest reasons for taking it now are that I want to maximize my income in the early years of retirement when my health is still good and I am able to travel and engage in activities of all types and 2nd, my first priority is to ensure that my wife has security after I am gone. Taking SS early means we will spend less of our shared savings if I were to die early and leave her behind. Her SSDI is high enough that she would not benefit from taking 1/2 of my SS when I pass on.
Monthly expenses (pre-tax) in first 3 years (until house is paid off and I qualify for Medicare)=$7500/mo. ; $5750/mo after that.
Hope that helps.
You can’t do anything with you wife’s IRA then, in terms of consolidating with the state plans.

Would you be able to move the funds from one of your state plans to the other?

joylesshusband
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Re: Need some guidance at retirement time

Post by joylesshusband » Fri Nov 08, 2019 3:10 pm

NJT wrote:
Fri Nov 08, 2019 11:49 am
Her SSDI is high enough that she would not benefit from taking 1/2 of my SS when I pass on.
Would she benefit from taking 1/1 instead of 1/2 of your SS benefit?
Retired July 2018 @ age 59. Posting here purely for amusement.

Topic Author
NJT
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Re: Need some guidance at retirement time

Post by NJT » Fri Nov 08, 2019 3:55 pm

Am I correct that a surviving spouse has to choose whether to keep their own social security or drop it in exchange for 1/2 of their deceased spouse's benefit?

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GerryL
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Re: Need some guidance at retirement time

Post by GerryL » Fri Nov 08, 2019 4:57 pm

NJT wrote:
Fri Nov 08, 2019 3:55 pm
Am I correct that a surviving spouse has to choose whether to keep their own social security or drop it in exchange for 1/2 of their deceased spouse's benefit?
A surviving spouse would get an amount equal to the larger of their SS or the deceased spouse's SS. So it is often best for the higher earning spouse to delay SS as long as possible to ensure the surviving would get the higher payout when they become widowed.

Anyone else want to correct this or add more detail?

delamer
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Re: Need some guidance at retirement time

Post by delamer » Fri Nov 08, 2019 5:00 pm

NJT wrote:
Fri Nov 08, 2019 3:55 pm
Am I correct that a surviving spouse has to choose whether to keep their own social security or drop it in exchange for 1/2 of their deceased spouse's benefit?
No.

The surviving spouse receives the higher of 1) their own benefit or 2) their spouse’s benefit.

When both spouses are alive, the spouse with lower benefit based on their own earnings gets either 1) their own earned benefit or 2) 1/2 of their spouse’s higher benefit, whichever is higher. (The actual benefit may be adjusted based on age at claiming.)

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