Planning for my wife to retire in two years: a checkup

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JSnyder
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Planning for my wife to retire in two years: a checkup

Post by JSnyder »

Could you help me do a retirement check up? I would like to evaluate the possibility that my wife retires in two years at the age of 59 1/2. Her 401K is now 100% in bonds. I am also slowly moving her IRA from Vanguard Growth Index into the Vanguard Total Bond Market. Any other advise?

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My wife and I still work. We are fortunate to have big company jobs that are allowing us to work from home.

However, recently my wife has been having health issues partially caused by work. Her neck hurts and she has pain down her arm. Also she is starting to have trouble walking. Finally she has gained weight which I suspect is partially partially to age, menopause, and a sedentary lifestyle.

I tell her that some of her problems are that she sit behind the laptop for many hours and that a laptop is not ergonomically correct. She has an external monitor and I try to tell her to get an ergonomic keyboard. I also tell her she needs to get up and exercise and find some activities she enjoys that encourage her to move around. But I cannot force her to do these things. And Covid-19 is not helping things as it is hard to do things right now.

My wife has been discussing retiring and I am thinking of telling her that she can retire in 2 years when she is 59 1/2. At this age she would be able to pull from her IRA without penalty. Or she could work somewhere else doing whatever she likes and supplement her income with an IRA withdrawal if needed. But she needs to take better care of herself.

I plan to continue to work as long as I can. At least until my wife and I can qualify for Medicare.

Our total assets are just shy of $5.3 million My wife's IRA is $1.1 million. She has about $137K in a 401K at her workplace.

I have a house that is probably work $700,000 with a mortgage of $566,000. My plan is to sell our house after my child finishes the local community college and move into a smaller and less expensive property. Though right now the housing market where I am at is terrible so it really makes better financial sense to stay where I am.

I prefer to rent house or townhouse until my kids settle down and have children of their own instead of buying. If they let me, I would like to be part of their lives and live nearby. I don't want to buy a 'empty nest' property just to move again when my kids have kids.

Our liabilities are our youngest child just entered college. But the first 2 years will be the local community college. I estimate the last two years will cost $100K. Everything else is paid off.

Our current asset allocation is 73.5% U.S. stocks, 22% bonds, 4.6% miscellaneous, The stock market has been generous recently and I have been moving money out of Vanguard Growth Index to Vanguard Total Bond Market in my wife's IRA in anticipation of her retiring. As already indicated her 401K is 100% in bonds.

At risk of coming up as a humble brag, please advise on anything I am missing as I prepare for this next step in our live's journey.

Thank you in advance.
rkhusky
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Re: Planning for my wife to retire in two years: a checkup

Post by rkhusky »

What are your yearly expenses, now and in retirement?

What is your net worth, minus equity in the house? (If it is $5M, like it seems, you are fine financially, unless your yearly expenses are greater than $200K/year).
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David Jay
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Re: Planning for my wife to retire in two years: a checkup

Post by David Jay »

Why are you making her wait 2 years. With a 5.3M net worth, Why not let her retire tomorrow?
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LuckyGuy
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Re: Planning for my wife to retire in two years: a checkup

Post by LuckyGuy »

I agree with retirement sooner than later. Figure out your yearly expenses and go from there. I gotta believe you will be OK. You can’t get back time.
flyingaway
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Re: Planning for my wife to retire in two years: a checkup

Post by flyingaway »

Is this post a joke?

See another thread with $5MM networth, viewtopic.php?f=2&t=320560
Last edited by flyingaway on Tue Jul 21, 2020 9:47 am, edited 1 time in total.
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KingRiggs
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Re: Planning for my wife to retire in two years: a checkup

Post by KingRiggs »

At the risk of giving medical advice on the Forum, please consult a physician for her physical ailments. Some of them may indicate issues which are amenable to surgical intervention and might alleviate her pain, allowing her to stay active and healthy.
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WoodSpinner
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Re: Planning for my wife to retire in two years: a checkup

Post by WoodSpinner »

OP,

I think you are spot on for the Ergo recommendations! This is an area that I would keep pushing her on since she is in significant danger. I went through a similar issue years ago but fortunately I got help through my company. Of the 20 patients I. My cohort group in Physical Therapy, I was the ONLY ONE who could return back to my job and a normal life.

That said, she should be fine to Retire if she wants.

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spectec
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Re: Planning for my wife to retire in two years: a checkup

Post by spectec »

Given your numbers, I don't think this will matter. But about 3 years before my wife retired, we scaled back her take-home pay to what we expected her pension to be in retirement by diverting the difference into our savings/investment account. The idea was to approximate what the income conditions would be when she retired. As it turned out, her pension was somewhat larger than our estimate, so when she retired she effectively received a raise. It's all a mind game using artificial buckets, but sure made the transition a nice one.
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers
Topic Author
JSnyder
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Re: Planning for my wife to retire in two years: a checkup

Post by JSnyder »

There have been some questions about retire now vs retire later which I would like to address.

1. There is IMO a lot of uncertainty in the economy right now. I do not wish to be political which will get the admins upset at me but consider: Covid-19, anti-globalization, U.S. vs trading partner relations friction, riots and protests in U.S. cities, income inequality, gridlock in the political parties. IMO there is a possibility of a steep drop in the stock market. Or it could go up. I have no idea. But I do see a lot of pieces moving around and I cannot predict the end result,

Keep in mind there is a possibility over the next few years that one of us could be involuntarily let go. Also keep in mind that while I am moving into bonds I still have a lot off our assets in stocks and they can go down. And the reverse is true which is bonds are barely IMO keeping up with inflation. It is easy IMO to have a portfolio which slowly gets eaten away by inflation. If someone is looking at possibility 25 years living off investments I feel it pays to be conservative.

2. At a job, once you are out you are out. Once you have retired it is next to impossible IMO to get re-hired with your previous position at an income level you were at. So I advise to make 100% sure you really want to retire before doing it.

3. My wife enough though she is sometimes frustrated with her job may not necessarily want to retire. What people say and what they do are often two different things. Many people, I suspect my wife is included, get a lot of socialization and self worth through their job.

4. I am not forcing her to keep working. Ultimately she will decide what she wants to do. I am providing options. My first concern is her health which IMO needs focus on. I have tried (nicely) to encourage her on this.

5. Retirement by itself doesn't make your problems go away. It provides time to make changes. But if you retire and spend your time watching mindless TV you will deteriorate. I feel you have to retire with a purpose.
RickyAZ
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Re: Planning for my wife to retire in two years: a checkup

Post by RickyAZ »

I am astonished at what I've read hear and this may be inappropriate for this forum: You have 5.3$ million, why risk your wife's health for 1 second? What's the point of accumulating all of those assets if you (collectively) will be limited in your enjoyment of them? Sometimes enough is enough
bampf
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Re: Planning for my wife to retire in two years: a checkup

Post by bampf »

RickyAZ wrote: Tue Jul 21, 2020 11:28 am I am astonished at what I've read hear and this may be inappropriate for this forum: You have 5.3$ million, why risk your wife's health for 1 second? What's the point of accumulating all of those assets if you (collectively) will be limited in your enjoyment of them? Sometimes enough is enough
Yeah, I have to agree here. The operative question is "Can I retire with x $". If $5M doesn't scream yes than there is no hope at all for the rest of us.

If you run these numbers through Rich, Broke or Dead you have $250K spending a year, a modest SS and 20% flex rate with an 80/20 portfolio and literally no chance of being broke. At 75 you have a 21% chance of being dead (female ) and a 48% chance of having more money than you started with. Again a $250k a year spending habit.

OP leads with "Do I have enough...?"

OP, yes you have enough unless your budget runs to the high side of $250K. Even then. Holy smokes. Whether you should (or your wife) retire is personal and depends on what you do with your time. This isn't a financial question. IF it is, most of us are in deep trouble.
dbr
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Re: Planning for my wife to retire in two years: a checkup

Post by dbr »

JSnyder wrote: Tue Jul 21, 2020 8:24 am Could you help me do a retirement check up? I would like to evaluate the possibility that my wife retires in two years at the age of 59 1/2.
This is entirely a personal choice driven by health concerns and personal desires.

If it were me I would be really scared if physical limitations were manifesting not even at age 60 and I would be focusing all attention on getting some resolution -- but medical advice is off topic here.

I am, however, curious how one arrives at age 591/2 on a no penalty withdrawal criterion in a situation as described here. That would have no relevance to anything I would be thinking about. That a person might want to continue working is certainly a valid desire.
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Watty
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Re: Planning for my wife to retire in two years: a checkup

Post by Watty »

JSnyder wrote: Tue Jul 21, 2020 8:24 am She has an external monitor and I try to tell her to get an ergonomic keyboard. I also tell her she needs to get up and exercise and find some activities she enjoys that encourage her to move around. But I cannot force her to do these things.
Ah, no.

At least for the keyboard just order several of them yourself and let her decide which works for her. Even the "expensive" ones are not really that expensive in the grand scheme of things so if you cannot return the ones that don't work for her you could just give them away and it would not be any big deal. You can likely have these delivered in a couple of days.

If she is doing something like working on the dining room table then also just order a decent ergonomic desk and chair. Those may be in short supply because so many people are working from home but you can still get them if you are flexible about the brand and and style.

You can just order these yourself without waiting for her to order them.
RickyAZ wrote: Tue Jul 21, 2020 11:28 am I am astonished at what I've read hear and this may be inappropriate for this forum: You have 5.3$ million, why risk your wife's health for 1 second? What's the point of accumulating all of those assets if you (collectively) will be limited in your enjoyment of them? Sometimes enough is enough
+1000

You will also get Social Security some day too.

You did not give a lot of details but you likely have enough in your taxable accounts to easily pay off your mortgage and you want to be more conservative anyway. Your mortgage is likely at a higher interest rate than the bonds that you are buying so that would make sense from a financial point of view too.

Even if your wife retires today and you work a few more years then your nest-egg will likely be even larger when you retire.
JSnyder wrote: Tue Jul 21, 2020 8:24 am My wife has been discussing retiring and I am thinking of telling her that she can retire in 2 years when she is 59 1/2. At this age she would be able to pull from her IRA without penalty.
She can withdraw from the 401k after the age of 55 without any penalty. There are also ways to get at the IRA money early without a penalty if she really needs to. This is just one of them.

https://www.bogleheads.org/wiki/Substan ... c_payments
JSnyder wrote: Tue Jul 21, 2020 8:24 am I plan to continue to work as long as I can. At least until my wife and I can qualify for Medicare.
The age of 63.5 is a more realistic worst case goal since you could use 18 months of COBRA to get to Medicare if you could not get an Affordable Care Act policy because of future changes. A few states have expanded COBRA to be 36 months but they may call it something else.
GMT-8
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Re: Planning for my wife to retire in two years: a checkup

Post by GMT-8 »

FWIW - I did a research report once on why people retire when they do:

1. health
2. hate my job
3. moving to be with family
4. outside trigger point (military, corporate policy)
5. laid off

Financial issues were not in the top 5 reasons for choosing the time to go, even for people with next to no money.

She can socialize walking in the mall, or sitting in a comfy chair
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dogagility
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Re: Planning for my wife to retire in two years: a checkup

Post by dogagility »

With a 5MM portfolio, two (well-paying) job household, and one of those jobs causing health problems, my decision would a no-brainer. Quit the job!
More than enough money to live comfortably.

My other piece of advice. You keep writing that you "tell" your wife to do this and "tell" her to do that. If this is how you communicate with your wife, I suggest you should try a different approach. Listen, then "suggest" a course of action.

:beer
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Re: Planning for my wife to retire in two years: a checkup

Post by LadyGeek »

The thread is getting derailed on lifestyle and relationship issues (off-topic). Please stay focused on the investing aspects and state your concerns in a civil, factual manner.
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delamer
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Re: Planning for my wife to retire in two years: a checkup

Post by delamer »

Your wife can withdraw from her IRA without penalty before age 59.5 if she follows the rules under IRS regulation 72(t): https://www.investopedia.com/terms/r/rule72t.asp

And until you have a firm handle on retirement expenses, no one can tell you if you or your wife are able to retire.

Finally, while bonds are less volatile than stocks, don’t kid yourself that they can’t go down in value.

Have you considered putting 10 years of retirement expenses in cash, and the rest of your portfolio in stocks? That much in cash will allow you to weather any stock market crash without having to “sell low” to maintain your lifestyle but allows for continued growth to outpace inflation. Over the 25 year period that you noted, stocks are your best protection against inflation not bonds.
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