Wondering if wife can retire...

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Cosmic Pony
Posts: 50
Joined: Sun Sep 22, 2019 8:56 am

Wondering if wife can retire...

Post by Cosmic Pony » Sat Aug 01, 2020 5:07 pm

Hello,

I lost my job last year and have not been able to replace it. Planning to keep up the search but retired for now. Wondering if we've saved enough for my wife to retire with me. What info do I need to provide the forum to get some reasonable idea? Here are the basics:

-I'm 60, she will be 59.5 March of next year.
-We live conservatively but comfortably on her $55,000/year income. Her workplace subsidizes healthcare, so our share is $350/mo. We will need to pay our college kid's rent of $450/month for the next year out of the $55k.
-We have a portfolio worth $2,080,000. It hit a high of $2,300,000 last year and a low of $1,700,000 in March. $290,000 is in taxable accounts, the rest in IRAs. The makeup...
-25% a mix of short, intermediate, long and corporate bond ETFs (yes, underweight bonds for our age)
-65% stocks including a mix of VTI, blue chips with dividends, a few smaller spec positions
-10% REITS with a mix of medical properties, data centers, warehouses and malls (ouch on the malls)
-Portfolio was scheduled to yield $50,000 in dividend income pre-covid, suspect that will be closer to $25,000 after cuts and eliminations.
-We have a rainy day fund of $55,000 in a money market (not counted in the $2,080,000)
-We own our home and our cars, no credit card debt but owe $4,600 for a garden tractor bought on 0% interest balance due in a year
-We're in the 15% tax bracket with one dependent for the next two years
-Estimate social security will be conservatively around $3,000/mo when we retire

Again what else is needed to render some opinions? Also, are there still affordable healthcare options under the ACA?

Thanks!

lakpr
Posts: 5715
Joined: Fri Mar 18, 2011 9:59 am

Re: Wondering if wife can retire...

Post by lakpr » Sat Aug 01, 2020 5:11 pm

With a $2 million portfolio, a 3% withdrawal rate equates to $60k per year. Yes you can retire, with the only caveat being health care.

Edited to add a suggestion: with both of you out of the job market, I think you should drastically increase the bond portion of your portfolio. 25% allocation to bonds is extremely aggressive for your ages as it is, the risk is further magnified with no further human capital if your wife also retires. I suggest "Age-20" = 40% of the allocation to bonds.
Last edited by lakpr on Sat Aug 01, 2020 5:21 pm, edited 2 times in total.

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David Jay
Posts: 8893
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Wondering if wife can retire...

Post by David Jay » Sat Aug 01, 2020 5:14 pm

If you can live comfortably on $55,000 then you can retire on $2M. At your ages a very reasonable withdrawal rate is 3% which is $60,000 a year.

Social Security bumps that up further, so you could probably start at $80,000 a year without threatening your nest egg.

[edit] I retired @ 62 with less than $1M. We have a very similar level of spending, so you two will be just fine.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

Monsterflockster
Posts: 323
Joined: Thu Nov 21, 2019 12:03 am

Re: Wondering if wife can retire...

Post by Monsterflockster » Sat Aug 01, 2020 6:02 pm

Cosmic Pony wrote:
Sat Aug 01, 2020 5:07 pm
Hello,

I lost my job last year and have not been able to replace it. Planning to keep up the search but retired for now. Wondering if we've saved enough for my wife to retire with me. What info do I need to provide the forum to get some reasonable idea? Here are the basics:

-I'm 60, she will be 59.5 March of next year.
-We live conservatively but comfortably on her $55,000/year income. Her workplace subsidizes healthcare, so our share is $350/mo. We will need to pay our college kid's rent of $450/month for the next year out of the $55k.
-We have a portfolio worth $2,080,000. It hit a high of $2,300,000 last year and a low of $1,700,000 in March. $290,000 is in taxable accounts, the rest in IRAs. The makeup...
-25% a mix of short, intermediate, long and corporate bond ETFs (yes, underweight bonds for our age)
-65% stocks including a mix of VTI, blue chips with dividends, a few smaller spec positions
-10% REITS with a mix of medical properties, data centers, warehouses and malls (ouch on the malls)
-Portfolio was scheduled to yield $50,000 in dividend income pre-covid, suspect that will be closer to $25,000 after cuts and eliminations.
-We have a rainy day fund of $55,000 in a money market (not counted in the $2,080,000)
-We own our home and our cars, no credit card debt but owe $4,600 for a garden tractor bought on 0% interest balance due in a year
-We're in the 15% tax bracket with one dependent for the next two years
-Estimate social security will be conservatively around $3,000/mo when we retire

Again what else is needed to render some opinions? Also, are there still affordable healthcare options under the ACA?

Thanks!
First thing I’d do is talk to your child about paying their own rent. $450 is cheap and they can do that working part time anywhere. I paid every dollar out of my own pocket to go to college in the “modern age” of crazy high prices. They can do it too.

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JoeRetire
Posts: 5392
Joined: Tue Jan 16, 2018 2:44 pm

Re: Wondering if wife can retire...

Post by JoeRetire » Sat Aug 01, 2020 6:04 pm

Cosmic Pony wrote:
Sat Aug 01, 2020 5:07 pm
I lost my job last year and have not been able to replace it.
Why not? There are plenty of jobs - probably not jobs you previously held.
Again what else is needed to render some opinions?
Nothing. If your expenses remain moderate as they are now, you can both retire safely. If you increase your spending, perhaps not.
Also, are there still affordable healthcare options under the ACA?
Yes. And you'll only need ACA for 5 years until Medicare age anyway.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.

User avatar
David Jay
Posts: 8893
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Wondering if wife can retire...

Post by David Jay » Sat Aug 01, 2020 6:08 pm

I like to calculate 3.5% after start of Social Security and then just add on the living expenses to get to start of SS:

$80,000 - $35,000 SS = $45,000, $45,000 * 28.5 (3.5%) = $1.28M
$80,000 * 7 years(claiming at Full Retirement Age) = $560K
Total ($80K/yr lifestyle) $1.84M

And all this assumes no growth in the living expense funds ($560K) so you guys have lots of safety margin, even if you spend extra on travel or whatever.

Important note: You should investigate multiple SS claiming strategies here: https://opensocialsecurity.com

For most married couples, the optimal strategy is for the low earner to file earlier and the high earner to wait until age 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

delamer
Posts: 10212
Joined: Tue Feb 08, 2011 6:13 pm

Re: Wondering if wife can retire...

Post by delamer » Sat Aug 01, 2020 6:31 pm

If your $3,000 Social Security is at full retirement age, then you’ll need to cover $55,000 for about 7 years from your nest egg.

That means withdrawals in total of $385,000 until you start Social Security, not including your health insurance premiums.

Once you hit 65 you can sign up for Medicare, regardless of whether you’ve started your SS benefits.

From age 67 forward, you’ll only need to take $19,000/year from your (roughly $1.6 million minus health insurance oremiums) nest egg. And it’s likely that Medicare will be cheaper than your previous insurance.

So you seem to be in great shape. It is always useful to run your numbers for the highly-likely eventuality of one of you predeceasing the other. At that point, total SS benefits will go down and marginal tax rates will go up for the survivor. It doesn’t appear to be a problem for you, but it is good to know what to expect at that time.

Lalamimi
Posts: 479
Joined: Mon Jun 24, 2019 4:22 pm
Location: Texas

Re: Wondering if wife can retire...

Post by Lalamimi » Sat Aug 01, 2020 6:57 pm

We are in our mid 60s, DH "retired" end of 2006 (no benefits, just fed up) and I was laid off in 2018 at age 64, so did not actually decide to "Retire". My question is, what do you both plan to do when she retires? (after COVID of course). Travel? Sit at home and watch TV? Remodel house? Thinking of expenses above your planned spending. We had told financial planner $45K a year worked for us a few years back. What a joke. We ended up retiring in a bigger home, with higher taxes, that required some updates (purchased 2 months before I was laid off). We traveled some until this year, and want to give grandkids toys, money for future college. DH has cars as a hobby, I don't really have anything. Will your college kid move back home after graduation, or go straight out on own? Will college kid require insurance another year?

Trader Joe
Posts: 1835
Joined: Fri Apr 25, 2014 6:38 pm

Re: Wondering if wife can retire...

Post by Trader Joe » Sat Aug 01, 2020 7:29 pm

Cosmic Pony wrote:
Sat Aug 01, 2020 5:07 pm
Hello,

I lost my job last year and have not been able to replace it. Planning to keep up the search but retired for now. Wondering if we've saved enough for my wife to retire with me. What info do I need to provide the forum to get some reasonable idea? Here are the basics:

-I'm 60, she will be 59.5 March of next year.
-We live conservatively but comfortably on her $55,000/year income. Her workplace subsidizes healthcare, so our share is $350/mo. We will need to pay our college kid's rent of $450/month for the next year out of the $55k.
-We have a portfolio worth $2,080,000. It hit a high of $2,300,000 last year and a low of $1,700,000 in March. $290,000 is in taxable accounts, the rest in IRAs. The makeup...
-25% a mix of short, intermediate, long and corporate bond ETFs (yes, underweight bonds for our age)
-65% stocks including a mix of VTI, blue chips with dividends, a few smaller spec positions
-10% REITS with a mix of medical properties, data centers, warehouses and malls (ouch on the malls)
-Portfolio was scheduled to yield $50,000 in dividend income pre-covid, suspect that will be closer to $25,000 after cuts and eliminations.
-We have a rainy day fund of $55,000 in a money market (not counted in the $2,080,000)
-We own our home and our cars, no credit card debt but owe $4,600 for a garden tractor bought on 0% interest balance due in a year
-We're in the 15% tax bracket with one dependent for the next two years
-Estimate social security will be conservatively around $3,000/mo when we retire

Again what else is needed to render some opinions? Also, are there still affordable healthcare options under the ACA?

Thanks!
There are plenty of available jobs. How hard are you looking for employment?

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