Would you sleep easy ?

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Topic Author
seezoram
Posts: 21
Joined: Tue May 19, 2015 2:25 pm

Would you sleep easy ?

Post by seezoram »

Just looking for some perspectives.
If you were in our shoes how would you feel about
pulling a mid 2024 retirement date?
Love to hear your first reaction and really appreciate all this
forum has to offer.

Thanks in advance to all who reply.

Self 54 can retire 2024 (age56) with 60k per year pension
Spouse 56 can retire 2024 (age58) with 40k per year pension
These maybe up to 10% more depending on a few other factors.

Eligible for COLA after 5 year But min 1% - 3% max on the first 18k of each pension
This will most likely not keep up with inflation

Will need to acquire Health Ins. via ACA, Looks like we will be paying full freight
Planning on 20k per year to start. With our pensions there is no way to limit our income.

Future Portfolio Value Projected for 2024
900k Combined Cash,403b,457 and Roth
Feels like we should have saved more but started BogleHeads investing late, justified small saving rate
with having a defined pension. Current and Future Asset allocation 50/50


Social Security @ 62 If Needed Approx.
Self (2030) 24K
Spouse (2028) 22K

Feel like our very liberal forecasted annual spend is very high 100k-110k
This includes Health Ins & Taxes

30k in student loans for our son that I am inclined to pay off
No other debt
Normchad
Posts: 3355
Joined: Thu Mar 03, 2011 7:20 am

Re: Would you sleep easy ?

Post by Normchad »

How much money do you spend right now, every year? Is it in the 100K ballpark?

ACA may not be nearly as expensive as you think, due to premium tax credits. But budgeting for roughly $20K per year is wise, and I do the same thing.

You will also eventually start drawing social security, which can be pretty significant, honestly.

You’re likely in good shape, but more details are required.

If your retirement budget that you’d be happy with is $100 K you will be fine. If it’s $140K, you very well might be fine, but we need to know more…..
JDave
Posts: 169
Joined: Tue Oct 29, 2019 9:23 am

Re: Would you sleep easy ?

Post by JDave »

It's impossible for you, or any one else to give you a good answer without knowing your expenses. I never kept a budget until 3 years ago, then I thought "Hey - I'm close to retirement - or am I? How much do I need?". So I've kept an every penny budget for the past 3 years. It's been a bit of a hassle, but not awful. Now I know what my expenses are, and I'm retiring in 6 weeks.
AnnetteLouisan
Posts: 1980
Joined: Sat Sep 18, 2021 10:16 pm
Location: New York, NY

Re: Would you sleep easy ?

Post by AnnetteLouisan »

I think a lot will depend on whether the pensions are reasonably secure, whether you live in a HCOLA, whether you own your home outright or have other debt, whether you stay together, where inflation goes and whether the projected portfolio number materializes. How will you cover the years between retirement and collecting SS? Presumably both the pension and SS are taxable and your RMDs will be too. I think you are in decent shape but it’s always good to build in some padding for life’s surprises. I don’t think paying off the son’s debt is wise since he has a lifetime of earnings to draw upon and your portfolio could fluctuate (you don’t say how much is in equities).
Topic Author
seezoram
Posts: 21
Joined: Tue May 19, 2015 2:25 pm

Re: Would you sleep easy ?

Post by seezoram »

For clarification we have tracked our last 4 years spending.

I am confident that the 110k which will includes our federal tax liability and
ACA Health Ins. @ 20k is a good budget number. Once we reach Medicare age
that amount could be adjusted down.
vas
Posts: 327
Joined: Thu Mar 06, 2014 12:51 pm

Re: Would you sleep easy ?

Post by vas »

Have you modeled this in FireCalc or iORP? If you're unfamiliar with these tools, FireCalc allows you to back test your portfolio and withdrawal plan and iORB suggests an optimal withdrawal plan. These tools will give you a couple data points to consider.

Its worth considering delaying SS at least for the higher earner. Thee are some modeling tools for this that optimize SS. Then compare that to the modeling tools mentioned above.

$10K each for ACA seems reasonable if a bit conservative. Recommend getting a ACA quote so you can pick an alloy. You'll need to consider the max out of pocket cost as well as premiums. Maybe offset this with other discretionary spending so if you're having a bad year you travel less for example.

Recommend developing a more detailed spending plan. I find levels such as baseline survival, comfortable, and target are useful to stress test the plan on both the high and low levels.
"The wages of sin are death, but after they take the taxes out, it's more like a tired feeling, really." - Paula Poundstone
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Wiggums
Posts: 4721
Joined: Thu Jan 31, 2019 8:02 am

Re: Would you sleep easy ?

Post by Wiggums »

seezoram wrote: Fri Jan 14, 2022 3:31 pm For clarification we have tracked our last 4 years spending.

I am confident that the 110k which will includes our federal tax liability and
ACA Health Ins. @ 20k is a good budget number. Once we reach Medicare age
that amount could be adjusted down.
You will be fine. You have a pension that covers most of your expenses. Once SS FRA and medicare age, you will be even better off.
Investors need to be better informed about the costs they pay. “High fund fees can be hazardous to your wealth in the same way that high calories can be hazardous for your health.”
TwoBitsCA
Posts: 30
Joined: Tue Jan 07, 2020 3:12 pm

Re: Would you sleep easy ?

Post by TwoBitsCA »

Looks good to me...especially if you were willing to get a PT job if needed. You only have 7-9 years to get to Medicare and less than that if you needed SS.
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calmaniac
Posts: 702
Joined: Fri Jan 30, 2015 3:32 pm

Re: Would you sleep easy ?

Post by calmaniac »

seezoram wrote: Fri Jan 14, 2022 2:27 pm
Social Security @ 62 If Needed Approx.
Self (2030) 24K
Spouse (2028) 22K
A very high priority is for one of you to take Social Security at age 70. That way, both of you will have that guaranteed COLA'ed income stream for life. Longevity insurance. Everything being equal, good chance one of you will live well into your eighties.

I don't see you having addressed long-term care in a substantial way. It may never be an issue, but could seriously disrupt plans.

You mention "Future Portfolio Value Projected for 2024". Huh?

You guys are in better shape than the majority of people and my SWAG analysis suggests a better than 75% chance of success. But is that 76% or 95% requires more analysis.

That said, there are a lot of variables that worry me, including your non-COLA'ed pensions and how they will fund you 20 years in the future and the potential for medical/long-term care issues consuming some of what you had allocated for lifestyle. I may be overly conservative, but with what I know so far I am sleeping with one eye opened. YMMV.
≈63yo. AA 70/30: 30% TSM, 16% value (VIOV/VFVA/AVUV), 16% foreign LC, 8%emerging, 30% GFund/VBTIX. Fed pensions now ≈60% of expenses. Taking SS @age 70--> pension+SS ≈100% of expenses. What me worry?
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JoeRetire
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Joined: Tue Jan 16, 2018 2:44 pm

Re: Would you sleep easy ?

Post by JoeRetire »

seezoram wrote: Fri Jan 14, 2022 2:27 pmSocial Security @ 62 If Needed
See: https://opensocialsecurity.com/
I'm much more comfortable criticizing people behind their backs.
User avatar
JoeRetire
Posts: 10967
Joined: Tue Jan 16, 2018 2:44 pm

Re: Would you sleep easy ?

Post by JoeRetire »

seezoram wrote: Fri Jan 14, 2022 2:27 pm Just looking for some perspectives.
If you were in our shoes how would you feel about
pulling a mid 2024 retirement date?
I wouldn't feel wonderful about retiring until I had some idea of what I was retiring to (other than just "not-working").
Your mileage may vary.
I'm much more comfortable criticizing people behind their backs.
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HomerJ
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Joined: Fri Jun 06, 2008 12:50 pm

Re: Would you sleep easy ?

Post by HomerJ »

The math isn't that hard.

You spend $110k, your pensions are $100k, and you will also get Social Security in 4-6 years after retirement of $46k.


So yeah, of course, you can retire in 2024.

Your 900k investments are purely for fun at this point. I'm guessing you could probably retire today (if it wouldn't impact your pensions too much).

Yes, I'd sleep easy.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
Dave55
Posts: 1484
Joined: Tue Sep 03, 2013 2:51 pm

Re: Would you sleep easy ?

Post by Dave55 »

Yes, I would sleep easy.

Dave
"Reality always wins, your only job is to get in touch with it." Wilfred Bion
mary1492
Posts: 380
Joined: Thu Oct 17, 2019 3:02 am

Re: Would you sleep easy ?

Post by mary1492 »

seezoram wrote: Fri Jan 14, 2022 2:27 pm Self 54 can retire 2024 (age56) with 60k per year pension
Spouse 56 can retire 2024 (age58) with 40k per year pension
These maybe up to 10% more depending on a few other factors.
...

Feel like our very liberal forecasted annual spend is very high 100k-110k
This includes Health Ins & Taxes
I agree that your annual forecasted spend is very high. However, since your combined pension amounts come very close to that range, there is likely a good amount of fat and discretionary spending that you could cut back on, and then you'd be in a great position.
retire2022
Posts: 2447
Joined: Tue Oct 02, 2018 6:10 pm
Location: NYC

Re: Would you sleep easy ?

Post by retire2022 »

seezoram wrote: Fri Jan 14, 2022 2:27 pm Future Portfolio Value Projected for 2024
900k Combined Cash,403b,457 and Roth
op

Does your former employer 403/457 provide post-employment healthcare?

Mine does, I would check with HR to see what the requirements and what it covers.

My plan NYSHIP covers the period since I had 30 years and above 55, NYSHIP covers primary until Medicare kicks in at 65 (3 months before I turn 65), then Medicare becomes primary and NYSHIP becomes secondary.
Parkinglotracer
Posts: 546
Joined: Fri Dec 20, 2019 3:49 am
Location: Upstate NY

Re: Would you sleep easy ?

Post by Parkinglotracer »

Can you go part time then?

Could you go back to work and make near the same if you wanted to after retiring ?

Could you consult as a 1099 employee?

Think out of the box to preserve alternatives as I did all between ages 50-60 and you may want to

Don’t slam any doors
Topic Author
seezoram
Posts: 21
Joined: Tue May 19, 2015 2:25 pm

Re: Would you sleep easy ?

Post by seezoram »

OP here...... wanted to add some additional info, just kind of thinking out loud and responding to several of your questions.

Pensions are NYS public NYS is rated at 95% funded only 4 other states rank higher per taxfoundation.org

As of right now we would consider delaying SS as long as we can, DW is the lesser earning spouse and a bit older.
I believe I am correct in thinking she would get a bump to the higher delayed SS should something happen to me first.
I tend to think we would collect hers at 62 to assist with our COLA deficiencies and hold off till 70 for mine.

I recently researched the available ACA options for us in our area and I am confident we can get a comparable ACA plan to what we have
today with an annual total within our budget realizing of course that all though our health is excellent today this can change forcing us
to possibly pay additional deductibles.

We live in what I consider a Medium Cost of Living Area but expect to travel domestically more than we do now.

We plan to retire to lock in our pensions. If something were to happen to either of us before
separating from service the beneficiaries would only be entitled to a death benefit which would be significantly less in value than
collecting the pension. Our thinking is basically to separate from service as soon as eligible. I have personally witnessed
several people delaying separation with negative consequences. In one case a routine procedure almost ended in death.
During recovery they had to use sick time which could have been cashed out at retirement (approx. 75K) to bridge till retirement paperwork
could be completed. That is just too much risk.
I /We do plan to do something additional in retirement some type of side Gig.

"Future Portfolio Value Projected for 2024" I calculate this as my current balance Plus contributions over the next 2 years + 6% RoR
This also includes a Sick Time buy back with a payment into my 403b account from my employer. As long as I can stay healthy for the next 2 years
At this point unless we have a drastic change, I do not see us having to dip into this much but maybe this is actually our Long-Term Care Ins.

As mentioned in my original post and by others our COLA is a weak spot, I like the idea of delaying the higher earners SS and getting the
annual COLA to help keep up with inflation.

As to NYSHIP although we are civil service, we both work for non-participating local agencies, and it appears we are not eligible.
I do need to confirm this further to be certain. Thank you for bringing this up.

I would be leaving 30+ year career in IT. I am and certain I could supplement our funds but am somewhat burned out in IT.
I have always had a DIY attitude and feel that I am handy and resourceful enough to do most anything I decide to do.
No job is beneath me.

Thank you to all who took the time to comment, you have given me several points to consider.
It is helpful to get your collective perspective.
I am sure 100's have reviewed my post and just knowing that is a piece of mind as well.

My take aways or actionables :)

1)We need to work on a plan to keep busy, what does our 2.0 look like?
2)A Long-Term Care event could derail this plan significantly
3)Lack of pension COLA is concerning but can be mitigated with delaying SS
4)Have a plan to trim our annual spend if belt tightening is required.
5)With our needs almost completely met by the pensions our SWR is 0% this allows the portfolio to continue to grow.

Regards
pasadena
Posts: 1754
Joined: Sat Jul 02, 2016 1:23 am
Location: PNW

Re: Would you sleep easy ?

Post by pasadena »

HomerJ wrote: Fri Jan 14, 2022 5:11 pm The math isn't that hard.

You spend $110k, your pensions are $100k, and you will also get Social Security in 4-6 years after retirement of $46k.


So yeah, of course, you can retire in 2024.

Your 900k investments are purely for fun at this point. I'm guessing you could probably retire today (if it wouldn't impact your pensions too much).

Yes, I'd sleep easy.
Agreed. You will need to wihdraw $10 - $20k from your portfolio every year until Medicare, then SS, kicks in, and perhaps some money later on for LTC or to cover COL increases (but by then, your expenses should be way lower).

You will have $900k.

You're more than ok.
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CyclingDuo
Posts: 4679
Joined: Fri Jan 06, 2017 9:07 am

Re: Would you sleep easy ?

Post by CyclingDuo »

seezoram wrote: Sat Jan 15, 2022 1:59 am OP here...... wanted to add some additional info, just kind of thinking out loud and responding to several of your questions.

Pensions are NYS public NYS is rated at 95% funded only 4 other states rank higher per taxfoundation.org

As of right now we would consider delaying SS as long as we can, DW is the lesser earning spouse and a bit older.
I believe I am correct in thinking she would get a bump to the higher delayed SS should something happen to me first.
I tend to think we would collect hers at 62 to assist with our COLA deficiencies and hold off till 70 for mine.

I recently researched the available ACA options for us in our area and I am confident we can get a comparable ACA plan to what we have
today with an annual total within our budget realizing of course that all though our health is excellent today this can change forcing us
to possibly pay additional deductibles.

We live in what I consider a Medium Cost of Living Area but expect to travel domestically more than we do now.

We plan to retire to lock in our pensions. If something were to happen to either of us before
separating from service the beneficiaries would only be entitled to a death benefit which would be significantly less in value than
collecting the pension. Our thinking is basically to separate from service as soon as eligible. I have personally witnessed
several people delaying separation with negative consequences. In one case a routine procedure almost ended in death.
During recovery they had to use sick time which could have been cashed out at retirement (approx. 75K) to bridge till retirement paperwork
could be completed. That is just too much risk.
I /We do plan to do something additional in retirement some type of side Gig.

"Future Portfolio Value Projected for 2024" I calculate this as my current balance Plus contributions over the next 2 years + 6% RoR
This also includes a Sick Time buy back with a payment into my 403b account from my employer. As long as I can stay healthy for the next 2 years
At this point unless we have a drastic change, I do not see us having to dip into this much but maybe this is actually our Long-Term Care Ins.

As mentioned in my original post and by others our COLA is a weak spot, I like the idea of delaying the higher earners SS and getting the
annual COLA to help keep up with inflation.

As to NYSHIP although we are civil service, we both work for non-participating local agencies, and it appears we are not eligible.
I do need to confirm this further to be certain. Thank you for bringing this up.

I would be leaving 30+ year career in IT. I am and certain I could supplement our funds but am somewhat burned out in IT.
I have always had a DIY attitude and feel that I am handy and resourceful enough to do most anything I decide to do.
No job is beneath me.

Thank you to all who took the time to comment, you have given me several points to consider.
It is helpful to get your collective perspective.
I am sure 100's have reviewed my post and just knowing that is a piece of mind as well.

My take aways or actionables :)

1)We need to work on a plan to keep busy, what does our 2.0 look like?
2)A Long-Term Care event could derail this plan significantly
3)Lack of pension COLA is concerning but can be mitigated with delaying SS
4)Have a plan to trim our annual spend if belt tightening is required.
5)With our needs almost completely met by the pensions our SWR is 0% this allows the portfolio to continue to grow.

Regards
Looks like you are going to be fine. How to help or increase the sleep factor? How to address the non-COLA?

This is what we would do...

Delay SS for longevity insurance. Live in a very humble manner (cut costs) the next two years until you retire and sock as much as you can from your income into all of your investment/savings accounts to build up the DIY COLA and bridge account funds a bit more. In other words, capitalize on the income from your human capital for your final two years as if it is your last chance to stoke the fire and stuff the mattress.

Have you considered - or at least discussed - the idea of both of you not retiring in the same year? Do you have the opportunity to stagger it by one of you working an additional year (or longer)? That suggestion is based on countless conversations I have had with former dual income couples who are now retirees who pretty much all seem to give me the advice of not retiring at the same time. One couple I recently visited with that were both retired teachers and retired the same year led to the husband telling me (while his wife was using the restroom) "Whatever you do, don't retire at the same time!!" I had no reason to doubt him as it was the umpteenth time I had heard this from a retiree couple in recent months. The reasons are mainly due to the transition period into retirement and not suddenly being with each other 24/7 that it presents an unwanted strain on your relationship.

Anyway, take it for what it is worth. It's also the reason I am going to call an audible in 2023 when my wife retires and perhaps not pull the plug at the same time as we work through the transition. In our case, there is a 4 year age difference compared to your 2 year age difference. The other reason is both of you could go on the health insurance of the spouse that is still working which at least would keep your insurance costs down for a year or two longer if one of you delays. Worth the discussion and running the numbers.

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel
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