what to do in retirement

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homeslice
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Joined: Sat Sep 23, 2017 11:43 pm

what to do in retirement

Post by homeslice » Fri Feb 02, 2018 11:18 pm

I can't find much in the way of what are some recommended strategies for when you're in retirement. I'm asking for my mom and I'm young enough that I have not thought about this phase of life and don't know much. Here is some information about her situation.

House is paid off.
Checking & Savings: 25k
After Tax Investments: 50k
401k: 166k (all pretax)
IRA: 550k (all pretax)
Age: 65, single and newly retired. Good health.

I have read that if she waits until 70 that each year she gets an additional 8% from Soc Sec. I think she is on Medicare. Her annual budget for retirement is 30k. We were going to roll her 401k to a Schwab IRA. If we do, she gets some sort of free consult with one of their financial planners/advisors. We were going to use this since it is free. I don't know how much info they provide.

She/We are fortunate enough that me and my wife can gift her up to the annual amount each year without causing tax issues if she needs money or if it is strategically wise to do so. We were going to gift her money so she didn't need to use Soc Sec yet. She was previously married and now divorced and I heard that she may take advantage of her ex-husband's Soc Sec? Are there any websites that provide information in retirement? Most sites seem to focus on accumulating wealth and not spending it. Thanks

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Watty
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Re: what to do in retirement

Post by Watty » Fri Feb 02, 2018 11:31 pm

homeslice wrote:
Fri Feb 02, 2018 11:18 pm
She was previously married and now divorced and I heard that she may take advantage of her ex-husband's Soc Sec?
You would want to check on it but as I recall the marriage needs to have lasted for ten years for her to do that.

One of the first things I would do would be to have her make an appointment to go into the Social Security office to have then explain all her options to her.

She can get her Social Security amounts at different ages on the Social Security website but when she goes into the office they should be able to give her the options with her ex husbands account too.

pennywise
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Re: what to do in retirement

Post by pennywise » Sat Feb 03, 2018 9:52 am

Respectfully, there are endless discussions on this forum about divorced or widowed aging parents, their resources and how they can/should/will manage in retirement. I suggest investing some time surfing Bogleheads, as well as some online research time on how Social Security works; start with ssa.gov, there's a wealth of information including how benefits work for divorced claimants and quick ways to plug in specific numbers and get estimates on lots of SS taking strategies.

Most likely based on the generous nature of many bogleheads forum members you'll also get helpful responses to your query but a 'what to do in retirement' and statement that there's no information out there, posted on THIS site is a bit uninformed.

mouses
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Re: what to do in retirement

Post by mouses » Sat Feb 03, 2018 11:02 am

I respectfully disagree with pennywise :-) I think each person's circumstances vary enough so that an individual thread is helpful.

I am a bit worried about the OP's Mom, as I do not think she is sure of having enough for retirement, depending on what Social Security amounts to.

OP, how much will she get from Social Security under various circumstances, once you figure that out?

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jharkin
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Location: Boston suburbs

Re: what to do in retirement

Post by jharkin » Sat Feb 03, 2018 11:43 am

It sounds like you are just starting to try and figure this all out. This discussion thread will be a good resource to get some specific answers/advice on your situation. However, it sounds like you need a lot of guidance on the basics so good strategy while you are asking target questions would be to pick up this book

https://www.amazon.com/Bogleheads-Guide ... M4VV8G6435

And read it as you work thought all of this. The book will cover these topics in much ore exhaustive detail than we can here and will help get you started... It may even prompt you to ask us more targeted questions on topics you have not even thought of yet.

The good news is that from a 30,000 ft view it looks like she is in good shape financially. With 700k in investable assets the 4% rule ballparks 28k a year roughly, and that's before social security. If she can really comfortably live on 30k I believe you can make this work without having to gift her anything, assuming some smart planning (good investment choises, appropriate asset allocation/risk, watch out for costs, careful tax planning, etc)


Read that book, ask questions, take your time and think carefully before making any major decisions.

homeslice
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Re: what to do in retirement

Post by homeslice » Sun Feb 04, 2018 1:17 am

Thank you for the replies. My mom talked to the Soc Sec office and I don't think she understood what they told her. It sounds like I will need to go with her to the office when she is closer to her full retirement date. Its far enough in the future that I can read the recommended book to ask the right questions.

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iceport
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Re: what to do in retirement

Post by iceport » Sun Feb 04, 2018 1:57 am

homeslice wrote:
Fri Feb 02, 2018 11:18 pm
Are there any websites that provide information in retirement? Most sites seem to focus on accumulating wealth and not spending it.
This site is great for information on retirement financing. There's a search box in the upper right corner of the page, and there is a link to a wiki along the header also. (There are lots of threads on the spousal benefits for divorced couples, for example. And the Michael Kitces article linked in one of the top searches provides a good overview.) Of course, you can always ask more detailed questions specific to your situation.

However, for a really great guide on retirement financing tailored to the phase your mom is entering, I highly recommend Jane Bryant Quinn's book, How to Make Your Money Last — The Indispensable Retirement Guide. There are chapters dedicated to issues of primary concern to you and your mom.

(I kind of expected a thread on recreational ideas. 8-) )
"Discipline matters more than allocation.” ─William Bernstein

MoonOrb
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Re: what to do in retirement

Post by MoonOrb » Sun Feb 04, 2018 2:26 am

mouses wrote:
Sat Feb 03, 2018 11:02 am
I am a bit worried about the OP's Mom, as I do not think she is sure of having enough for retirement, depending on what Social Security amounts to.
She is 65 has nearly 30x annual expenses before SS and her child is willing and able to gift her additional money? This is about the most "you are okay to retire" situation as one can reasonably encounter.

She can easily delay SS until age 70.

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GerryL
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Re: what to do in retirement

Post by GerryL » Sun Feb 04, 2018 3:48 am

Check out the book Get What's Yours (Social Security) See http://www.getwhatsyours.org/.
Be sure to look for the most recent edition as there have been changes to the program since the title originally came out.

When speaking to anyone at the SS office, it's good to be somewhat knowledgeable about the program, especially as it applies to a person's individual situation. Once you get past single-never-married, the possible permutations increase.

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GerryL
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Re: what to do in retirement

Post by GerryL » Sun Feb 04, 2018 3:50 am

BTW from the title of this post, I figured it had to do with how to spend time in retirement so as not to become a couch potato.

mouses
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Re: what to do in retirement

Post by mouses » Sun Feb 04, 2018 8:34 am

homeslice wrote:
Sun Feb 04, 2018 1:17 am
Thank you for the replies. My mom talked to the Soc Sec office and I don't think she understood what they told her. It sounds like I will need to go with her to the office when she is closer to her full retirement date.
No reason you folks can't go now and get that information in advance. You probably need to visit SS again later, but at least you will have a better idea now of what's going on.

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jeffyscott
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Re: what to do in retirement

Post by jeffyscott » Sun Feb 04, 2018 9:48 am

I can't see how it would make any sense for you to gift her money. She's got nearly $900K plus an SS benefit available and spending of $30K. Whether she takes SS now or delays, she should withdraw from her retirement accounts to cover expenses (and convert to Roth if not needed), rather than take money from you. Leaving her money in tax deferred accounts will just increase future RMDs.

At a minimum, I would withdraw/convert to the top of the new 12% tax bracket, if it were me. If taking SS, then the taxability of that might be a consideration with regard to withdrawals as well.

The SS benefit does increase by about 8% per year, with delay. But then you collect it for fewer years, so maybe it is equivalent to earning about a 5% return or so?

I have often thought that my decision to delay or not might be affected by the level of the market at the time. Were I making that decision now, I might lean toward delay as stocks are high and bond yields are still low, so getting an effective 5% return from SS delay, while reducing exposure to over-priced stocks and bonds, seems like a pretty good option.
press on, regardless - John C. Bogle

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