Can I retire at the end of 2018 at age 59?

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DigitalJanitor
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Can I retire at the end of 2018 at age 59?

Post by DigitalJanitor » Sat Apr 14, 2018 8:22 pm

I have a window of opportunity that might enable me to retire towards the end of 2018, at age 59, and I am seeking the advice and suggestions of the Bogleheads.

Due to a pending merger, a generous retirement severance program at my private-sector company may terminate towards the end of 2018 or beginning of 2019 (no definite date given). At the same time, a valuable retiree medical plan may go away. Better things may become available after the merger, or nothing -- no one knows at this point. So there's some incentive to take the bird in the hand, so to speak, and retire while these are still available. (I like my job, and appreciate the salary and the intellectual stimulation, but my wife and I would like to spend time while we are still young pursuing our own interests, hobbies, traveling, etc.)

Between retirement in November 2018, and start of pension and SS in August 2021, we will be living on the severance plus whatever we need to withdraw from the 401(k).

I am fairly risk tolerant. Once the pension and SS start in 2021, I plan to move to a heavily stock-weighted portfolio (index funds only), gliding more towards a more balanced stock and bond mix as inflation reduces the value of the pension.

I have modeled this scenario using FIRECalc, cfiresim, Flexible Retirement Planner, Fidelity Retirement Planner, and i-ORP, all with post-retirement investment portfolios of 100% stocks. All have given me 100% success at $100,000/year spending, but at $120,000, Flexible Retirement Planner and Fidelity Retirement Planner, though both optimistic, show possible shortfalls towards the very end of my 30 year plan. All of these models do better if I sell the house at age 60, invest the proceeds, and rent.

We'd like to leave something for the kids at the end, if possible.


Emergency funds: six months expenses
Debt: none
Tax Filing Status: Married Filing Jointly
Tax Rate: 35% Federal (2018), 6.9% State
State of Residence: CT
Age: 59 in summer 2018
Two grown children, college all done and paid for.
Desired Asset allocation: TBD
Desired International allocation: TBD

Current cost of housing: $15,000/year including taxes, garbage pickup, landscaping, but not including utilities or maintenance, which can be substantial. We live in an HCOL area, and will likely stay in HCOL areas.

Planned retirement date
November 2018

Planned life expectancy
Age 90 (funds will need to last for 30-31 years)

Planned retirement spending
$100,000 to $120,000 (in 2018 dollars) per year.

Current retirement assets

Taxable
None, aside from emergency fund

401k
100% Vanguard Target Retirement 2025 Fund (VTTVX) (ER = 0.08%)
Company match: First 6%
Pre-tax catch-up $5000/year
Current value = $1,000,000

Pension
$58,000/year, non-COLA, 50% joint and survivor, starting at age 62, summer 2021.
I have the option of taking this as a $950,000 lump sum, but the models give me a much lower probability of success.
The pension is well-funded, and will survive the merger, though it is possible that employer contributions may cease at that point.

Social Security
His: $25,000, starting at age 62, summer 2021. I want to front-load my SS to enable more travel while we are young(er). The models didn't care all that much when I started SS.
Hers: $14,000, starting at age 70, summer 2030.

Retirement severance
$165,000, taxable, payable in a lump sum. I would prefer to take this in January 2019 to avoid the 2018 tax hit (about $4,000 in extra taxes), but I will probably take it towards the end of 2018 to make sure I get it before the program is canceled.

Retiree medical plan
$13,000/year for full medical coverage for my wife and myself.

House
Worth approximately $600,000, planning to sell summer 2019 and move to a rental.

Contributions

New annual Contributions
$31,000 to 401k, includes company matching and catch-up.
$30,000 to taxable.

Available funds

Funds available in 401(k)
Vanguard Target Retirement 2025 Fund (VTTVX) = $1,000,000


Questions:
1. Is this a reasonable retirement plan?

2. The $120,000 spending level makes a lot of things possible for us. Is it too risky?
Last edited by DigitalJanitor on Sat May 19, 2018 6:20 pm, edited 2 times in total.

ResearchMed
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Re: Can I retire at the end of 2018 at age 59?

Post by ResearchMed » Sat Apr 14, 2018 8:30 pm

DigitalJanitor wrote:
Sat Apr 14, 2018 8:22 pm

<snip>

Social Security
His: $25,000, starting at age 62, summer 2021. I want to front-load my SS to enable more travel while we are young(er). The models didn't care all that much when I started SS.
Hers: $14,000, starting at age 70, summer 2030.

<snip>

Questions:
1. Is this a reasonable retirement plan?

2. The $120,000 spending level makes a lot of things possible for us. Is it too risky?
You may want to re-think taking your own SS early (before maximum benefits at age 70).
That is a COLA'd life annuity, with full benefits to the survivor (either you or your wife), and that's hard to beat.
Your wife should not take her SS until her full retirement age (probably age 66 or ?) so that her benefits won't be reduced - I'm NOT totally familiar with survivor benefits, but I think they would be reduced if someone started their own SS benefits prior to "FRA" (full retirement age).
Try to model things so that you are covering that income from other sources, and getting the higher amount for yourself (and later, for survivor).

RM
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dwickenh
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Re: Can I retire at the end of 2018 at age 59?

Post by dwickenh » Sat Apr 14, 2018 8:57 pm

Hello,

It appears that you need 3 years to get to your pension. You are estimating a need for 125,000 to 145,000 before taxes as annual expenses.
Your 1,000,000 portfolio will reasonable supply (at 4% withdrawal rate) about 40,000 per year. Over the first 3 years, you will need to supply
85,000 to 105,000 in additional income(pre-tax). You 165,000 severance will be taxed down to about 115,000 so that will only cover a little over 1 year of the expenses. The sale of the house(if owned) could produce additional funds to draw from until the pension and Social Security kick in.
Are your expenses including the rental expenses once the house is sold? At 62, if you add the pension and 4% withdrawal, you are still 40,000 to 50,000 short of expenses. SS will not cover that gap and you will be selling the benefit short by taking it early. I would think you have enough to retire, if you can reduce your expenses to meet your future income with a cushion for unexpected expenses.

Retirement is as much about spending decisions as it is about accumulated funds.

Best of luck to you,

Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

SittingOnTheFence
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Re: Can I retire at the end of 2018 at age 59?

Post by SittingOnTheFence » Sat Apr 14, 2018 11:31 pm

DigitalJanitor wrote:
Sat Apr 14, 2018 8:22 pm
Between retirement in November 2018, and start of pension and SS in August 2021, we will be living on the severance plus whatever we need to withdraw from the 401(k).
Not sure about rules for 401-K but for TIRA if you withdraw before age 59.5 there is a limitation. I don't recall exactly what it is nor do I recall if it applies to 401-k's. Would be worth you while to check to see if it applies to you. Even though it is only 6 months into age 59 it may be a costly mistake for not waiting 6 mo's.

gotester2000
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Re: Can I retire at the end of 2018 at age 59?

Post by gotester2000 » Sat Apr 14, 2018 11:54 pm

Downsize the house instead of renting to increase your portfolio to 1.5M - that will support a maximum 120k expense alongwith pension +ss . You need to draw 360k from the portfolio in 3 years. Honestly, 220k salary should have created a bigger portfolio.

aristotelian
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Re: Can I retire at the end of 2018 at age 59?

Post by aristotelian » Sun Apr 15, 2018 9:51 am

I don't know why frontloading SS would "enable more travel". The most efficient option is generally to delay SS, then withdraw/convert from your 401k at a lower tax rate. Your pension complicates keeping your tax rate low in retirement, but if you want to travel more you can simply withdraw more from 401k. Have you run numbers with SS at 62 and 70? I would worry that claiming at 62 combined with pension will put a lot of your 401k withdrawals in 22% or even 24% marginal rate.

If you are planning to downsize spending toward the end or retirement, it would seem pension and SS (at 70) would be able to provide about 90% of your income. Your portfolio should be able to easily provide for 60-70K of spending over the next 10 years with perhaps $500K or so left over.

I think you are all set but please explain your logic for claiming SS early. It seems to me that you are pretty much guaranteeing that just about every penny of your 401k will be taxed at 22% or higher.

Bacchus01
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Re: Can I retire at the end of 2018 at age 59?

Post by Bacchus01 » Sun Apr 15, 2018 10:03 am

[Post removed by admin LadyGeek]
[Response removed by admin LadyGeek]

To the OP, I honestly think the deal is very good and you should take it.

Now, you may not want to quit working, but take the deal? Yeah.

bradpevans
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Re: Can I retire at the end of 2018 at age 59?

Post by bradpevans » Sun Apr 15, 2018 10:20 am

SittingOnTheFence wrote:
Sat Apr 14, 2018 11:31 pm
DigitalJanitor wrote:
Sat Apr 14, 2018 8:22 pm
Between retirement in November 2018, and start of pension and SS in August 2021, we will be living on the severance plus whatever we need to withdraw from the 401(k).
Not sure about rules for 401-K but for TIRA if you withdraw before age 59.5 there is a limitation. I don't recall exactly what it is nor do I recall if it applies to 401-k's. Would be worth you w hile to check to see if it applies to you. Even though it is only 6 months into age 59 it may be a costly mistake for not waiting 6 mo's.
401k withdrawal IS ok pre 59.5 so long as
1) you leave THAT company after 55
2) you withdraw from THAT plan

msk
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Re: Can I retire at the end of 2018 at age 59?

Post by msk » Sun Apr 15, 2018 10:39 am

I prefer looking at these things simplistically. A million $ 100% stocks portfolio is worth $50k per annum, on average, keeping up with inflation. Your severance pay is $165k pretax, to be spread over 2 to 3 years till pension kicks in. You need $120k p.a. over and above accommodation in a HCOL area? Selling the house will not deliver the full $600k. You will have to downsize and/or rent, so you end up with a net amount available for investing of say, $200k? Methinks that the $120k p.a. will require a bunch of luck to be met, including inflation. Not at all a sure prospect. Try to find a cheaper mode of living, at least until pension and SS kick in. Keen to travel? Sell house, move to a cheaper location by the beach somewhere till 2021?
Edit: if you love the house, rent it out for the 3 years and rent some place cheaper by the beach somewhere. I view the prospect as border line. If your needs drop to circa $100k pretax then I would say, go for it. Markets can go well or bad. Well: 120k p.a. may be possible. Bad: even 100k p.a. could be a stretch. My simplistic assessment would be that 100k is at 50/50 probability.
Last edited by msk on Sun Apr 15, 2018 10:50 am, edited 1 time in total.

sophie1
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Re: Can I retire at the end of 2018 at age 59?

Post by sophie1 » Sun Apr 15, 2018 10:43 am

I agree. This retirement plan doesn't look viable to me. There simply isn't enough savings to support a $120K/year spending habit no matter what you do with SS. Pension $58K + 4% SWR on one million i.e. $40K leaves you $22K/year short. It will not help to sell your house and rent, as you'll end up spending the $600K on rent over time. And, this doesn't count taxes on the income of $120K (401k + pension, I assume no Roth or taxable savings to speak of).

You either need to continue working to increase your savings to $2 million (at bare minimum), or cut your spending. If your housing costs (property tax, mortgage etc) are limited to $15K, that means you're spending $105K on non-housing. That is an unfathomable number to me. You'd have to chop that in half to retire safely, but that shouldn't be difficult if you're motivated to retire.

rgs92
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Re: Can I retire at the end of 2018 at age 59?

Post by rgs92 » Sun Apr 15, 2018 11:34 am

Well, you are looking at about $100,000 a year of combined pension+SS income (with the pension fixed).
Add to this about a $1.2 million nest egg in retirement funds (most of it tax-deferred).
(I think I am reading this right.)
That's OK, but it only provides a moderate income in Connecticut (or anywhere in the vicinity of NYC) with the high taxes and expenses.
And now those taxes are not as deductible, so that's a small ding to your plans.

So I think you are OK as long as you don't have a lavish budget to live on. In 10 years, with some inflation, it is probably equivalent to about $135,000 a year now, so it's doable, but not extravagant.
And the non-COLA pension will shrink slowly in real terms later in life, so keep up with your equity allocation, maybe 60/40 stocks/bonds permanently.

aristotelian
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Re: Can I retire at the end of 2018 at age 59?

Post by aristotelian » Sun Apr 15, 2018 11:50 am

sophie1 wrote:
Sun Apr 15, 2018 10:43 am
I agree. This retirement plan doesn't look viable to me. There simply isn't enough savings to support a $120K/year spending habit no matter what you do with SS. Pension $58K + 4% SWR on one million i.e. $40K leaves you $22K/year short. It will not help to sell your house and rent, as you'll end up spending the $600K on rent over time. And, this doesn't count taxes on the income of $120K (401k + pension, I assume no Roth or taxable savings to speak of).
You are leaving out SS. He may have $50K coming depending on when he claims. That makes a huge difference given he only has three years to cover before he can claim. $58K pension + $50K SS comes very close to covering his entire budget. That means he would just need the portfolio to cover 3 years plus about 50% of 7 years. That seems very feasible to me.

He also has $100K plus coming from the severance, as well as $600K from the house. So his portfolio is more like $1.6-$1.7M.

My assumption would be that the $120K budget includes tax as well as rental expense. If he needs to budget for additional housing expense, you are right, that would change everything and I would change my answer.

You are right to be concerned that his assets are mostly pre-tax, and I do agree that he should scale back the $120K if possible. That said, I think he is on good ground if the $120K budget includes everything.

sophie1
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Re: Can I retire at the end of 2018 at age 59?

Post by sophie1 » Sun Apr 15, 2018 12:54 pm

aristotelian wrote:
Sun Apr 15, 2018 11:50 am
sophie1 wrote:
Sun Apr 15, 2018 10:43 am
I agree. This retirement plan doesn't look viable to me. There simply isn't enough savings to support a $120K/year spending habit no matter what you do with SS. Pension $58K + 4% SWR on one million i.e. $40K leaves you $22K/year short. It will not help to sell your house and rent, as you'll end up spending the $600K on rent over time. And, this doesn't count taxes on the income of $120K (401k + pension, I assume no Roth or taxable savings to speak of).
You are leaving out SS. He may have $50K coming depending on when he claims. That makes a huge difference given he only has three years to cover before he can claim. $58K pension + $50K SS comes very close to covering his entire budget. That means he would just need the portfolio to cover 3 years plus about 50% of 7 years. That seems very feasible to me.

He also has $100K plus coming from the severance, as well as $600K from the house. So his portfolio is more like $1.6-$1.7M.

My assumption would be that the $120K budget includes tax as well as rental expense. If he needs to budget for additional housing expense, you are right, that would change everything and I would change my answer.

You are right to be concerned that his assets are mostly pre-tax, and I do agree that he should scale back the $120K if possible. That said, I think he is on good ground if the $120K budget includes everything.
Need OP to weigh in on whether he factored in taxes on the pension, 401K withdrawals, and SS, and the difference between rental costs and current spending on housing (rental will almost certainly be much higher than $15K/year). I assumed neither was included, as retirement simulators always ignore taxes, and it sounds like $120K is probably take-home pay now ($220K - fully funding 401K - FICA - withholding).

Assuming they are included, then yes taking SS early and spending down the severance & portfolio in the meantime would work. It would be tight, though, and just one of the above factors unaccounted for would blow the budget. If my guess is correct that the $120K is based on current take-home pay, then it should be possible to shave down spending if the OP is sufficiently motivated to do it. The lack of taxable/Roth savings, though, is worrying.

delamer
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Re: Can I retire at the end of 2018 at age 59?

Post by delamer » Sun Apr 15, 2018 1:36 pm

It isn’t clear how housing is figured into the $120K spending.

If you are spending roughly $22K per year (adding a guess on utilities and maintenance to the $15K) to support the current home, is that part of the $120K?

Or is the $120K assuming that you can rent at a lower cost? If so, how much have you researched actual rental costs? Can you find something in your area that will be well under $2K a month, and so worth the savings?

Since you have run a bunch of estimators, I am assuming that the $120K includes income taxes?

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Nestegg_User
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Re: Can I retire at the end of 2018 at age 59?

Post by Nestegg_User » Sun Apr 15, 2018 6:46 pm

I suspect the biggest hole is that they need to fund until the pension: $300-360 k of the million noted

Then, after receiving the pension: if they also start SS they are still short $17-37 k/yr
if it’s at the top ($120/yr) that implies a residual of $640k, of which 4% is $25.6k, leaving a shortfall of over $11k/yr
if it’s the lower value ($100k/yr) leaving a residual of $700k, then the 4% value is $28k and gives them just enough , but then the question is do they have enough reserves for unexpected costs
of course, as noted by others, this assumes that taxes are already included in the required draw, as both pension and SS would be somewhat taxed. The magnitude of taxes from the portfolio would have to be managed to be as low as possible for them to succeed (taxes in the 22% or higher would likely leave them with a shortfall )

At the expected burn, the best choice is probably to take the early out, with pension at 62, but find some other employment... but not necessarily one that needs to supplant the current one at the same level

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DigitalJanitor
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Re: Can I retire at the end of 2018 at age 59?

Post by DigitalJanitor » Sun Apr 15, 2018 9:41 pm

OP here. Thank you all for your responses and suggestions. I am concerned about the discrepancy between a 4% SWR and the simulator results that seem to ignore it.

I'll try to address some of the issues that were raised:
  • ResearchMed and aristotelian: Regarding SS, I was willing to trade off bigger for sooner. The models show similar success levels regardless of when I start taking SS. But you make a good case; I will investigate further. My rough budget is $110K and includes rental expense but does not include taxes.
  • dwickenh: I will likely be short the first 2.5 years. I would first use some after-tax money I am currently saving, plus some from the house sale. Then 401(k). Rental expenses are included in my spending number.
  • gotester2000: The portfolio isn't as big as it should be because I recently paid for two college educations.
  • msk: The $120K spending amount includes accommodation.
  • sophie1: All good points. The $100K-$120K spending level is based on past spending, less retirement saving and SS/Medicare tax, and with extra vacation spending added. It is a rough estimate right now. Take home pay right now is circa $150K. Rental budget is $24K, and is included in main budget. Taxes were factored in on i-ORP and Flexible Retirement Planner, possibly others.
  • rgs92: Regarding allocation, we do plan to increase the proportion of bonds as time passes to compensate for loss of value of the pension.
  • delamer: Within the $120K spend, we've allocated $24K for rent and $5K for utilities/phone/internet. It's starting to look like $24K may not be a realistic rent in our area.

PhilosophyAndrew
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Re: Can I retire at the end of 2018 at age 59?

Post by PhilosophyAndrew » Sun Apr 15, 2018 9:57 pm

OP, what is your assessment of your continued employment after the merger should you choose not to accept the retirement incentives, and how confident are you about this?


Andy.

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DigitalJanitor
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Re: Can I retire at the end of 2018 at age 59?

Post by DigitalJanitor » Sun Apr 15, 2018 10:03 pm

PhilosophyAndrew wrote:
Sun Apr 15, 2018 9:57 pm
OP, what is your assessment of your continued employment after the merger should you choose not to accept the retirement incentives, and how confident are you about this?
Hi Andy: I am pretty confident that my job will survive the merger.

PhilosophyAndrew
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Re: Can I retire at the end of 2018 at age 59?

Post by PhilosophyAndrew » Sun Apr 15, 2018 10:19 pm

DigitalJanitor wrote:
Sun Apr 15, 2018 10:03 pm
PhilosophyAndrew wrote:
Sun Apr 15, 2018 9:57 pm
OP, what is your assessment of your continued employment after the merger should you choose not to accept the retirement incentives, and how confident are you about this?
Hi Andy: I am pretty confident that my job will survive the merger.
And what does your modeling show you are the conseqiences of foregoing the retirement incentives and working for several more years? Since you enjoy your job and there is no urgent need to start your retirement traveling now, this seems worth considering.

You said that your retiree medical benefits could be lost after the merger. This militates against declining the retirement incentives. Is your pension safe after the merger, or is this also something unknown? If you mahout lose those benefits, it would be prudent to take the bird in hand.

Andy.

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DigitalJanitor
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Re: Can I retire at the end of 2018 at age 59?

Post by DigitalJanitor » Sun Apr 15, 2018 10:26 pm

PhilosophyAndrew wrote:
Sun Apr 15, 2018 10:19 pm
DigitalJanitor wrote:
Sun Apr 15, 2018 10:03 pm
PhilosophyAndrew wrote:
Sun Apr 15, 2018 9:57 pm
OP, what is your assessment of your continued employment after the merger should you choose not to accept the retirement incentives, and how confident are you about this?
Hi Andy: I am pretty confident that my job will survive the merger.
And what does your modeling show you are the conseqiences of foregoing the retirement incentives and working for several more years? Since you enjoy your job and there is no urgent need to start your retirement traveling now, this seems worth considering.

You said that your retiree medical benefits could be lost after the merger. This militates against declining the retirement incentives. Is your pension safe after the merger, or is this also something unknown? If you mahout lose those benefits, it would be prudent to take the bird in hand.
I have also modeled working until 62, without a severance, and the models look good. The pension is safe after the merger, although it is possible that company contributions to it will stop.

The urge to retire is driven mostly by carpe diem. I also dislike alarm clocks. :happy

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Nestegg_User
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Re: Can I retire at the end of 2018 at age 59?

Post by Nestegg_User » Sun Apr 15, 2018 10:45 pm

DJ

hmmm, I must have misread... I was reading that if you retired that the health insurance would be continued, whereas if you didn’t that there was significant concern that future retirees wouldn’t get health insurance

That further shows the need for continued employment, as it’s highly likely that the company paid a significant fraction of the insurance costs. That you would need such high annual funds in retirement would mean NO ACA subsidies... so those costs might blow up your budget.

It sounds as if the pension would be frozen? and not eliminated if you stayed, so OMY pattern might be necessary.

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Re: Can I retire at the end of 2018 at age 59?

Post by Sandtrap » Sun Apr 15, 2018 10:48 pm

The "Black Swan" in the room is medical care. If it "goes away", your expenses may be substantial as you are far above the ACA Subsidy Cliff.

If retirement medical "goes away", what are your options until qualifying for Medicare at approx. age 65?

Suppose you had to pay 2-3k/month for medical insurance?

How would that change your plans?

There are always Medical "perfect storms" that can and do happen between pre-65 retirement and Medicare eligibility.
IE: High out of pocket medical expenses + High medical insurance premiums.

If this happened, can you survive it financially? Can you recover?

Also, Google "search" the forum threads for "retirement red zone" and "sequence of returns risk". Take these things into consideration to see if you are comfortable with your plan going forward.

aloha
j :D

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DigitalJanitor
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Re: Can I retire at the end of 2018 at age 59?

Post by DigitalJanitor » Mon Apr 16, 2018 6:35 am

Sandtrap wrote:
Sun Apr 15, 2018 10:48 pm
The "Black Swan" in the room is medical care. If it "goes away", your expenses may be substantial as you are far above the ACA Subsidy Cliff.

If retirement medical "goes away", what are your options until qualifying for Medicare at approx. age 65?

Suppose you had to pay 2-3k/month for medical insurance?

How would that change your plans?

There are always Medical "perfect storms" that can and do happen between pre-65 retirement and Medicare eligibility.
IE: High out of pocket medical expenses + High medical insurance premiums.

If this happened, can you survive it financially? Can you recover?
I've been told that the retirement health plan, once one is enrolled, is for life. There is some question as to whether one will still be able to enroll in it after the merger. But no one knows for sure at this point if either of these (lifetime plan, and being able to enroll) are guaranteed. I might be able to pay 2-3k per month, but knowing that I'd have to do that would probably dissuade me from retiring this early. As of now, I am feeling positive about obtaining the lifetime plan if I enroll before the merger, but until I get something in writing (and even after that) it's still just a bet.

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Re: Can I retire at the end of 2018 at age 59?

Post by smitcat » Mon Apr 16, 2018 7:02 am

DigitalJanitor wrote:
Sun Apr 15, 2018 9:41 pm
OP here. Thank you all for your responses and suggestions. I am concerned about the discrepancy between a 4% SWR and the simulator results that seem to ignore it.

I'll try to address some of the issues that were raised:
  • ResearchMed and aristotelian: Regarding SS, I was willing to trade off bigger for sooner. The models show similar success levels regardless of when I start taking SS. But you make a good case; I will investigate further. My rough budget is $110K and includes rental expense but does not include taxes.
  • dwickenh: I will likely be short the first 2.5 years. I would first use some after-tax money I am currently saving, plus some from the house sale. Then 401(k). Rental expenses are included in my spending number.
  • gotester2000: The portfolio isn't as big as it should be because I recently paid for two college educations.
  • msk: The $120K spending amount includes accommodation.
  • sophie1: All good points. The $100K-$120K spending level is based on past spending, less retirement saving and SS/Medicare tax, and with extra vacation spending added. It is a rough estimate right now. Take home pay right now is circa $150K. Rental budget is $24K, and is included in main budget. Taxes were factored in on i-ORP and Flexible Retirement Planner, possibly others.
  • rgs92: Regarding allocation, we do plan to increase the proportion of bonds as time passes to compensate for loss of value of the pension.
  • delamer: Within the $120K spend, we've allocated $24K for rent and $5K for utilities/phone/internet. It's starting to look like $24K may not be a realistic rent in our area.
"
  • ResearchMed and aristotelian: Regarding SS, I was willing to trade off bigger for sooner. The models show similar success levels regardless of when I start taking SS. But you make a good case; I will investigate further. My rough budget is $110K and includes rental expense but does not include taxes."

    When modleing future vs now SS as well as other future budgets it is important to keep in mind that your inputs vary the output greatly. For instance , if you have a higher earnings level set for you personal accounts but a lower inflation level it will favor early SS.
    Will these types of scenarios happen? Who knows but I think you want to model a number of possibilities which may then favor later SS election as well as other potential options.
    - What if one spouse passes early?
    - What if inlfation takes a run?
    - What if your portfolios have a lower earnings?
    - How will these choices affect my after tax 'spendable' money? (vs account balances)
    Things like these will leave you with much differnt model outputs.

ShowMeTheER
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Re: Can I retire at the end of 2018 at age 59?

Post by ShowMeTheER » Mon Apr 16, 2018 8:24 am

Work to the end of 2019 and then retire. You have plenty to enjoy some great years. Cut back a bit if the full $120K/yr seems a stretch.

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BL
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Re: Can I retire at the end of 2018 at age 59?

Post by BL » Mon Apr 16, 2018 10:03 am

With a non-COLAd pension, I would strongly advise waiting as long as possible for the higher-amount SS, so that the longest-lived of the 2 of you has a high COLA SS payment for life. It is like buying an inflation-adjusted annuity at a bargain cost, and is worth investing some of your retirement savings for.

The lower-SS spouse would not have that consideration, so starting point is not as important. It does not affect survivor's benefits, as long as she is at least FRA (67?) when she applies for survivor benefits.

She would not get spousal benefit until you claim, AFAIK, and that would be reduced if under FRA. If she can get benefits on her own employment, it will be reduced if done early.

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DigitalJanitor
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Re: Can I retire at the end of 2018 at age 59?

Post by DigitalJanitor » Mon Apr 16, 2018 7:41 pm

BL wrote:
Mon Apr 16, 2018 10:03 am
With a non-COLAd pension, I would strongly advise waiting as long as possible for the higher-amount SS, so that the longest-lived of the 2 of you has a high COLA SS payment for life. It is like buying an inflation-adjusted annuity at a bargain cost, and is worth investing some of your retirement savings for.

The lower-SS spouse would not have that consideration, so starting point is not as important. It does not affect survivor's benefits, as long as she is at least FRA (67?) when she applies for survivor benefits.

She would not get spousal benefit until you claim, AFAIK, and that would be reduced if under FRA. If she can get benefits on her own employment, it will be reduced if done early.
Thanks for this well-considered suggestion. I will definitely consider it.

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DigitalJanitor
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Re: Can I retire at the end of 2018 at age 59?

Post by DigitalJanitor » Mon Apr 16, 2018 7:42 pm

ShowMeTheER wrote:
Mon Apr 16, 2018 8:24 am
Work to the end of 2019 and then retire. You have plenty to enjoy some great years. Cut back a bit if the full $120K/yr seems a stretch.
Thanks!

Sandi_k
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Re: Can I retire at the end of 2018 at age 59?

Post by Sandi_k » Mon Apr 16, 2018 11:41 pm

DigitalJanitor wrote:
Mon Apr 16, 2018 6:35 am

I've been told that the retirement health plan, once one is enrolled, is for life.
Legally, this is not true. Just ask IBM retirees, who took it all the way to the USSC - it was deemed legal to halt health care for retirees.

It's why I won't retire until I have some confidence that I will have coverage, regardless of my employer's retiree health care promises. It might not be 100% confidence, but even getting to age 63.5 and having COBRA handle the last 18 months until Medicare is a good strategy.

msk
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Re: Can I retire at the end of 2018 at age 59?

Post by msk » Tue Apr 17, 2018 2:17 am

DigitalJanitor wrote:
Sun Apr 15, 2018 9:41 pm
OP here. Thank you all for your responses and suggestions. I am concerned about the discrepancy between a 4% SWR and the simulator results that seem to ignore it.

msk: The $120K spending amount includes accommodation.
In that case I feel you are ready to go :beer
Simplistic arithmetic:
$1m supplies $50k p.a.
$600k from house sale supplies $30k p.a.
$165k severance supplies $40k p.a. for 4 years
Total available is $120k p.a. till SS and Pension. Done.
No need to be overly conservative. I see the above has 50:50 probability of keeping up with inflation. Cup half full or half empty? Do not over focus on the half empty. Does it matter, really? Cup half full means that the future may pan out much better. Remember that to soothe your nerves. YOLO!

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DigitalJanitor
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Re: Can I retire at the end of 2018 at age 59?

Post by DigitalJanitor » Tue Apr 17, 2018 6:17 am

Sandi_k wrote:
Mon Apr 16, 2018 11:41 pm
DigitalJanitor wrote:
Mon Apr 16, 2018 6:35 am

I've been told that the retirement health plan, once one is enrolled, is for life.
Legally, this is not true. Just ask IBM retirees, who took it all the way to the USSC - it was deemed legal to halt health care for retirees.

It's why I won't retire until I have some confidence that I will have coverage, regardless of my employer's retiree health care promises. It might not be 100% confidence, but even getting to age 63.5 and having COBRA handle the last 18 months until Medicare is a good strategy.
Agreed. What I didn't add was: in life (and retirement), there are no guarantees.

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DigitalJanitor
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Re: Can I retire at the end of 2018 at age 59?

Post by DigitalJanitor » Tue Apr 17, 2018 6:21 am

msk wrote:
Tue Apr 17, 2018 2:17 am
DigitalJanitor wrote:
Sun Apr 15, 2018 9:41 pm
msk: The $120K spending amount includes accommodation.
In that case I feel you are ready to go :beer
Thanks!

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