My husband says I can retire. Is he right?

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MissBouvier
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My husband says I can retire. Is he right?

Post by MissBouvier » Mon Oct 21, 2019 12:01 pm

Looking for some advice from the combined wisdom here.

I'm 58 and my husband is 50.

My job is extremely stressful, and I'd love to retire. My husband tells me we're in great shape financially, and I can quit today. Is he right?

We don't keep a budget, but we have a joint account that pays all our bills. We put $6000 a month into that account, and for the past 3 years or so, it has covered almost all our bills, including multiple vacations a year.

The one big thing it doesn't cover is new cars. We recently bought two new cars, cash, using money from another account.

But it seems $72,000 a year pays for the lifestyle that makes us happy, and should be enough in retirement.

Numbers:
$1.4 million in retirement accounts
$500,000 in normal accounts.
$500,000 paid-off house

So $1.9 million total liquid assets and the paid-off house.

I think it's around 40/60 stocks/bonds

My husband says we need $2 million to pull $80,000 a year (4% rule?), but I point out we still need to pay for health care when he retires too. Plus maybe we'll want to spend more in retirement with more travel and other fun stuff. So $80,000 may not be enough.

He plans to work for 4 more years, because we have one more kid to get through college. With college costs, and if I quit my job, we won't be saving much at all those 4 years, maybe $5,000 or $10,000 a year.

$1.9 million probably will grow to $2 million+ over 4 years, but what if we have another stock market crash?

He points out that none of this includes Social Security. Both of us will get around $20,000 a year. I can start collecting at age 63, right around when he retires. And then 8 years later, when he turns 63, we can start collecting another $20,000 a year.

That's the big buffer that makes me think maybe he's right, and we're in good shape.

Can I retire, and can we coast, not saving much, for 4 years, until I can collect Social Security and he can retire too?

retired@50
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Re: My husband says I can retire. Is he right?

Post by retired@50 » Mon Oct 21, 2019 12:17 pm

You may be able to have a successful retirement, but you mention a couple of things to keep an eye on.

Future returns from the stock market. A serious downturn could crimp your spending plans and/or shrink your portfolio.

Health care from now till Medicare at 65. ACA plans aren't cheap unless your annual income is below 400% of the Federal Poverty Line. Read up...

Finally, since you're considering leaving the workforce early, you may need to survive on less than 4% for a retirement that could last 40 years. If I were you I'd see if that could be reduced to 3 - 3.5%. This would allow you to weather any market storm more successfully. Regards,

aristotelian
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Re: My husband says I can retire. Is he right?

Post by aristotelian » Mon Oct 21, 2019 12:20 pm

Seems like you would be fine to both retire. His ability to work four more years puts you over the top, IMO. Even if you don't save a dime, he will be working four more years, during which time you don't have to touch your portfolio even if you don't save a dime. At that point you will be able to claim Social Security if you want to, but if things are OK you can delay and keep increasing your payment.

I also have a feeling you can tighten your budget as well as downsize your home in a worst case scenario.

I assume the $1.4M in retirement accounts includes a lot in pretax accounts. My biggest concern is whether you are counting taxes in your expense. With him continuing to work at least through 54, that is a pretty small window you have to liquidate your pretax funds in a low tax bracket.

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Re: My husband says I can retire. Is he right?

Post by KyleAAA » Mon Oct 21, 2019 12:22 pm

Yeah, easily. You’re being far too conservative. Since your husband is only 50 you have plenty of flexibility for home to work an extra couple of years if market returns aren’t great in the near term. And as he says, SS is still unaccounted for. You will almost certainly end up with far too much money.

ExitStageLeft
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Re: My husband says I can retire. Is he right?

Post by ExitStageLeft » Mon Oct 21, 2019 12:31 pm

As much as it pains me to say it, in this rare instance a husband may be correct. :shock:

I encourage you to check out one of the online retirement calculators and see what sort of projections they give you. I just plugged your numbers into the one at http://cfiresim.com/ and for a retirement lasting 40 years you could spend $88k per year (adjusted for inflation) with a 100% success rate.

There are a lot of assumptions bundled into that result, but I share it with you to illustrate that you are indeed in a very good place. If it keeps you healthy and sane, you should definitely consider dialing things back if not retiring completely.

In the mean time you may want to become more familiar with your annual expenses. That's the key to the question "Can we retire?" The answer will always be yes, but the remaining question is how well will you live? With a firm handle on expenses you will now if $88k per year is reasonable or not. As noted by others, that has to cover living expenses and taxes.

Thegame14
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Re: My husband says I can retire. Is he right?

Post by Thegame14 » Mon Oct 21, 2019 12:33 pm

you seem to be ok, how about work one more year, save as much as you can, and then re-assess next year with one more year of savings and more insight into the market, plus you should already have been changing your AA to be less risky the closer you get to retirement, so that should help in an equity dip in the market.

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Brianmcg321
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Re: My husband says I can retire. Is he right?

Post by Brianmcg321 » Mon Oct 21, 2019 12:33 pm

You need to get on a budget for a few months to see really where you money is going.

Now is not a time to just guess if you will be ok and then hope for the best.
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.

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onthecusp
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Re: My husband says I can retire. Is he right?

Post by onthecusp » Mon Oct 21, 2019 12:35 pm

Sure there are concerns. There always will be. Looks like you are on the good side of the "edge" to me.

Social security is big plus for you, it would be a significant portion of your needs, and it looks like you may not "need" it right away. In that case, once you get nearer to 62, you might want to come back here and/or look at opensocialsecurity.com to get an idea of the best claiming strategy for the two of you. Many here choose to spend a little more from savings to allow the SS payment to increase by delaying the claim, but it is a decision based on both circumstances and personal financial circumstances. You can talk out the circumstances here and do the math with opensocialsecurity.com, which is free and was written by a frequent poster here.

financeperchance
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Re: My husband says I can retire. Is he right?

Post by financeperchance » Mon Oct 21, 2019 12:37 pm

Have a fun retirement! If it makes you feel better, you could always check out Etsy to see if there's anything there you're interested in doing for a bit of extra income. Also I would bet that you wouldn't necessarily be coasting, because with you retired, you will become a lot more creative at ways to save money (eating out less, shopping for deals, etc.)

One thing I would caution you is to make sure you aren't allocated too much into stocks. A very good rule of thumb that used be used around here a lot is Maximum tolerable loss x 2 = Maximum equity allocation.

EDIT to add that from top tick to bottom tick, the market was down 50% from October 2008 to March 2009. By 2009 people were in an absolute panic, and there were no guarantees that it would go back up anytime soon. It's been a very long bull market, so please be careful.
Last edited by financeperchance on Mon Oct 21, 2019 12:44 pm, edited 2 times in total.

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greg24
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Re: My husband says I can retire. Is he right?

Post by greg24 » Mon Oct 21, 2019 12:41 pm

I agree with others that you're in a good spot, or on the edge of a good spot.

If you aren't quite comfortable with retiring, you could work One More Year. Knowing that you could quit at any time could make your stressful job a lot easier to handle.

If you get 6 months in and just can't handle it, go ahead and retire.

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Re: My husband says I can retire. Is he right?

Post by bloom2708 » Mon Oct 21, 2019 12:51 pm

You have earned flexibility. I would "retire" together when you both stop working in 4-5 years.

Today, you have a bunch of options. Quit and take a year off. See how a break feels. Maybe a lower stress/part-time opportunity comes up.

When one spouse "retires" and the other is still working, it can cause some semantic dynamics to shift.

Are your salaries pretty much equal? You are both on his health insurance now?

Now is when you make sure your stock/bond mix is set up for a "near term retirement". Track spending and understand what stays and what will go when kids fly the nest. Understand how much health insurance will cost between both retiring and Medicare. Kids on the policy until age 26?

With premiums and deductible/out of pocket, I think $25k to $30k is the number I would dedicate to health insurance. It is a lot, but I'd rather have a high target and miss than the other way around. How does spending look with $72k + $25k for health related spending?

I'm currently working and my wife is on an "extended break" while we launch the last 2 kids from the nest. I told her she can keep working at home or go part-time or go back to work. We are ahead of the game and have options. You have those same options. Good luck!
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ohai
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Re: My husband says I can retire. Is he right?

Post by ohai » Mon Oct 21, 2019 1:13 pm

OP, how much do you earn in your job? Retirement safety is not Yes/No. It is a balance of % safety and utility.

If you make $1 million a year, then you'd probably not want to retire, as another year of work can dramatically improve your outlook. Even if you don't care about spending past $80k a year, your failure rate will be lower with a larger portfolio.

However, if you make $50k a year, then you might want to retire, as the incremental income is small relative to your portfolio.

birnhamwood
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Re: My husband says I can retire. Is he right?

Post by birnhamwood » Mon Oct 21, 2019 1:19 pm

You're minimally set for retirement IMO, but with one more college education to pay for, why not wait until graduation at least?

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Re: My husband says I can retire. Is he right?

Post by RadAudit » Mon Oct 21, 2019 2:01 pm

Many women never think their husbands are right. Your call.
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delamer
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Re: My husband says I can retire. Is he right?

Post by delamer » Mon Oct 21, 2019 3:03 pm

So your husband will be eligible for Medicare in 2034?

I’d do a spreadsheet for your health insurance showing for each year (through 2034) how many people you need to cover, source of health insurance, expected cost of health insurance, and expected out-of-pocket costs.

Subtract the total cost from your nest egg and see what you are left with.

My guess is that you’ll both still feel comfortable with you retiring now. But health care needs to accounted for explicitly, especially when there is going to be a gap between the end of employer coverage and the beginning of Medicare.

HomeStretch
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Re: My husband says I can retire. Is he right?

Post by HomeStretch » Mon Oct 21, 2019 3:04 pm

As you consider whether to retire or not, spend the time figuring out your annual spending. It may vary. For example, your spending might be higher due to private/ACA healthcare costs for the years between husband’s retirement dates and when you are both eligible for Medicare.

Your spending is about $72k per year. Double check that. It needs to include everything - income taxes, healthcare costs (may vary over time - employed, not employed, Medicare), lumpy expenses (like cars, major home repairs, cash-flow college expenses), increased travel in retirement, etc. Some expenses will likely go down or go away, like work-related expenses and supporting children.

You likely have or are close to having “enough”. But just dig into the numbers to be sure which it is. You will likely be more confident about retiring soon after you dig in.

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Re: My husband says I can retire. Is he right?

Post by willthrill81 » Mon Oct 21, 2019 3:11 pm

Considering that he'll be 62 in four years and capable of starting SS benefits if the stock market does tank, and the fact that you're likely to see some portfolio gains between now and then even if you don't make any retirement contributions at all, I'd say that you'll be a-okay.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

delamer
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Re: My husband says I can retire. Is he right?

Post by delamer » Mon Oct 21, 2019 3:19 pm

willthrill81 wrote:
Mon Oct 21, 2019 3:11 pm
Considering that he'll be 62 in four years and capable of starting SS benefits if the stock market does tank, and the fact that you're likely to see some portfolio gains between now and then even if you don't make any retirement contributions at all, I'd say that you'll be a-okay.
She’s 58 now, not her husband. But the principle holds.

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Re: My husband says I can retire. Is he right?

Post by MotoTrojan » Mon Oct 21, 2019 3:53 pm

A few key things:

4% seems a bit steep given your retirement will have an expected duration >30 years; I'd aim for closer to 3.5% myself.

Healthcare costs are not trivial, as you noted.

The 4% (or less) is pre-tax, so you likely won't be spending $80K if you withdraw $80K.

40/60 stocks/bonds is a bit conservative for my tastes given that you have a lengthy retirement and a moderate-to-high withdrawal rate.

Yes, you should factor in SS and then the withdrawal rate (4% or otherwise) is of portfolio on additional funds necessary for retirement.

protagonist
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Re: My husband says I can retire. Is he right?

Post by protagonist » Mon Oct 21, 2019 5:03 pm

MissBouvier wrote:
Mon Oct 21, 2019 12:01 pm
Looking for some advice from the combined wisdom here.

I'm 58 and my husband is 50.

My job is extremely stressful, and I'd love to retire. My husband tells me we're in great shape financially, and I can quit today. Is he right?

We don't keep a budget, but we have a joint account that pays all our bills. We put $6000 a month into that account, and for the past 3 years or so, it has covered almost all our bills, including multiple vacations a year.

The one big thing it doesn't cover is new cars. We recently bought two new cars, cash, using money from another account.

But it seems $72,000 a year pays for the lifestyle that makes us happy, and should be enough in retirement.

Numbers:
$1.4 million in retirement accounts
$500,000 in normal accounts.
$500,000 paid-off house

So $1.9 million total liquid assets and the paid-off house.

I think it's around 40/60 stocks/bonds

My husband says we need $2 million to pull $80,000 a year (4% rule?), but I point out we still need to pay for health care when he retires too. Plus maybe we'll want to spend more in retirement with more travel and other fun stuff. So $80,000 may not be enough.

He plans to work for 4 more years, because we have one more kid to get through college. With college costs, and if I quit my job, we won't be saving much at all those 4 years, maybe $5,000 or $10,000 a year.

$1.9 million probably will grow to $2 million+ over 4 years, but what if we have another stock market crash?

He points out that none of this includes Social Security. Both of us will get around $20,000 a year. I can start collecting at age 63, right around when he retires. And then 8 years later, when he turns 63, we can start collecting another $20,000 a year.

That's the big buffer that makes me think maybe he's right, and we're in good shape.

Can I retire, and can we coast, not saving much, for 4 years, until I can collect Social Security and he can retire too?
It all depends on your life style demands.
You certainly have enough to retire, but if you plan to spend $80K/year or more and your investments don't do well there would be some risk involved.
You can probably have a very good retirement lifestyle including travel spending less than $80K/year, depending on your demand for luxuries and where you live. Most people spend a lot less in retirement than they do when they are working.
You may also be able to defer taking SS until later. You could rely on your $1.9M and whatever income you get from your investments until later in life if you don't need the money sooner.
If I were in your situation (I was when I retired at 55 in 2008 right before the crash- I am deferring SS to age 70), I would invest at least half your $1.9M very conservatively if you retire (eg: CDs. I-bonds, etc). That would give you close to a million dollar buffer if the market crashes and doesn't bounce back. That will significantly soften the blow of even a 95% market crash. But the main variable is your life style demands. $80K is way more than the average working American household makes per year before taxes.

Also consider that if your house is worth $500K you really have $2.4M that you could tap into if absolutely necessary.

NotWhoYouThink
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Re: My husband says I can retire. Is he right?

Post by NotWhoYouThink » Mon Oct 21, 2019 5:14 pm

As others have pointed out, your annual spending of $72K probably does not include state and federal income tax, or health insurance for you and your child. Where I am, we'd spend $3K/month a age 60 just for (unsubsidized) premiums on the ACA plans. Plus deductibles, and that's just for 2 of us. Will your husband's company insurance be available to you until he retires? If not, will you be eligible for subsidies? Maybe you will if you don't pull from retirement funds until you are 65.

So if he is the one that does these calculations, ask him if he has included tax and insurance in his rough budget.

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JoeRetire
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Re: My husband says I can retire. Is he right?

Post by JoeRetire » Mon Oct 21, 2019 5:18 pm

MissBouvier wrote:
Mon Oct 21, 2019 12:01 pm
He points out that none of this includes Social Security. Both of us will get around $20,000 a year. I can start collecting at age 63, right around when he retires. And then 8 years later, when he turns 63, we can start collecting another $20,000 a year.
You "can" both start collecting at age 62. But that may not be optimal.

Check https://opensocialsecurity.com/ before you decide when to start.
Can I retire, and can we coast, not saving much, for 4 years, until I can collect Social Security and he can retire too?
You get to decide how much buffer would make you comfortable. But yes, you can retire.
My job is extremely stressful, and I'd love to retire.
Remember, there are many other alternatives besides staying in an "extremely stressful" job or retiring.
$1.9 million probably will grow to $2 million+ over 4 years, but what if we have another stock market crash?
If at any point you find yourself with insufficient savings due to a market crash or any other reasons, you can return to work and/or cut back on your expenses. That's true now and will always be true in the future.
Last edited by JoeRetire on Mon Oct 21, 2019 5:22 pm, edited 2 times in total.
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Re: My husband says I can retire. Is he right?

Post by willthrill81 » Mon Oct 21, 2019 5:19 pm

MotoTrojan wrote:
Mon Oct 21, 2019 3:53 pm
A few key things:

4% seems a bit steep given your retirement will have an expected duration >30 years; I'd aim for closer to 3.5% myself.

Healthcare costs are not trivial, as you noted.

The 4% (or less) is pre-tax, so you likely won't be spending $80K if you withdraw $80K.

40/60 stocks/bonds is a bit conservative for my tastes given that you have a lengthy retirement and a moderate-to-high withdrawal rate.

Yes, you should factor in SS and then the withdrawal rate (4% or otherwise) is of portfolio on additional funds necessary for retirement.
Considering that they haven't taken SS into account, and the likelihood of both of them surviving more than 30 years is slim, 4% seems like a reasonable starting point to me. Like everyone else, they will reduce their spending if their portfolio tanks.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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willthrill81
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Re: My husband says I can retire. Is he right?

Post by willthrill81 » Mon Oct 21, 2019 5:22 pm

JoeRetire wrote:
Mon Oct 21, 2019 5:18 pm
MissBouvier wrote:
Mon Oct 21, 2019 12:01 pm
He points out that none of this includes Social Security. Both of us will get around $20,000 a year. I can start collecting at age 63, right around when he retires. And then 8 years later, when he turns 63, we can start collecting another $20,000 a year.
You "can" both start collecting at age 62. But that may not be optimal.
True, but taking benefits early might be better than taking needed portfolio withdrawals if their portfolio tanks. If their portfolio drops by 30% in one year, for instance, starting SS benefits in order to reduce their withdrawals could really benefit them by taking the strain off their portfolio. This could easily outweigh the benefit of deferring benefits, though I agree that deferring to age 70 is a very worthy goal for those who can.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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JoeRetire
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Re: My husband says I can retire. Is he right?

Post by JoeRetire » Mon Oct 21, 2019 5:25 pm

willthrill81 wrote:
Mon Oct 21, 2019 5:19 pm
the likelihood of both of them surviving more than 30 years is slim
I suppose that depends on how you define the term "slim".

It's quite realistic that a 58 year old woman and a 50 year old man could survive 30+ years these days if they are currently in good health.
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JoeRetire
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Re: My husband says I can retire. Is he right?

Post by JoeRetire » Mon Oct 21, 2019 5:28 pm

willthrill81 wrote:
Mon Oct 21, 2019 5:22 pm
JoeRetire wrote:
Mon Oct 21, 2019 5:18 pm
MissBouvier wrote:
Mon Oct 21, 2019 12:01 pm
He points out that none of this includes Social Security. Both of us will get around $20,000 a year. I can start collecting at age 63, right around when he retires. And then 8 years later, when he turns 63, we can start collecting another $20,000 a year.
You "can" both start collecting at age 62. But that may not be optimal.
True, but taking benefits early might be better than taking needed portfolio withdrawals if their portfolio tanks.
If they somehow know that their portfolio will tank, that may (or may not) be true. Most people don't know that ahead of time, otherwise they would change their portfolio.
If their portfolio drops by 30% in one year, for instance, starting SS benefits in order to reduce their withdrawals could really benefit them by taking the strain off their portfolio. This could easily outweigh the benefit of deferring benefits, though I agree that deferring to age 70 is a very worthy goal for those who can.
I disagree. If their portfolio is strained, they could benefit from a larger guaranteed, inflation-protected income stream.

Taking your benefits early because you fear market conditions is often a poor substitute for a better asset allocation.
Don't be a lemming.

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Re: My husband says I can retire. Is he right?

Post by willthrill81 » Mon Oct 21, 2019 5:34 pm

JoeRetire wrote:
Mon Oct 21, 2019 5:25 pm
willthrill81 wrote:
Mon Oct 21, 2019 5:19 pm
the likelihood of both of them surviving more than 30 years is slim
I suppose that depends on how you define the term "slim".

It's quite realistic that a 58 year old woman and a 50 year old man could survive 30+ years these days if they are currently in good health.
Using the SS life tables, there is only an 18% probability that both of them will survive another 30 years. And if they don't start making withdrawals for another 4 years, the probability of both of them surviving 30 years from then (i.e. 34 years from now) drops to just 8%.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: My husband says I can retire. Is he right?

Post by willthrill81 » Mon Oct 21, 2019 5:36 pm

JoeRetire wrote:
Mon Oct 21, 2019 5:28 pm
willthrill81 wrote:
Mon Oct 21, 2019 5:22 pm
JoeRetire wrote:
Mon Oct 21, 2019 5:18 pm
MissBouvier wrote:
Mon Oct 21, 2019 12:01 pm
He points out that none of this includes Social Security. Both of us will get around $20,000 a year. I can start collecting at age 63, right around when he retires. And then 8 years later, when he turns 63, we can start collecting another $20,000 a year.
You "can" both start collecting at age 62. But that may not be optimal.
True, but taking benefits early might be better than taking needed portfolio withdrawals if their portfolio tanks.
If they somehow know that their portfolio will tank, that may (or may not) be true. Most people don't know that ahead of time, otherwise they would change their portfolio.
If their portfolio drops by 30% in one year, for instance, starting SS benefits in order to reduce their withdrawals could really benefit them by taking the strain off their portfolio. This could easily outweigh the benefit of deferring benefits, though I agree that deferring to age 70 is a very worthy goal for those who can.
I disagree. If their portfolio is strained, they could benefit from a larger guaranteed, inflation-protected income stream.

Taking your benefits early because you fear market conditions is often a poor substitute for a better asset allocation.
You misunderstand me. I'm not saying that they should begin SS benefits at age 62. I'm saying that if their portfolio tanks, they may want to begin SS benefits before age 70.
Last edited by willthrill81 on Mon Oct 21, 2019 6:04 pm, edited 1 time in total.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

ExitStageLeft
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Re: My husband says I can retire. Is he right?

Post by ExitStageLeft » Mon Oct 21, 2019 5:36 pm

JoeRetire wrote:
Mon Oct 21, 2019 5:28 pm

If they somehow know that their portfolio will tank, that may (or may not) be true. Most people don't know that ahead of time, otherwise they would change their portfolio.
I think the scenario WT was describing would be staring at a portfolio that had dropped significantly at age 62. Opting to take early SS would allow one to leave that much of the nest egg untouched and give it a chance to rebound. I'm just a year behind OP and have been generally been on board with the 62/70 strategy that opensocialsecurity.com recommends. But it's an interesting puzzle that I think I need to chew on a little longer and see if I can figure out what circumstances would argue for taking SS earlier.

Edit: Sorry for the mangled quote (now fixed).

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Re: My husband says I can retire. Is he right?

Post by supersharpie » Mon Oct 21, 2019 6:06 pm

MissBouvier wrote:
Mon Oct 21, 2019 12:01 pm
Looking for some advice from the combined wisdom here.

I'm 58 and my husband is 50.

My job is extremely stressful, and I'd love to retire. My husband tells me we're in great shape financially, and I can quit today. Is he right?

We don't keep a budget, but we have a joint account that pays all our bills. We put $6000 a month into that account, and for the past 3 years or so, it has covered almost all our bills, including multiple vacations a year.

The one big thing it doesn't cover is new cars. We recently bought two new cars, cash, using money from another account.

But it seems $72,000 a year pays for the lifestyle that makes us happy, and should be enough in retirement.

Numbers:
$1.4 million in retirement accounts
$500,000 in normal accounts.
$500,000 paid-off house

So $1.9 million total liquid assets and the paid-off house.

I think it's around 40/60 stocks/bonds

My husband says we need $2 million to pull $80,000 a year (4% rule?), but I point out we still need to pay for health care when he retires too. Plus maybe we'll want to spend more in retirement with more travel and other fun stuff. So $80,000 may not be enough.

He plans to work for 4 more years, because we have one more kid to get through college. With college costs, and if I quit my job, we won't be saving much at all those 4 years, maybe $5,000 or $10,000 a year.

$1.9 million probably will grow to $2 million+ over 4 years, but what if we have another stock market crash?

He points out that none of this includes Social Security. Both of us will get around $20,000 a year. I can start collecting at age 63, right around when he retires. And then 8 years later, when he turns 63, we can start collecting another $20,000 a year.

That's the big buffer that makes me think maybe he's right, and we're in good shape.

Can I retire, and can we coast, not saving much, for 4 years, until I can collect Social Security and he can retire too?
Please note, you can both take Social Security at 62. Only full retirement age has increased, not early.

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Re: My husband says I can retire. Is he right?

Post by MotoTrojan » Mon Oct 21, 2019 6:20 pm

willthrill81 wrote:
Mon Oct 21, 2019 5:19 pm
MotoTrojan wrote:
Mon Oct 21, 2019 3:53 pm
A few key things:

4% seems a bit steep given your retirement will have an expected duration >30 years; I'd aim for closer to 3.5% myself.

Healthcare costs are not trivial, as you noted.

The 4% (or less) is pre-tax, so you likely won't be spending $80K if you withdraw $80K.

40/60 stocks/bonds is a bit conservative for my tastes given that you have a lengthy retirement and a moderate-to-high withdrawal rate.

Yes, you should factor in SS and then the withdrawal rate (4% or otherwise) is of portfolio on additional funds necessary for retirement.
Considering that they haven't taken SS into account, and the likelihood of both of them surviving more than 30 years is slim, 4% seems like a reasonable starting point to me. Like everyone else, they will reduce their spending if their portfolio tanks.
Did I miss the part where they told you when they were going to die? Husband is 50; is living to 80 these-days actually a slim occurrence?

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Re: My husband says I can retire. Is he right?

Post by drawpoker » Mon Oct 21, 2019 6:31 pm

JoeRetire wrote:
Mon Oct 21, 2019 5:18 pm

....If at any point you find yourself with insufficient savings due to a market crash or any other reasons, you can return to work and/or cut back on your expenses. That's true now and will always be true in the future.
Do you have any idea how difficult, if not impossible, it is for a 59 yr old or 60 yr old to try and re-enter the workforce at that age? Finding a position that pays well? If someone in that situation has some professional background/skills they would be better off starting a small business. Maybe consulting work.

"Cut back" on expenses is something easily done. In the Real World a return to work (unless you would like to be the greeter at Walmart or flipping burgers at Wendy's) should not be considered as a viable option in the future.

On another matter, the OP should better acquaint herself with the family investments (retirement accounts)

I don't like the sound of " I think it is around 40-60 stocks/bonds" as was in the post. :shock: She should know exactly what it is!

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David Jay
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Re: My husband says I can retire. Is he right?

Post by David Jay » Mon Oct 21, 2019 6:35 pm

Can you retire? ABSOLUTELY!

Can your husband retire now? That is unclear. I think your 4-5 year schedule is a good estimate.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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Re: My husband says I can retire. Is he right?

Post by willthrill81 » Mon Oct 21, 2019 7:21 pm

MotoTrojan wrote:
Mon Oct 21, 2019 6:20 pm
willthrill81 wrote:
Mon Oct 21, 2019 5:19 pm
MotoTrojan wrote:
Mon Oct 21, 2019 3:53 pm
A few key things:

4% seems a bit steep given your retirement will have an expected duration >30 years; I'd aim for closer to 3.5% myself.

Healthcare costs are not trivial, as you noted.

The 4% (or less) is pre-tax, so you likely won't be spending $80K if you withdraw $80K.

40/60 stocks/bonds is a bit conservative for my tastes given that you have a lengthy retirement and a moderate-to-high withdrawal rate.

Yes, you should factor in SS and then the withdrawal rate (4% or otherwise) is of portfolio on additional funds necessary for retirement.
Considering that they haven't taken SS into account, and the likelihood of both of them surviving more than 30 years is slim, 4% seems like a reasonable starting point to me. Like everyone else, they will reduce their spending if their portfolio tanks.
Did I miss the part where they told you when they were going to die? Husband is 50; is living to 80 these-days actually a slim occurrence?
I crunched the probabilities using the SS life expectancy data in this post above.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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MP123
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Re: My husband says I can retire. Is he right?

Post by MP123 » Mon Oct 21, 2019 7:25 pm

willthrill81 wrote:
Mon Oct 21, 2019 5:34 pm
JoeRetire wrote:
Mon Oct 21, 2019 5:25 pm
willthrill81 wrote:
Mon Oct 21, 2019 5:19 pm
the likelihood of both of them surviving more than 30 years is slim
I suppose that depends on how you define the term "slim".

It's quite realistic that a 58 year old woman and a 50 year old man could survive 30+ years these days if they are currently in good health.
Using the SS life tables, there is only an 18% probability that both of them will survive another 30 years. And if they don't start making withdrawals for another 4 years, the probability of both of them surviving 30 years from then (i.e. 34 years from now) drops to just 8%.
Yes.

And that's the elephant in the room that no one wants to acknowledge in many of these discussions.

It impacts taxes (MFJ vs single), SS benefits, and of course life plans in general.

Maybe you should enjoy it while you can?

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Re: My husband says I can retire. Is he right?

Post by willthrill81 » Mon Oct 21, 2019 7:44 pm

MP123 wrote:
Mon Oct 21, 2019 7:25 pm
willthrill81 wrote:
Mon Oct 21, 2019 5:34 pm
JoeRetire wrote:
Mon Oct 21, 2019 5:25 pm
willthrill81 wrote:
Mon Oct 21, 2019 5:19 pm
the likelihood of both of them surviving more than 30 years is slim
I suppose that depends on how you define the term "slim".

It's quite realistic that a 58 year old woman and a 50 year old man could survive 30+ years these days if they are currently in good health.
Using the SS life tables, there is only an 18% probability that both of them will survive another 30 years. And if they don't start making withdrawals for another 4 years, the probability of both of them surviving 30 years from then (i.e. 34 years from now) drops to just 8%.
Yes.

And that's the elephant in the room that no one wants to acknowledge in many of these discussions.

It impacts taxes (MFJ vs single), SS benefits, and of course life plans in general.

Maybe you should enjoy it while you can?
I'm sure that their heirs wouldn't mind them being as conservative as many here would advocate.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

delamer
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Re: My husband says I can retire. Is he right?

Post by delamer » Mon Oct 21, 2019 9:20 pm

MP123 wrote:
Mon Oct 21, 2019 7:25 pm
willthrill81 wrote:
Mon Oct 21, 2019 5:34 pm
JoeRetire wrote:
Mon Oct 21, 2019 5:25 pm
willthrill81 wrote:
Mon Oct 21, 2019 5:19 pm
the likelihood of both of them surviving more than 30 years is slim
I suppose that depends on how you define the term "slim".

It's quite realistic that a 58 year old woman and a 50 year old man could survive 30+ years these days if they are currently in good health.
Using the SS life tables, there is only an 18% probability that both of them will survive another 30 years. And if they don't start making withdrawals for another 4 years, the probability of both of them surviving 30 years from then (i.e. 34 years from now) drops to just 8%.
Yes.

And that's the elephant in the room that no one wants to acknowledge in many of these discussions.

It impacts taxes (MFJ vs single), SS benefits, and of course life plans in general.

Maybe you should enjoy it while you can?
So much depends on demographics. If the OP is white, higher income, and has a college degree, her life expectancy is greater than average for a woman her age.

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MP123
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Re: My husband says I can retire. Is he right?

Post by MP123 » Mon Oct 21, 2019 9:53 pm

delamer wrote:
Mon Oct 21, 2019 9:20 pm
MP123 wrote:
Mon Oct 21, 2019 7:25 pm
willthrill81 wrote:
Mon Oct 21, 2019 5:34 pm
JoeRetire wrote:
Mon Oct 21, 2019 5:25 pm
willthrill81 wrote:
Mon Oct 21, 2019 5:19 pm
the likelihood of both of them surviving more than 30 years is slim
I suppose that depends on how you define the term "slim".

It's quite realistic that a 58 year old woman and a 50 year old man could survive 30+ years these days if they are currently in good health.
Using the SS life tables, there is only an 18% probability that both of them will survive another 30 years. And if they don't start making withdrawals for another 4 years, the probability of both of them surviving 30 years from then (i.e. 34 years from now) drops to just 8%.
Yes.

And that's the elephant in the room that no one wants to acknowledge in many of these discussions.

It impacts taxes (MFJ vs single), SS benefits, and of course life plans in general.

Maybe you should enjoy it while you can?
So much depends on demographics. If the OP is white, higher income, and has a college degree, her life expectancy is greater than average for a woman her age.
That's certainly true.

I should have been clearer but I was referring to the chance of both partners being alive. Say each has a 50% chance of being around in 30 years (ie that's their life expectancy) then there's a 25% chance that they both will. But also a 75% chance that at least one will, and a 25% chance that neither will. Just rough figures of course, OP's situation is slightly different but the idea is the same.

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Re: My husband says I can retire. Is he right?

Post by TheDDC » Mon Oct 21, 2019 10:13 pm

Your husband is probably concerned about "preservation of principal" - i.e., not seeing a declining balance during your retirement years. I can understand that. Perhaps look into passive income sources such as real estate, SPIA or high dividend yield funds. You can live on 80k just fine in retirement, really... Also you mention college. That is not a given and there are other sources available there for kids college. Retirement is not optional.

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Last edited by TheDDC on Mon Oct 21, 2019 11:34 pm, edited 1 time in total.
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Re: My husband says I can retire. Is he right?

Post by willthrill81 » Mon Oct 21, 2019 10:27 pm

TheDDC wrote:
Mon Oct 21, 2019 10:13 pm
You can live on 80k just fine in retirement, really...
I should hope so since we spend less than that right now during our working years. :D
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Nicolas
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Re: My husband says I can retire. Is he right?

Post by Nicolas » Mon Oct 21, 2019 11:17 pm

If you retire now and next year your husband loses his job and can’t find another, how will you fare?

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2pedals
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Re: My husband says I can retire. Is he right?

Post by 2pedals » Mon Oct 21, 2019 11:31 pm

While husband is still working, will your husband be able to pay for all current expenses and still be able to save money for his retirement? How much is your income relative to his? Do you combine household income and bank accounts? How do you split expenses?

I think it may take a while to get through this discussion with dear husband and it may be a good time for you and him to do some homework.

Get a complete understanding of expenses and how they will be payed. College can be very very expensive or not expensive at all. Healthcare insurance and home improvements/repair also can be as well. After all the expenses (lumpy and typical annual living) say in 5 and 10 years, what do you think your portfolio will look like? Would you be satisfied with your projected portfolio in say 10 years?

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Re: My husband says I can retire. Is he right?

Post by celia » Tue Oct 22, 2019 12:01 am

TheDDC wrote:
Mon Oct 21, 2019 10:13 pm
You can live on 80k just fine in retirement, really...
The OP probably does not include the income taxes paid each year as part of their $6,000 spending. I assume that expense is withheld directly from their wages.

Taxes apparently are also not accounted for when they withdraw from retirement accounts (if the majority of it is tax-deferred). To spend $40k from their retirement accounts (to supplement their SS), they might have to withdraw $50K or more a year. Or if they want to do Roth conversion before RMDs are required (age 70.5) in order to avoid being pushed into a higher tax bracket, they will need to pay additional income taxes before then.

In my opinion, taxes and health insurance are not being taken into account here.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

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Re: My husband says I can retire. Is he right?

Post by JoeRetire » Tue Oct 22, 2019 8:03 am

willthrill81 wrote:
Mon Oct 21, 2019 5:34 pm
JoeRetire wrote:
Mon Oct 21, 2019 5:25 pm
willthrill81 wrote:
Mon Oct 21, 2019 5:19 pm
the likelihood of both of them surviving more than 30 years is slim
I suppose that depends on how you define the term "slim".

It's quite realistic that a 58 year old woman and a 50 year old man could survive 30+ years these days if they are currently in good health.
Using the SS life tables, there is only an 18% probability that both of them will survive another 30 years.
Maybe the SS life table applies to you, maybe not. The table is an average of everyone, not just you. Family longevity, personal health, smoking, drug use, affluence, etc, all have an impact.

So the question becomes how should you plan for an event that you believe has an 18% probability of occurring? One way to approach that is to consider the downside.

What bad thing happens if you take Social Security early, and the 18% event does happen? You have far less in a guaranteed, inflation-protected income stream.

What bad thing happens if you delay Social Security, but only one of you lives for more than 30 years? (shrug)

- Visit https://opensocialsecurity.com/
- Choose Advanced Options
- Set the Mortality Table to Assumed Age at Death
- Play with various ages for each partner
- See the outcome that is projected
- Make your informed decision

I treat Social Security as longevity insurance. Since I am the high earner, male, and a year older, my goal is to maximize my wife's potential survivor benefit and mitigate her longevity and inflation risks. Thus, I plan to delay my benefits until 70. At the moment, we are considering starting hers at her FRA, but we may delay that as well.

You may have a different goal.
Last edited by JoeRetire on Tue Oct 22, 2019 8:21 am, edited 5 times in total.
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JoeRetire
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Re: My husband says I can retire. Is he right?

Post by JoeRetire » Tue Oct 22, 2019 8:13 am

willthrill81 wrote:
Mon Oct 21, 2019 5:36 pm
You misunderstand me. I'm not saying that they should begin SS benefits at age 62. I'm saying that if their portfolio tanks, they may want to begin SS benefits before age 70.
Maybe.

You always have the option of changing your mind and starting sooner if you plan to delay your benefits, but market conditions change sufficiently. Doesn't work the other way around.
Don't be a lemming.

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Re: My husband says I can retire. Is he right?

Post by CyclingDuo » Tue Oct 22, 2019 8:57 am

MissBouvier wrote:
Mon Oct 21, 2019 12:01 pm
Looking for some advice from the combined wisdom here.

I'm 58 and my husband is 50.

My job is extremely stressful, and I'd love to retire. My husband tells me we're in great shape financially, and I can quit today. Is he right?
Unwrap the stress at work as best you can. You appear to be in a good spot regarding FI. Use that knowledge to relax a bit and go to work with a bit different attitude to help lower your stress. Just knowing you are FI ought to take a weight off of your shoulders and allow you to relax at work because you have options.
MissBouvier wrote:
Mon Oct 21, 2019 12:01 pm
We don't keep a budget, but we have a joint account that pays all our bills. We put $6000 a month into that account, and for the past 3 years or so, it has covered almost all our bills, including multiple vacations a year.

The one big thing it doesn't cover is new cars. We recently bought two new cars, cash, using money from another account.

But it seems $72,000 a year pays for the lifestyle that makes us happy, and should be enough in retirement.
We would advocate diving in deep within the budget to know exactly what is coming in and going out to get a very accurate picture. These next few years are a good window of opportunity to live only on the net income you need to dial in a budget for retirement that includes everything (car replacement fund, home repair/maintenance, health care, taxes, etc...). All the while, you both would still be contributing to your retirement accounts from the gross income to build up the retirement kitty even more. There will be weddings, grandchildren, family reunions, etc... in the future.
MissBouvier wrote:
Mon Oct 21, 2019 12:01 pm
Numbers:
$1.4 million in retirement accounts
$500,000 in normal accounts.
$500,000 paid-off house

So $1.9 million total liquid assets and the paid-off house.

I think it's around 40/60 stocks/bonds
How long have you been at that AA and how have you determined that to be the best AA for your portfolio?
MissBouvier wrote:
Mon Oct 21, 2019 12:01 pm
My husband says we need $2 million to pull $80,000 a year (4% rule?), but I point out we still need to pay for health care when he retires too. Plus maybe we'll want to spend more in retirement with more travel and other fun stuff. So $80,000 may not be enough.
That's why we would suggest you dive in deeper with your budget and track every dollar.
MissBouvier wrote:
Mon Oct 21, 2019 12:01 pm
He plans to work for 4 more years, because we have one more kid to get through college. With college costs, and if I quit my job, we won't be saving much at all those 4 years, maybe $5,000 or $10,000 a year.
Personally, we would want that extra gravy by both of you working and saving as well as being able to fund all of the college costs during those 4 years, and fund your household budget. What about the scenario of your husband getting laid off or downsized before those 4 years are up? How would that adjust things in terms of the household cash flow, covering college costs?
MissBouvier wrote:
Mon Oct 21, 2019 12:01 pm
$1.9 million probably will grow to $2 million+ over 4 years, but what if we have another stock market crash?
Could be a good reason to continue working for a few more years as a dual income household for a little more icing on the cake. The business cycle always occurs, but you will have time on your side with your portfolio value and AA...

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You'll bounce back even if there was a 50% drop in a bear market...

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MissBouvier wrote:
Mon Oct 21, 2019 12:01 pm
He points out that none of this includes Social Security. Both of us will get around $20,000 a year. I can start collecting at age 63, right around when he retires. And then 8 years later, when he turns 63, we can start collecting another $20,000 a year.
One of you could also delay until 70 to provide the best longevity insurance. Have you both hit the second bend point in SS yet?
MissBouvier wrote:
Mon Oct 21, 2019 12:01 pm
That's the big buffer that makes me think maybe he's right, and we're in good shape.

Can I retire, and can we coast, not saving much, for 4 years, until I can collect Social Security and he can retire too?
Yes, you are in good shape. And you have the opportunity to be in even better shape for your retirement as well as provide a legacy for your heirs if you can mitigate your stress levels at work and keep the income and savings flowing for a bit longer. Every additional $250K in your portfolio can provide an extra $10K at the 4% SWR in retirement. Not saying it is needed, but depending on your overall goals, and accurate budget - it is at least worth contemplating now, rather than 5 years hence of pulling the plug from your career right now.

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