Can we retire?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Topic Author
2020content
Posts: 23
Joined: Sun Jan 12, 2020 10:34 am

Can we retire?

Post by 2020content » Sun Jan 12, 2020 10:58 am

I'm new to the Bogleheads group, and already very impressed with the thoughtful feedback posters get from the group.

I'm 50 years old and have $3.5M in investments and zero debt including our home. I've been running many retirement calculators including FireCalc and the Fidelity retirement planner, and from the outputs, it seems that we are safe to retire whenever we want. Can we safely stop working?

- Married and healthy, me 50, her 54.
- Kids are grown, married, and off the payroll.
- We both would like to stop working in one year, targeting January 2021.
- Total allocation is about 60% stock index funds and 40% bond index funds and cash (total of $3.5M).
-- Of the $3.5M, $1.5 is in tax deferred accounts (401ks and IRAs).
- Zero debt with no intention going into debt in the future. We own our home.
- Our current annual expenses are about $80K.
- We don't intend to require more than $100K annually, though we know healthcare costs are likely the biggest variable.
- Modest and frugal lifestyle and LCOL area.
- We both should be able to collect near maximum SS benefit once we get there.

Can we retire?
What are other considerations we aren't thinking about?

Thank you!

User avatar
galving
Posts: 81
Joined: Wed Oct 07, 2009 12:47 pm
Location: US Gulf Coast

Re: Can we retire?

Post by galving » Sun Jan 12, 2020 11:59 am

What's your plan for Health Insurance?
Definitely interested.

TheLaughingCow
Posts: 63
Joined: Tue Jul 01, 2014 9:41 pm

Re: Can we retire?

Post by TheLaughingCow » Sun Jan 12, 2020 12:00 pm

Yes, you can retire.

User avatar
willthrill81
Posts: 15190
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Can we retire?

Post by willthrill81 » Sun Jan 12, 2020 12:11 pm

Welcome to the forum!

Yes, you can very easily retire right now (i.e. there's no apparent financial need to wait for another year). Your withdrawal rate will only be 2.3%, and SS benefits will cover most of your $80k of living expenses when you start them. You are golden.

Congratulations!

After you retire, you'll want to start thinking about doing Roth conversions of your tax-deferred accounts at least until you start collecting SS benefits.
“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

btenny
Posts: 5220
Joined: Sun Oct 07, 2007 6:47 pm

Re: Can we retire?

Post by btenny » Sun Jan 12, 2020 12:32 pm

Yes you can retire any time. You have enough $$. You will have to work out the health insurance issues and when and how much to do for Roth conversions. But you are good to go.

But do you have a hobby or play work or travel plan to take up your time? Fifty is pretty young to stop working. Most people who retire at your age need a decompression period. I retired at 52 and took a year off and then took up ski coaching (I call this my play job). I did this for 5 years before fully retiring. That job was seasonal but fun and rewarding. It kept me busy and paid a little so I did not spend a ton to have a lot of fun. Others buy a nice motor home and travel the country for several years. Others go to work for a non profit. So tell us about your plan...

Good Luck......

JGoneRiding
Posts: 1842
Joined: Tue Jul 15, 2014 3:26 pm

Re: Can we retire?

Post by JGoneRiding » Sun Jan 12, 2020 12:39 pm

I think you can retire

But I also think you have a disconnect 80k with no mortgage no kids and medium or low col is not even sort of frugal! It's not even a little bit frugal.

Obviously you live with in your means which is really all that matters but stop calling yourself frugal just because you dont spend all your money on junk!

Is that 80k including taxes and healthcare. If not you may need to take a closer look at the budget.

I do still think you can retire.

User avatar
ram
Posts: 1367
Joined: Tue Jan 01, 2008 10:47 pm
Location: Midwest

Re: Can we retire?

Post by ram » Sun Jan 12, 2020 12:48 pm

Yes.

You would be in a reasonably good place even if you donate 1 million today.
Ram

User avatar
RickBoglehead
Posts: 5608
Joined: Wed Feb 14, 2018 9:10 am
Location: In a house

Re: Can we retire?

Post by RickBoglehead » Sun Jan 12, 2020 12:53 pm

JGoneRiding wrote:
Sun Jan 12, 2020 12:39 pm
I think you can retire

But I also think you have a disconnect 80k with no mortgage no kids and medium or low col is not even sort of frugal! It's not even a little bit frugal.

Obviously you live with in your means which is really all that matters but stop calling yourself frugal just because you dont spend all your money on junk!

Is that 80k including taxes and healthcare. If not you may need to take a closer look at the budget.

I do still think you can retire.
Budget is fine IMO, by a long shot.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

FireHorse
Posts: 184
Joined: Sat Nov 25, 2017 7:03 pm

Re: Can we retire?

Post by FireHorse » Sun Jan 12, 2020 12:58 pm

Absolutely you can.
Enjoy the next phase of your life!!!

delamer
Posts: 9492
Joined: Tue Feb 08, 2011 6:13 pm

Re: Can we retire?

Post by delamer » Sun Jan 12, 2020 12:58 pm

JGoneRiding wrote:
Sun Jan 12, 2020 12:39 pm
I think you can retire

But I also think you have a disconnect 80k with no mortgage no kids and medium or low col is not even sort of frugal! It's not even a little bit frugal.

Obviously you live with in your means which is really all that matters but stop calling yourself frugal just because you dont spend all your money on junk!

Is that 80k including taxes and healthcare. If not you may need to take a closer look at the budget.

I do still think you can retire.
Good comments.

Whether the $80K includes income taxes and health insurance premiums is important in a couple respects. If it includes them, then you probably are living fairly frugally and will be fine retiring. If not, then you aren’t living particularly frugally and, while you still should be OK to retire, you’ll have a much more significant spend down of your assets over the next 15 years or so (an additional $25K a year is almost $400,000 more from your assets).

randomguy
Posts: 8534
Joined: Wed Sep 17, 2014 9:00 am

Re: Can we retire?

Post by randomguy » Sun Jan 12, 2020 1:11 pm

willthrill81 wrote:
Sun Jan 12, 2020 12:11 pm
Welcome to the forum!

Yes, you can very easily retire right now (i.e. there's no apparent financial need to wait for another year). Your withdrawal rate will only be 2.3%, and SS benefits will cover most of your $80k of living expenses when you start them. You are golden.

Congratulations!

After you retire, you'll want to start thinking about doing Roth conversions of your tax-deferred accounts at least until you start collecting SS benefits.
Manipulating income to get an ACA subsidy is probably more important than roth conversions. But yes they are golden and things like this are just icing on the cake. They would need a huge number of things to go wrong (divorce, expensive health care issues not covered by insurance, SS cuts,...) to run into issues.

Topic Author
2020content
Posts: 23
Joined: Sun Jan 12, 2020 10:34 am

Re: Can we retire?

Post by 2020content » Sun Jan 12, 2020 1:11 pm

btenny wrote:
Sun Jan 12, 2020 12:32 pm
Yes you can retire any time. You have enough $$. You will have to work out the health insurance issues and when and how much to do for Roth conversions. But you are good to go.

But do you have a hobby or play work or travel plan to take up your time? Fifty is pretty young to stop working. Most people who retire at your age need a decompression period. I retired at 52 and took a year off and then took up ski coaching (I call this my play job). I did this for 5 years before fully retiring. That job was seasonal but fun and rewarding. It kept me busy and paid a little so I did not spend a ton to have a lot of fun. Others buy a nice motor home and travel the country for several years. Others go to work for a non profit. So tell us about your plan...

Good Luck......
We definitely plan to stay active and possibly even make some money with some of our hobbies. As a hobby, I do metal work, mechanic work, and wood working. My wife is an avid gardener and loves to sew. We also love to work together. Traveling (the US) and seeing the country is also on the agenda.

I agree that it seems early to retire, having worked really hard all my life. It's like we just woke up one day, looked at each other, and said we were tired of the rat-race. Not making a decision yet, but these posts really help to alleviate some of our anxiety about whether we have enough of a nest egg to be FI.

Thank you, btenny.

Topic Author
2020content
Posts: 23
Joined: Sun Jan 12, 2020 10:34 am

Re: Can we retire?

Post by 2020content » Sun Jan 12, 2020 1:19 pm

JGoneRiding wrote:
Sun Jan 12, 2020 12:39 pm
I think you can retire

But I also think you have a disconnect 80k with no mortgage no kids and medium or low col is not even sort of frugal! It's not even a little bit frugal.

Obviously you live with in your means which is really all that matters but stop calling yourself frugal just because you dont spend all your money on junk!

Is that 80k including taxes and healthcare. If not you may need to take a closer look at the budget.

I do still think you can retire.
JGoneRiding - My apologies. Frugal, for this forum, might not be the best description of our budget. Compared to our peers, neighbors, co-workers, etc. we live a more cost conscious existence.

HomeStretch
Posts: 3517
Joined: Thu Dec 27, 2018 3:06 pm

Re: Can we retire?

Post by HomeStretch » Sun Jan 12, 2020 1:25 pm

Welcome!

Does your $80k-$100k budget include all expenses like income taxes, healthcare and lumpy expenses like a car purchase or major home repair?

At $100k spend, agree that you can retire now financially. That’s before taking into account any retirement income like Social Security and pension, or any income from money-making hobbies.

If you haven’t already, you can check your SS claiming strategy at opensocialsecurity.com.

If you plan to obtain healthcare through the national or a state healthcare exchange, you can get quotes online to get an estimate of the cost. You can also see what premium subsidy is available to you if you can manage your income to qualify. With > 50% of your savings in Taxable or Roth accounts, you may be able to do so.

You may also want to see if Roth conversions in retirement prior to claiming SS and RMDs make sense.

Topic Author
2020content
Posts: 23
Joined: Sun Jan 12, 2020 10:34 am

Re: Can we retire?

Post by 2020content » Sun Jan 12, 2020 1:42 pm

HomeStretch wrote:
Sun Jan 12, 2020 1:25 pm
Welcome!

Does your $80k-$100k budget include all expenses like income taxes, healthcare and lumpy expenses like a car purchase or major home repair?

At $100k spend, agree that you can retire now financially. That’s before taking into account any retirement income like Social Security and pension, or any income from money-making hobbies.

If you haven’t already, you can check your SS claiming strategy at opensocialsecurity.com.

If you plan to obtain healthcare through the national or a state healthcare exchange, you can get quotes online to get an estimate of the cost. You can also see what premium subsidy is available to you if you can manage your income to qualify. With > 50% of your savings in Taxable or Roth accounts, you may be able to do so.

You may also want to see if Roth conversions in retirement prior to claiming SS and RMDs make sense.
Yes, the $80k to $100k includes taxes and our expected healthcare costs (premiums and out-of-pocket expenses). We plan to save an additional $200k this year to specifically cover those lumpy expenses. We have reliable 2018 and 2013 vehicles that should last us until hydrogen powered cars are available. :D Plus, I do all the mechanic work.

Thanks for the suggestions... so on the to-do list:

- SS claiming strategy
- Roth conversion strategy
- Medical Costs / Premium estimates

Thanks!

User avatar
abuss368
Posts: 17195
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Can we retire?

Post by abuss368 » Sun Jan 12, 2020 1:44 pm

It appears that you could retire. You have accumulated a nice nest egg.

I like the idea of scaling a hobby to provide cash flows. That will help preserve the portfolio.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

Unladen_Swallow
Posts: 181
Joined: Tue Dec 10, 2019 6:12 pm

Re: Can we retire?

Post by Unladen_Swallow » Sun Jan 12, 2020 1:57 pm

Investments $3.5MM.
Spend $80K to $100K (Less than 3%)
Max SS expected (in whatever shape or form).

If it were me, I would consider myself able to retire. You have plenty of buffer in your savings to weather challenges well.

Best wishes and enjoy your "youth and wisdom" years with your wife!
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman

User avatar
Stef
Posts: 358
Joined: Thu Oct 10, 2019 10:13 am

Re: Can we retire?

Post by Stef » Sun Jan 12, 2020 2:01 pm

100k of 3.5M is 2.9%. You plan to add another 200k this year, which will bring it down to 2.7%. Then SS will kick in in 15 years? Nothing to worry I guess.

User avatar
sergeant
Posts: 1305
Joined: Tue Dec 04, 2007 11:13 pm
Location: The Golden State

Re: Can we retire?

Post by sergeant » Sun Jan 12, 2020 2:08 pm

I don't know that much about SS because I don't qualify for it but how are you going to get near max SS? Doesn't that require 35 years of work history?

I think you can retire.
Lincoln 3 EOW! AA 40/60.

coffeeblack
Posts: 148
Joined: Wed Jun 19, 2019 10:20 am

Re: Can we retire?

Post by coffeeblack » Sun Jan 12, 2020 2:14 pm

btenny wrote:
Sun Jan 12, 2020 12:32 pm
Yes you can retire any time. You have enough $$. You will have to work out the health insurance issues and when and how much to do for Roth conversions. But you are good to go.

But do you have a hobby or play work or travel plan to take up your time? Fifty is pretty young to stop working. Most people who retire at your age need a decompression period. I retired at 52 and took a year off and then took up ski coaching (I call this my play job). I did this for 5 years before fully retiring. That job was seasonal but fun and rewarding. It kept me busy and paid a little so I did not spend a ton to have a lot of fun. Others buy a nice motor home and travel the country for several years. Others go to work for a non profit. So tell us about your plan...

Good Luck......
I like this. What will they do after sitting around for a few months to decompress? I don't think anyone can sit around year after year without a purpose.

marcopolo
Posts: 2787
Joined: Sat Dec 03, 2016 10:22 am

Re: Can we retire?

Post by marcopolo » Sun Jan 12, 2020 2:40 pm

2020content wrote:
Sun Jan 12, 2020 10:58 am
I'm new to the Bogleheads group, and already very impressed with the thoughtful feedback posters get from the group.

I'm 50 years old and have $3.5M in investments and zero debt including our home. I've been running many retirement calculators including FireCalc and the Fidelity retirement planner, and from the outputs, it seems that we are safe to retire whenever we want. Can we safely stop working?

- Married and healthy, me 50, her 54.
- Kids are grown, married, and off the payroll.
- We both would like to stop working in one year, targeting January 2021.
- Total allocation is about 60% stock index funds and 40% bond index funds and cash (total of $3.5M).
-- Of the $3.5M, $1.5 is in tax deferred accounts (401ks and IRAs).
- Zero debt with no intention going into debt in the future. We own our home.
- Our current annual expenses are about $80K.
- We don't intend to require more than $100K annually, though we know healthcare costs are likely the biggest variable.
- Modest and frugal lifestyle and LCOL area.
- We both should be able to collect near maximum SS benefit once we get there.

Can we retire?
What are other considerations we aren't thinking about?

Thank you!
I sure hope you are able to retire.

We had very similar stats when we pulled the trigger at age 51, two years ago. So far, so good. The nice run up this past years helps even more. With another year of savings you are planning, you should be in very good shape.

For those worried about how to spend your time, we have not experienced any problem with that, it just takes a little imagination to come up with your own schedule. You can make it as "meaningful" as you want, or not. Not sure why people think you need a paying job for that.

Good luck, and enjoy your retirement.
Once in a while you get shown the light, in the strangest of places if you look at it right.

User avatar
JoeRetire
Posts: 4523
Joined: Tue Jan 16, 2018 2:44 pm

Re: Can we retire?

Post by JoeRetire » Sun Jan 12, 2020 2:44 pm

2020content wrote:
Sun Jan 12, 2020 10:58 am
I'm 50 years old and have $3.5M in investments and zero debt including our home.

- Our current annual expenses are about $80K.
- We don't intend to require more than $100K annually, though we know healthcare costs are likely the biggest variable.

- We both should be able to collect near maximum SS benefit once we get there.

Can we retire?
Yes you can.
Very Stable Genius

marcopolo
Posts: 2787
Joined: Sat Dec 03, 2016 10:22 am

Re: Can we retire?

Post by marcopolo » Sun Jan 12, 2020 2:45 pm

2020content wrote:
Sun Jan 12, 2020 1:42 pm
HomeStretch wrote:
Sun Jan 12, 2020 1:25 pm
Welcome!

Does your $80k-$100k budget include all expenses like income taxes, healthcare and lumpy expenses like a car purchase or major home repair?

At $100k spend, agree that you can retire now financially. That’s before taking into account any retirement income like Social Security and pension, or any income from money-making hobbies.

If you haven’t already, you can check your SS claiming strategy at opensocialsecurity.com.

If you plan to obtain healthcare through the national or a state healthcare exchange, you can get quotes online to get an estimate of the cost. You can also see what premium subsidy is available to you if you can manage your income to qualify. With > 50% of your savings in Taxable or Roth accounts, you may be able to do so.

You may also want to see if Roth conversions in retirement prior to claiming SS and RMDs make sense.
Yes, the $80k to $100k includes taxes and our expected healthcare costs (premiums and out-of-pocket expenses). We plan to save an additional $200k this year to specifically cover those lumpy expenses. We have reliable 2018 and 2013 vehicles that should last us until hydrogen powered cars are available. :D Plus, I do all the mechanic work.

Thanks for the suggestions... so on the to-do list:

- SS claiming strategy
- Roth conversion strategy
- Medical Costs / Premium estimates

Thanks!
Not sure what your plan is for health insurance, but i would recommend looking at the trade-off between Roth Conversions and qualifying for ACA Premium Tax Credits. The optimal strategy is specific to each situation, the math is somewhat complicated, and you have to make some assumptions.

With your numbers, you should be able to pay very little taxes, and possibly get very low cost health insurance.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Topic Author
2020content
Posts: 23
Joined: Sun Jan 12, 2020 10:34 am

Re: Can we retire?

Post by 2020content » Sun Jan 12, 2020 2:47 pm

sergeant wrote:
Sun Jan 12, 2020 2:08 pm
I don't know that much about SS because I don't qualify for it but how are you going to get near max SS? Doesn't that require 35 years of work history?

I think you can retire.
I used the SS benefits calculator found on this bogleheads forum:

viewtopic.php?t=231913

If anyone has additional insight into expected SS benefits if we stop working at age 51 and 55, please comment.

Thanks!

klondike
Posts: 15
Joined: Thu Jan 10, 2019 6:58 pm

Re: Can we retire?

Post by klondike » Sun Jan 12, 2020 2:52 pm

You have more than plenty to retire right now. Just curious, what makes you question about it?
2020content wrote:
Sun Jan 12, 2020 10:58 am
I'm new to the Bogleheads group, and already very impressed with the thoughtful feedback posters get from the group.

I'm 50 years old and have $3.5M in investments and zero debt including our home. I've been running many retirement calculators including FireCalc and the Fidelity retirement planner, and from the outputs, it seems that we are safe to retire whenever we want. Can we safely stop working?

- Married and healthy, me 50, her 54.
- Kids are grown, married, and off the payroll.
- We both would like to stop working in one year, targeting January 2021.
- Total allocation is about 60% stock index funds and 40% bond index funds and cash (total of $3.5M).
-- Of the $3.5M, $1.5 is in tax deferred accounts (401ks and IRAs).
- Zero debt with no intention going into debt in the future. We own our home.
- Our current annual expenses are about $80K.
- We don't intend to require more than $100K annually, though we know healthcare costs are likely the biggest variable.
- Modest and frugal lifestyle and LCOL area.
- We both should be able to collect near maximum SS benefit once we get there.

Can we retire?
What are other considerations we aren't thinking about?

Thank you!

marcopolo
Posts: 2787
Joined: Sat Dec 03, 2016 10:22 am

Re: Can we retire?

Post by marcopolo » Sun Jan 12, 2020 2:53 pm

2020content wrote:
Sun Jan 12, 2020 2:47 pm
sergeant wrote:
Sun Jan 12, 2020 2:08 pm
I don't know that much about SS because I don't qualify for it but how are you going to get near max SS? Doesn't that require 35 years of work history?

I think you can retire.
I used the SS benefits calculator found on this bogleheads forum:

viewtopic.php?t=231913

If anyone has additional insight into expected SS benefits if we stop working at age 51 and 55, please comment.

Thanks!
Once you pass what is known as the second bend point, additional years of contributions don't add much to the benefit amounts. So, while you may not qualify for the absolute maximum amount, you can be prerty close to it even if you retire early.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Topic Author
2020content
Posts: 23
Joined: Sun Jan 12, 2020 10:34 am

Re: Can we retire?

Post by 2020content » Sun Jan 12, 2020 2:59 pm

marcopolo wrote:
Sun Jan 12, 2020 2:53 pm
2020content wrote:
Sun Jan 12, 2020 2:47 pm
sergeant wrote:
Sun Jan 12, 2020 2:08 pm
I don't know that much about SS because I don't qualify for it but how are you going to get near max SS? Doesn't that require 35 years of work history?

I think you can retire.
I used the SS benefits calculator found on this bogleheads forum:

viewtopic.php?t=231913

If anyone has additional insight into expected SS benefits if we stop working at age 51 and 55, please comment.

Thanks!
Once you pass what is known as the second bend point, additional years of contributions don't add much to the benefit amounts. So, while you may not qualify for the absolute maximum amount, you can be prerty close to it even if you retire early.
That's what we saw. We input our historical earnings and the benefit of working extra years was negligible.

User avatar
wander
Posts: 2826
Joined: Sat Oct 04, 2008 9:10 am

Re: Can we retire?

Post by wander » Sun Jan 12, 2020 3:04 pm

2020content wrote:
Sun Jan 12, 2020 10:58 am
- We both should be able to collect near maximum SS benefit once we get there.
If you retire next year, you have not earned enough 35 years for SS calculation, how can you collect near maximum SS benefits? Anyway, you can retire. Just saying.

User avatar
Stef
Posts: 358
Joined: Thu Oct 10, 2019 10:13 am

Re: Can we retire?

Post by Stef » Sun Jan 12, 2020 3:35 pm

Well maybe that's "near max"?

marcopolo
Posts: 2787
Joined: Sat Dec 03, 2016 10:22 am

Re: Can we retire?

Post by marcopolo » Sun Jan 12, 2020 3:39 pm

wander wrote:
Sun Jan 12, 2020 3:04 pm
2020content wrote:
Sun Jan 12, 2020 10:58 am
- We both should be able to collect near maximum SS benefit once we get there.
If you retire next year, you have not earned enough 35 years for SS calculation, how can you collect near maximum SS benefits? Anyway, you can retire. Just saying.
You should try a Soc Sec benefit calculator. You can see for yourself how this is possible. Once your contributions pass second bend point, the change for working additional years in quite small. So "near" max is quite possible for early retirees.
Once in a while you get shown the light, in the strangest of places if you look at it right.

NYC_Guy
Posts: 305
Joined: Fri Mar 10, 2017 2:23 pm
Location: New York

Re: Can we retire?

Post by NYC_Guy » Sun Jan 12, 2020 3:48 pm

wander wrote:
Sun Jan 12, 2020 3:04 pm
2020content wrote:
Sun Jan 12, 2020 10:58 am
- We both should be able to collect near maximum SS benefit once we get there.
If you retire next year, you have not earned enough 35 years for SS calculation, how can you collect near maximum SS benefits? Anyway, you can retire. Just saying.
I’m the same age and I’m near maximum too. Once you have 25+ years of max limit, you are “near maximum” given how the second bend works.

PaulF
Posts: 207
Joined: Wed Aug 06, 2008 10:07 pm
Location: Wisconsin

Re: Can we retire?

Post by PaulF » Sun Jan 12, 2020 4:14 pm

Agreed: Past the second bend point, you are pushing on a rope! :mrgreen:

Topic Author
2020content
Posts: 23
Joined: Sun Jan 12, 2020 10:34 am

Re: Can we retire?

Post by 2020content » Sun Jan 12, 2020 4:33 pm

PaulF wrote:
Sun Jan 12, 2020 4:14 pm
Agreed: Past the second bend point, you are pushing on a rope! :mrgreen:
I'm pleased to see others confirm this. In one scenario I added an additional 5 years of work, contributing the maximum tax, and it only added about $150 per month to my benefit at 67 years old. That's about a 5% increase in benefit for 5 years of additional work. Just doesn't seem worth it.

User avatar
geerhardusvos
Posts: 177
Joined: Wed Oct 23, 2019 10:20 pm

Re: Can we retire?

Post by geerhardusvos » Sun Jan 12, 2020 4:49 pm

willthrill81 wrote:
Sun Jan 12, 2020 12:11 pm
Welcome to the forum!

Yes, you can very easily retire right now (i.e. there's no apparent financial need to wait for another year). Your withdrawal rate will only be 2.3%, and SS benefits will cover most of your $80k of living expenses when you start them. You are golden.

Congratulations!

After you retire, you'll want to start thinking about doing Roth conversions of your tax-deferred accounts at least until you start collecting SS benefits.
+1

Congratulations!
VTSAX and chill

Topic Author
2020content
Posts: 23
Joined: Sun Jan 12, 2020 10:34 am

Re: Can we retire?

Post by 2020content » Sun Jan 12, 2020 5:27 pm

klondike wrote:
Sun Jan 12, 2020 2:52 pm
You have more than plenty to retire right now. Just curious, what makes you question about it?
Klondike - Good question and I'm glad you asked. It made me think about my original question a bit more thoughtfully. Here are my/our answers to your question:

- The #1 reason we question retiring is because the idea of not having an income and relying on only what you've saved is just an odd concept for us. We've been earners and savers, not spenders. Spending our savings seems like a big step and will probably be difficult to do, but we also don't want to look back 10 years from now and regret not retiring earlier. Both of our jobs are stressful and there are many other things we'd rather do.
- We hope to live another active 30 years and much can change in 30 years. Do we have enough to "weather the storms" is a question that comes up often. While we would love to retire now, we also don't want to worry about whether our savings will last as long as we do.
- We genuinely want to hear feedback from folks approaching retirement, just starting retirement, or in retirement. The feedback we've received so far has been very reassuring and it's reminded us to research and plan in certain areas.

rossington
Posts: 408
Joined: Fri Jun 07, 2019 2:00 am
Location: Florida

Re: Can we retire?

Post by rossington » Sun Jan 12, 2020 5:41 pm

It would make sense to start doing the Roth conversions sooner as opposed to later.
Good luck!
"Success is going from failure to failure without loss of enthusiasm." Winston Churchill.

Financologist
Posts: 83
Joined: Wed Jan 01, 2020 11:16 pm

Re: Can we retire?

Post by Financologist » Sun Jan 12, 2020 5:47 pm

I can't see how this won't work out well. The one question to ask yourself is... if the market suffers a dramatic fall are you willing to spend less or go back to work to restore the level of confidence the models give you today?

Good luck

vipertom1970
Posts: 150
Joined: Fri Jun 21, 2019 7:06 pm

Re: Can we retire?

Post by vipertom1970 » Sun Jan 12, 2020 5:50 pm

randomguy wrote:
Sun Jan 12, 2020 1:11 pm
willthrill81 wrote:
Sun Jan 12, 2020 12:11 pm
Welcome to the forum!

Yes, you can very easily retire right now (i.e. there's no apparent financial need to wait for another year). Your withdrawal rate will only be 2.3%, and SS benefits will cover most of your $80k of living expenses when you start them. You are golden.

Congratulations!

After you retire, you'll want to start thinking about doing Roth conversions of your tax-deferred accounts at least until you start collecting SS benefits.
Manipulating income to get an ACA subsidy is probably more important than roth conversions. But yes they are golden and things like this are just icing on the cake. They would need a huge number of things to go wrong (divorce, expensive health care issues not covered by insurance, SS cuts,...) to run into issues.
Could you or some one please explain why choosing ACA subsidy over Roth Conversion is better ? I just retired at 50 and I am in the same boat as the OP with same age and $$ but I choose Roth conversion instead of ACA. I got 1.3M in IRA and currently paying $900 for insurance per month for 2.
Last edited by vipertom1970 on Sun Jan 12, 2020 5:52 pm, edited 1 time in total.

delamer
Posts: 9492
Joined: Tue Feb 08, 2011 6:13 pm

Re: Can we retire?

Post by delamer » Sun Jan 12, 2020 5:52 pm

Financologist wrote:
Sun Jan 12, 2020 5:47 pm
I can't see how this won't work out well. The one question to ask yourself is... if the market suffers a dramatic fall are you willing to spend less or go back to work to restore the level of confidence the models give you today?

Good luck
The stock market will almost certainly suffer a dramatic fall (or falls) at sometime during the OP’s retirement. It isn’t “if” but “when.”

The models take that into account when determining the likelihood that a portfolio will survive at a given level of withdrawals.

marcopolo
Posts: 2787
Joined: Sat Dec 03, 2016 10:22 am

Re: Can we retire?

Post by marcopolo » Sun Jan 12, 2020 6:04 pm

vipertom1970 wrote:
Sun Jan 12, 2020 5:50 pm
randomguy wrote:
Sun Jan 12, 2020 1:11 pm
willthrill81 wrote:
Sun Jan 12, 2020 12:11 pm
Welcome to the forum!

Yes, you can very easily retire right now (i.e. there's no apparent financial need to wait for another year). Your withdrawal rate will only be 2.3%, and SS benefits will cover most of your $80k of living expenses when you start them. You are golden.

Congratulations!

After you retire, you'll want to start thinking about doing Roth conversions of your tax-deferred accounts at least until you start collecting SS benefits.
Manipulating income to get an ACA subsidy is probably more important than roth conversions. But yes they are golden and things like this are just icing on the cake. They would need a huge number of things to go wrong (divorce, expensive health care issues not covered by insurance, SS cuts,...) to run into issues.
Could you or some one please explain why choosing ACA subsidy over Roth Conversion is better ? I just retired at 50 and I am in the same boat as the OP with same age and $$ but I choose Roth conversion instead of ACA. I got 1.3M in IRA and currently paying $900 for insurance per month for 2.
It is very specific to each person's situation, but the general idea is that a Roth Conversion is beneficial if you expect your tax rate to be the same or higher when you will withdraw the funds than it is when doing the conversion.

You have to guess at what iyour tax rate will be in the future. ACA Premium Tax credits (PTC) affect what it will now, when doing the conversion.

If you are under the cliff (getting some PTC), then the reduction in the PTC adds about 10% to your tax rate. So, if you are converting in the 12% bracket, you are really paying 22% on the conversion. So, you need to consider if your tax rate at withdrawal will be higher or lower than that. If you will stay in the 12% bracket, it probably does not make sense to do the conversion.

If the Roth Conversion causes you to cross over the PTC cliff, then the added tax impact can be huge, but it depends on the particulars of your situation (ACA costs, the cost of second lowest cost silver plan, etc.). It is not uncommon to be in a situation where a small Roth Conversion can cost $10k or more in additional taxes. In this case, one would either want to not do the Roth conversion, or do really large ones, as once you have fallen off the cliff, the spike in the rate is behind you, and can be amortized over a larger conversion.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Topic Author
2020content
Posts: 23
Joined: Sun Jan 12, 2020 10:34 am

Re: Can we retire?

Post by 2020content » Sun Jan 12, 2020 6:05 pm

vipertom1970 wrote:
Sun Jan 12, 2020 5:50 pm
randomguy wrote:
Sun Jan 12, 2020 1:11 pm
willthrill81 wrote:
Sun Jan 12, 2020 12:11 pm
Welcome to the forum!

Yes, you can very easily retire right now (i.e. there's no apparent financial need to wait for another year). Your withdrawal rate will only be 2.3%, and SS benefits will cover most of your $80k of living expenses when you start them. You are golden.

Congratulations!

After you retire, you'll want to start thinking about doing Roth conversions of your tax-deferred accounts at least until you start collecting SS benefits.
Manipulating income to get an ACA subsidy is probably more important than roth conversions. But yes they are golden and things like this are just icing on the cake. They would need a huge number of things to go wrong (divorce, expensive health care issues not covered by insurance, SS cuts,...) to run into issues.
Could you or some one please explain why choosing ACA subsidy over Roth Conversion is better ? I just retired at 50 and I am in the same boat as the OP with same age and $$ but I choose Roth conversion instead of ACA. I got 1.3M in IRA and currently paying $900 for insurance per month for 2.
I would also like to see more about this. Definitely something I'm going to research.

marcopolo
Posts: 2787
Joined: Sat Dec 03, 2016 10:22 am

Re: Can we retire?

Post by marcopolo » Sun Jan 12, 2020 6:11 pm

2020content wrote:
Sun Jan 12, 2020 6:05 pm
vipertom1970 wrote:
Sun Jan 12, 2020 5:50 pm
randomguy wrote:
Sun Jan 12, 2020 1:11 pm
willthrill81 wrote:
Sun Jan 12, 2020 12:11 pm
Welcome to the forum!

Yes, you can very easily retire right now (i.e. there's no apparent financial need to wait for another year). Your withdrawal rate will only be 2.3%, and SS benefits will cover most of your $80k of living expenses when you start them. You are golden.

Congratulations!

After you retire, you'll want to start thinking about doing Roth conversions of your tax-deferred accounts at least until you start collecting SS benefits.
Manipulating income to get an ACA subsidy is probably more important than roth conversions. But yes they are golden and things like this are just icing on the cake. They would need a huge number of things to go wrong (divorce, expensive health care issues not covered by insurance, SS cuts,...) to run into issues.
Could you or some one please explain why choosing ACA subsidy over Roth Conversion is better ? I just retired at 50 and I am in the same boat as the OP with same age and $$ but I choose Roth conversion instead of ACA. I got 1.3M in IRA and currently paying $900 for insurance per month for 2.
I would also like to see more about this. Definitely something I'm going to research.
see my post above.
Let me know if you have additional questions. i retired a couple years ago, and have been elbows deep in this. It is quite complicated. i think i understand some of it now, hopefully, other more knowledgeable people will weigh in as well.
Once in a while you get shown the light, in the strangest of places if you look at it right.

rossington
Posts: 408
Joined: Fri Jun 07, 2019 2:00 am
Location: Florida

Re: Can we retire?

Post by rossington » Sun Jan 12, 2020 6:14 pm

marcopolo wrote:
Sun Jan 12, 2020 6:04 pm
vipertom1970 wrote:
Sun Jan 12, 2020 5:50 pm
randomguy wrote:
Sun Jan 12, 2020 1:11 pm
willthrill81 wrote:
Sun Jan 12, 2020 12:11 pm
Welcome to the forum!

Yes, you can very easily retire right now (i.e. there's no apparent financial need to wait for another year). Your withdrawal rate will only be 2.3%, and SS benefits will cover most of your $80k of living expenses when you start them. You are golden.

Congratulations!

After you retire, you'll want to start thinking about doing Roth conversions of your tax-deferred accounts at least until you start collecting SS benefits.
Manipulating income to get an ACA subsidy is probably more important than roth conversions. But yes they are golden and things like this are just icing on the cake. They would need a huge number of things to go wrong (divorce, expensive health care issues not covered by insurance, SS cuts,...) to run into issues.
Could you or some one please explain why choosing ACA subsidy over Roth Conversion is better ? I just retired at 50 and I am in the same boat as the OP with same age and $$ but I choose Roth conversion instead of ACA. I got 1.3M in IRA and currently paying $900 for insurance per month for 2.
It is very specific to each person's situation, but the general idea is that a Roth Conversion is beneficial if you expect your tax rate to be the same or higher when you will withdraw the funds than it is when doing the conversion.

You have to guess at what iyour tax rate will be in the future. ACA Premium Tax credits (PTC) affect what it will now, when doing the conversion.

If you are under the cliff (getting some PTC), then the reduction in the PTC adds about 10% to your tax rate. So, if you are converting in the 12% bracket, you are really paying 22% on the conversion. So, you need to consider if your tax rate at withdrawal will be higher or lower than that. If you will stay in the 12% bracket, it probably does not make sense to do the conversion.

If the Roth Conversion causes you to cross over the PTC cliff, then the added tax impact can be huge, but it depends on the particulars of your situation (ACA costs, the cost of second lowest cost silver plan, etc.). It is not uncommon to be in a situation where a small Roth Conversion can cost $10k or more in additional taxes. In this case, one would either want to not do the Roth conversion, or do really large ones, as once you have fallen off the cliff, the spike in the rate is behind you, and can be amortized over a larger conversion.
But do keep in mind that once converted the assets can grow with zero tax implications for the rest of his life, which now is presumably at least an extra 10-12 years head start.
"Success is going from failure to failure without loss of enthusiasm." Winston Churchill.

Topic Author
2020content
Posts: 23
Joined: Sun Jan 12, 2020 10:34 am

Re: Can we retire?

Post by 2020content » Sun Jan 12, 2020 6:15 pm

marcopolo wrote:
Sun Jan 12, 2020 6:11 pm
2020content wrote:
Sun Jan 12, 2020 6:05 pm
vipertom1970 wrote:
Sun Jan 12, 2020 5:50 pm
randomguy wrote:
Sun Jan 12, 2020 1:11 pm
willthrill81 wrote:
Sun Jan 12, 2020 12:11 pm
Welcome to the forum!

Yes, you can very easily retire right now (i.e. there's no apparent financial need to wait for another year). Your withdrawal rate will only be 2.3%, and SS benefits will cover most of your $80k of living expenses when you start them. You are golden.

Congratulations!

After you retire, you'll want to start thinking about doing Roth conversions of your tax-deferred accounts at least until you start collecting SS benefits.
Manipulating income to get an ACA subsidy is probably more important than roth conversions. But yes they are golden and things like this are just icing on the cake. They would need a huge number of things to go wrong (divorce, expensive health care issues not covered by insurance, SS cuts,...) to run into issues.
Could you or some one please explain why choosing ACA subsidy over Roth Conversion is better ? I just retired at 50 and I am in the same boat as the OP with same age and $$ but I choose Roth conversion instead of ACA. I got 1.3M in IRA and currently paying $900 for insurance per month for 2.
I would also like to see more about this. Definitely something I'm going to research.
see my post above.
Let me know if you have additional questions. i retired a couple years ago, and have been elbows deep in this. It is quite complicated. i think i understand some of it now, hopefully, other more knowledgeable people will weigh in as well.
Marcopolo - I missed that one somehow! Thank you for the information. It was very helpful.

User avatar
willthrill81
Posts: 15190
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Can we retire?

Post by willthrill81 » Sun Jan 12, 2020 6:16 pm

2020content wrote:
Sun Jan 12, 2020 6:05 pm
vipertom1970 wrote:
Sun Jan 12, 2020 5:50 pm
randomguy wrote:
Sun Jan 12, 2020 1:11 pm
willthrill81 wrote:
Sun Jan 12, 2020 12:11 pm
Welcome to the forum!

Yes, you can very easily retire right now (i.e. there's no apparent financial need to wait for another year). Your withdrawal rate will only be 2.3%, and SS benefits will cover most of your $80k of living expenses when you start them. You are golden.

Congratulations!

After you retire, you'll want to start thinking about doing Roth conversions of your tax-deferred accounts at least until you start collecting SS benefits.
Manipulating income to get an ACA subsidy is probably more important than roth conversions. But yes they are golden and things like this are just icing on the cake. They would need a huge number of things to go wrong (divorce, expensive health care issues not covered by insurance, SS cuts,...) to run into issues.
Could you or some one please explain why choosing ACA subsidy over Roth Conversion is better ? I just retired at 50 and I am in the same boat as the OP with same age and $$ but I choose Roth conversion instead of ACA. I got 1.3M in IRA and currently paying $900 for insurance per month for 2.
I would also like to see more about this. Definitely something I'm going to research.
To add to marcopolo's post above, with a significant taxable account, it may be fairly easy to keep one's taxable income low enough that one qualifies for ACA subsidies and pays very little for an ACA health insurance plan. For instance, if you sell an investment that has a high cost-basis, you're only realizing a small capital gain. For instance, if your cost basis in some stock is $70k and you sell it for $100k, then you only have $30k of long-term capital gains, and if you had no other income, a MFJ couple would likely qualify for significant ACA subsidies despite now having $100k to spend. But this assumes that you would be happy with an ACA plan. Managing the whole process is, as marcopolo noted, cumbersome at times.
“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

cacophony
Posts: 493
Joined: Tue Oct 16, 2007 9:12 pm

Re: Can we retire?

Post by cacophony » Sun Jan 12, 2020 6:25 pm

willthrill81 wrote:
Sun Jan 12, 2020 6:16 pm
To add to marcopolo's post above, with a significant taxable account, it may be fairly easy to keep one's taxable income low enough that one qualifies for ACA subsidies and pays very little for an ACA health insurance plan. For instance, if you sell an investment that has a high cost-basis, you're only realizing a small capital gain. For instance, if your cost basis in some stock is $70k and you sell it for $100k, then you only have $30k of long-term capital gains, and if you had no other income, a MFJ couple would likely qualify for significant ACA subsidies despite now having $100k to spend. But this assumes that you would be happy with an ACA plan. Managing the whole process is, as marcopolo noted, cumbersome at times.
Wouldn't a significant taxable account (at least one that is reasonably well diversified) have large dividends that are unavoidable? The current TSM dividend is 1.66%.

marcopolo
Posts: 2787
Joined: Sat Dec 03, 2016 10:22 am

Re: Can we retire?

Post by marcopolo » Sun Jan 12, 2020 6:28 pm

rossington wrote:
Sun Jan 12, 2020 6:14 pm
marcopolo wrote:
Sun Jan 12, 2020 6:04 pm
vipertom1970 wrote:
Sun Jan 12, 2020 5:50 pm
randomguy wrote:
Sun Jan 12, 2020 1:11 pm
willthrill81 wrote:
Sun Jan 12, 2020 12:11 pm
Welcome to the forum!

Yes, you can very easily retire right now (i.e. there's no apparent financial need to wait for another year). Your withdrawal rate will only be 2.3%, and SS benefits will cover most of your $80k of living expenses when you start them. You are golden.

Congratulations!

After you retire, you'll want to start thinking about doing Roth conversions of your tax-deferred accounts at least until you start collecting SS benefits.
Manipulating income to get an ACA subsidy is probably more important than roth conversions. But yes they are golden and things like this are just icing on the cake. They would need a huge number of things to go wrong (divorce, expensive health care issues not covered by insurance, SS cuts,...) to run into issues.
Could you or some one please explain why choosing ACA subsidy over Roth Conversion is better ? I just retired at 50 and I am in the same boat as the OP with same age and $$ but I choose Roth conversion instead of ACA. I got 1.3M in IRA and currently paying $900 for insurance per month for 2.
It is very specific to each person's situation, but the general idea is that a Roth Conversion is beneficial if you expect your tax rate to be the same or higher when you will withdraw the funds than it is when doing the conversion.

You have to guess at what iyour tax rate will be in the future. ACA Premium Tax credits (PTC) affect what it will now, when doing the conversion.

If you are under the cliff (getting some PTC), then the reduction in the PTC adds about 10% to your tax rate. So, if you are converting in the 12% bracket, you are really paying 22% on the conversion. So, you need to consider if your tax rate at withdrawal will be higher or lower than that. If you will stay in the 12% bracket, it probably does not make sense to do the conversion.

If the Roth Conversion causes you to cross over the PTC cliff, then the added tax impact can be huge, but it depends on the particulars of your situation (ACA costs, the cost of second lowest cost silver plan, etc.). It is not uncommon to be in a situation where a small Roth Conversion can cost $10k or more in additional taxes. In this case, one would either want to not do the Roth conversion, or do really large ones, as once you have fallen off the cliff, the spike in the rate is behind you, and can be amortized over a larger conversion.
But do keep in mind that once converted the assets can grow with zero tax implications for the rest of his life, which now is presumably at least an extra 10-12 years head start.
But, you start with a lower basis (after paying the taxes on the conversion). If the tax rates stay the same, then the two situations work out to be about equivalent. The main benefit comes from tax rate differentials. You can do marginally better by paying the conversion tax due out of other accounts (effectively shelter more dollars), but it does not usually make up for the case where you end up in a lower tax bracket later.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Topic Author
2020content
Posts: 23
Joined: Sun Jan 12, 2020 10:34 am

Re: Can we retire?

Post by 2020content » Sun Jan 12, 2020 6:35 pm

cacophony wrote:
Sun Jan 12, 2020 6:25 pm
willthrill81 wrote:
Sun Jan 12, 2020 6:16 pm
To add to marcopolo's post above, with a significant taxable account, it may be fairly easy to keep one's taxable income low enough that one qualifies for ACA subsidies and pays very little for an ACA health insurance plan. For instance, if you sell an investment that has a high cost-basis, you're only realizing a small capital gain. For instance, if your cost basis in some stock is $70k and you sell it for $100k, then you only have $30k of long-term capital gains, and if you had no other income, a MFJ couple would likely qualify for significant ACA subsidies despite now having $100k to spend. But this assumes that you would be happy with an ACA plan. Managing the whole process is, as marcopolo noted, cumbersome at times.
Wouldn't a significant taxable account (at least one that is reasonably well diversified) have large dividends that are unavoidable? The current TSM dividend is 1.66%.
Good point and not sure how that plays into this discussion. Our annual dividend on our taxable mutual fund accounts is at about $32,000 per year. We make another $13,000 annually from CDs and MM.

User avatar
willthrill81
Posts: 15190
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Can we retire?

Post by willthrill81 » Sun Jan 12, 2020 6:36 pm

cacophony wrote:
Sun Jan 12, 2020 6:25 pm
willthrill81 wrote:
Sun Jan 12, 2020 6:16 pm
To add to marcopolo's post above, with a significant taxable account, it may be fairly easy to keep one's taxable income low enough that one qualifies for ACA subsidies and pays very little for an ACA health insurance plan. For instance, if you sell an investment that has a high cost-basis, you're only realizing a small capital gain. For instance, if your cost basis in some stock is $70k and you sell it for $100k, then you only have $30k of long-term capital gains, and if you had no other income, a MFJ couple would likely qualify for significant ACA subsidies despite now having $100k to spend. But this assumes that you would be happy with an ACA plan. Managing the whole process is, as marcopolo noted, cumbersome at times.
Wouldn't a significant taxable account (at least one that is reasonably well diversified) have large dividends that are unavoidable? The current TSM dividend is 1.66%.
Most of the dividends from a fund like VTSAX are qualified, meaning that they are taxed at the much more favorable LTCG rates. A married filing jointly couple could have over $100k of qualified dividends and pay no tax at all.

Read this for more details.
“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

marcopolo
Posts: 2787
Joined: Sat Dec 03, 2016 10:22 am

Re: Can we retire?

Post by marcopolo » Sun Jan 12, 2020 6:39 pm

cacophony wrote:
Sun Jan 12, 2020 6:25 pm
willthrill81 wrote:
Sun Jan 12, 2020 6:16 pm
To add to marcopolo's post above, with a significant taxable account, it may be fairly easy to keep one's taxable income low enough that one qualifies for ACA subsidies and pays very little for an ACA health insurance plan. For instance, if you sell an investment that has a high cost-basis, you're only realizing a small capital gain. For instance, if your cost basis in some stock is $70k and you sell it for $100k, then you only have $30k of long-term capital gains, and if you had no other income, a MFJ couple would likely qualify for significant ACA subsidies despite now having $100k to spend. But this assumes that you would be happy with an ACA plan. Managing the whole process is, as marcopolo noted, cumbersome at times.
Wouldn't a significant taxable account (at least one that is reasonably well diversified) have large dividends that are unavoidable? The current TSM dividend is 1.66%.
Yes, but i guess it depends on how large that taxable account ends up being.
Even with a $2M taxable account, that is about $32k of dividends.
Take another $70k from taxable accounts generating $30k of capital gains.

You end up with $100k of spendable dollars, withing the ACA subsidy range, and probably no federal income taxes due.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Post Reply