Can I Retire??

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PH12
Posts: 30
Joined: Tue Jun 17, 2014 7:20 pm

Can I Retire??

Post by PH12 » Tue Mar 13, 2018 8:37 am

Hi all. I’m 56 yrs old and considering taking an early retirement package at work. Not happy in the job, and live too far away from significant other. I’m not sure if financially I’m ready to retire. I’ll be getting a severance package and pension that starts right away. I wouldn’t have to touch my retirement money until age 60yrs. Will be moving in with significant other but not married. We have no kids.

Me:
Retirement saving $990,000 60% stock/40% bonds/fixed income
Pension $17K year
Leaving with employee paid health and dental insurance in retirement
$290,000 savings from sale of house in a CD. Renting now.
$16K emergency fund
No debt
Make $73K. Save 16% in 401K, and $300mo for new car.
Plan to take social security at 70yrs, estimate it at about $23K

Him (65yrs old)
$160K mortgage at 4% on house being renovated. He’s a contractor and doing the work himself. We’ll be aggressive paying the mortgage off when I move in.
Pension $12K year
$25K 401K all stock.
Will take social security this year, about $19K
Still working full time and likes his job, but I don’t want him to have to work.

Could use your wisdom. Thanks!!

21&lewis
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Joined: Sun Nov 06, 2016 8:42 pm

Re: Can I Retire??

Post by 21&lewis » Tue Mar 13, 2018 8:48 am

Hard to tell unless we know your anticipated expenses in retirement

doon
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Re: Can I Retire??

Post by doon » Tue Mar 13, 2018 8:51 am

You did not mention what your expected expenses would be in retirement. Based on the numbers you provided your incoming would be

Your pension 17k + His Pension 12k + his SS 19k = Total 48K.
Assuming 3% withdrawal = 38K

Grand total 86K before tax

Assuming your insurance is taken care of I would say you can do it if you can manage to make mortgage payments and other expenses with the total above.
"Goal - Win the game before the need to retire"

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Watty
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Joined: Wed Oct 10, 2007 3:55 pm

Re: Can I Retire??

Post by Watty » Tue Mar 13, 2018 8:59 am

PH12 wrote:
Tue Mar 13, 2018 8:37 am
We’ll be aggressive paying the mortgage off when I move in.
Be very careful with co-mingling your finances with someone you are not married to. Even if you do get married there is a chance that it may not work out so a prenuptial agreement is a must since your assets are so different.

Do not skimp on having a lawyer draw up the paperwork to do this right.
21&lewis wrote:
Tue Mar 13, 2018 8:48 am
Hard to tell unless we know your anticipated expenses in retirement
+1

When figuring out your expenses don't forget to include income taxes and occasional large expenses like when you need a replacement car or have a large dental bill.

PH12
Posts: 30
Joined: Tue Jun 17, 2014 7:20 pm

Re: Can I Retire??

Post by PH12 » Tue Mar 13, 2018 9:52 am

hi all...I think I would be comfortable on $60K before tax. That's close to what I liven now minus my Roth 401K contributions. $85K a year would be a big raise! I'm a little concerned making this money last and new expenses (medical) in retirement I. Thanks for the comments!

PH12
Posts: 30
Joined: Tue Jun 17, 2014 7:20 pm

Re: Can I Retire??

Post by PH12 » Tue Mar 13, 2018 10:00 am

ps....I think I need $55-$60K from my assets alone. thanks

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Pajamas
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Joined: Sun Jun 03, 2012 6:32 pm

Re: Can I Retire??

Post by Pajamas » Tue Mar 13, 2018 10:07 am

The biggest unpredictable expense for me is definitely health care coverage. Even if you think you know what your up-front costs will be, they could change drastically. Sounds like you have enough of a buffer to handle health care expenses but are right to be concerned about them. It is especially worrisome in your mid-50s because there are so many years ahead, or at least hopefully so.

Carl53
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Joined: Sun Mar 07, 2010 8:26 pm

Re: Can I Retire??

Post by Carl53 » Tue Mar 13, 2018 10:13 am

PH12 wrote:
Tue Mar 13, 2018 8:37 am
Hi all. I’m 56 yrs old and considering taking an early retirement package at work. Not happy in the job, and live too far away from significant other. I’m not sure if financially I’m ready to retire. I’ll be getting a severance package and pension that starts right away. I wouldn’t have to touch my retirement money until age 60yrs. Will be moving in with significant other but not married. We have no kids.

Me:
Retirement saving $990,000 60% stock/40% bonds/fixed income
Pension $17K year
Leaving with employee paid health and dental insurance in retirement
$290,000 savings from sale of house in a CD. Renting now.
$16K emergency fund
No debt
Make $73K. Save 16% in 401K, and $300mo for new car.
Plan to take social security at 70yrs, estimate it at about $23K

Him (65yrs old)
$160K mortgage at 4% on house being renovated. He’s a contractor and doing the work himself. We’ll be aggressive paying the mortgage off when I move in.
Pension $12K year
$25K 401K all stock.
Will take social security this year, about $19K
Still working full time and likes his job, but I don’t want him to have to work.

Could use your wisdom. Thanks!!

So you (employee) are paying the health insurance? Or did you mean employer.

soccerrules
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Joined: Mon Nov 14, 2016 4:01 pm

Re: Can I Retire??

Post by soccerrules » Tue Mar 13, 2018 10:37 am

PH12 wrote:
Tue Mar 13, 2018 10:00 am
ps....I think I need $55-$60K from my assets alone. thanks
at 56 the thought might be SRW of 3.5%
In that case you would need $1.57M ($55K) to $1.71M ($60K)

It looks like you have @ $1.3M - which at 3.5% SWR = $45K
Don't let your outflow exceed your income or your upkeep will be your downfall.

delamer
Posts: 6394
Joined: Tue Feb 08, 2011 6:13 pm

Re: Can I Retire??

Post by delamer » Tue Mar 13, 2018 11:16 am

Your comments on health insurance are a little confusing. Are you eligible for coverage until you get Medicare? How much will you have to pay initially for that coverage? Is the coverage the same as you’ve had as an employee?

Unless you marry your SO, you will get no benefit from his Social Security if he gets run over by a bus tomorrow. However, he could make provisions for you to inherit his assets and maybe get a survivor benefit from his pension, regardless of your marital status.

But in any case, I’d highly recommend that you be able to support yourself solely off your own income and assets, given that you are not currently married and are relocating to be closer to your SO.

Life is uncertain.

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Sandtrap
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Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii😀 Northern AZ.😳 Retired.

Re: Can I Retire??

Post by Sandtrap » Tue Mar 13, 2018 11:56 am

PH12 wrote:
Tue Mar 13, 2018 8:37 am
Hi all. I’m 56 yrs old and considering taking an early retirement package at work. Not happy in the job, and live too far away from significant other. I’m not sure if financially I’m ready to retire. I’ll be getting a severance package and pension that starts right away. I wouldn’t have to touch my retirement money until age 60yrs. Will be moving in with significant other but not married. We have no kids.

Me:
Retirement saving $990,000 60% stock/40% bonds/fixed income
Pension $17K year
Leaving with employee paid health and dental insurance in retirement
$290,000 savings from sale of house in a CD. Renting now.
$16K emergency fund
No debt
Make $73K. Save 16% in 401K, and $300mo for new car.
Plan to take social security at 70yrs, estimate it at about $23K

Him (65yrs old)
$160K mortgage at 4% on house being renovated. He’s a contractor and doing the work himself. We’ll be aggressive paying the mortgage off when I move in.
Pension $12K year
$25K 401K all stock.
Will take social security this year, about $19K
Still working full time and likes his job, but I don’t want him to have to work.

Could use your wisdom. Thanks!!
You can edit your original post in this format:
Asking Portfolio Questions
https://www.bogleheads.org/forum/viewt ... =1&t=6212
It would be "prudent" and "safe" to list the HIS and HERS separately and treat them as different portfolios for now, each in different accounts and names. You will get a better financial review that way, for now.
His annual expenses?
His separate emergency fund?
etc.
Hers annual expenses?
Her separate emergency fund?
etc.
List the funds in each 401k, etc, tickers and fund names and expense ratios.
etc.
This would be if you want comprehensive suggestions.
In actuality, you will be getting 2 portfolio reviews, each one able to stand independently.

Otherwise, just selected questions on limited information as you feel comfortable, but suggestions will not be as comprehensive.

Welcome to the forum. You will get excellent help here based on what you provide.
mahalo,
j

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Watty
Posts: 14584
Joined: Wed Oct 10, 2007 3:55 pm

Re: Can I Retire??

Post by Watty » Tue Mar 13, 2018 12:32 pm

soccerrules wrote:
Tue Mar 13, 2018 10:37 am
PH12 wrote:
Tue Mar 13, 2018 10:00 am
ps....I think I need $55-$60K from my assets alone. thanks
at 56 the thought might be SRW of 3.5%
In that case you would need $1.57M ($55K) to $1.71M ($60K)

It looks like you have @ $1.3M - which at 3.5% SWR = $45K
That does not include her pension or Social Security so that is way off.

It would be mixing the money so she would need to take precautions to protect herself but she could just pay off the mortgage and car loan and that would likely lower the expected monthly expenses.

soccerrules
Posts: 803
Joined: Mon Nov 14, 2016 4:01 pm

Re: Can I Retire??

Post by soccerrules » Tue Mar 13, 2018 2:25 pm

Watty wrote:
Tue Mar 13, 2018 12:32 pm
soccerrules wrote:
Tue Mar 13, 2018 10:37 am
PH12 wrote:
Tue Mar 13, 2018 10:00 am
ps....I think I need $55-$60K from my assets alone. thanks
at 56 the thought might be SRW of 3.5%
In that case you would need $1.57M ($55K) to $1.71M ($60K)

It looks like you have @ $1.3M - which at 3.5% SWR = $45K
That does not include her pension or Social Security so that is way off.

It would be mixing the money so she would need to take precautions to protect herself but she could just pay off the mortgage and car loan and that would likely lower the expected monthly expenses.
Watty- OK
I was just using her " i need X from my assets", somewhat assuming she had done the rest of the math to get to her delta of $55-60K. The information provided was a little incomplete and there were a number of unanswered questions that could change her/their financial picture.
If her all in number is $55-60K then it looks like Pensions and SS will cover that once they get to 70 and some before based on timing of taking pensions and his SS this year.
Don't let your outflow exceed your income or your upkeep will be your downfall.

PH12
Posts: 30
Joined: Tue Jun 17, 2014 7:20 pm

Re: Can I Retire??

Post by PH12 » Tue Mar 13, 2018 3:26 pm

hi, sorry I wasn't clear. I would have EMPLOYER paid health care after I retire. My premium contribution will be about $35mo which is less than I pay now. When I'm medicare eligible I still get coverage called Medicare Advantage.

I want to make sure I have $55k-$60K from my assets alone starting at age 60. That's including my pension and social security but ss won't kick in till age 70. I severance package will tide me over from 56-60. Even if my significant other isn't in the picture I could live on that. thanks!

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Pajamas
Posts: 6015
Joined: Sun Jun 03, 2012 6:32 pm

Re: Can I Retire??

Post by Pajamas » Tue Mar 13, 2018 7:44 pm

PH12 wrote:
Tue Mar 13, 2018 3:26 pm
hi, sorry I wasn't clear. I would have EMPLOYER paid health care after I retire. My premium contribution will be about $35mo which is less than I pay now. When I'm medicare eligible I still get coverage called Medicare Advantage.
Just be aware that retirement benefits can change, especially since you have nine years or so until Medicare eligibility. Both private and government employers have reduced or eliminated retiree health benefits.

MrPotatoHead
Posts: 429
Joined: Sat Oct 14, 2017 10:41 pm

Re: Can I Retire??

Post by MrPotatoHead » Wed Mar 14, 2018 12:21 am

PH12 wrote:
Tue Mar 13, 2018 8:37 am
Hi all. I’m 56 yrs old and considering taking an early retirement package at work. Not happy in the job, and live too far away from significant other.
I would separate the issue, retirement and significant other and evaluate them separately. Of particular concern is the simple fact (and boy do I know this one) that relationships that have a distance/absence factor are seldom the same for both parties once the proximity factor is erased. Combining households is yet another factor that alters the equation. I would be very cautious. I say this as lifelong road warrior who had various meaningful relationships that were altered with periods of proximity.
Make $73K. Save 16% in 401K, and $300mo for new car.
Plan to take social security at 70yrs, estimate it at about $23K
Have you verified your SS assumption? In other words have you taken in account the fact your that early retirement might put some zeros in your 35 year average wage covered basis? As an fyi, your SS statement assumes you continue working.
$160K mortgage at 4% on house being renovated. He’s a contractor and doing the work himself. We’ll be aggressive paying the mortgage off when I move in.
"We'll"??? So you do realize you need a lawyer and a contract? What happens if your contractor guy falls off a roof, breaks his back, and enters a medical bill induced bankruptcy?

I would consider buying my own home and getting a roommate to offset some bills. You can always spend the night, but as mentioned before you might find the relationship is smoother with some periodic breathing space.

But at a minimum, you need a lawyer to separate your assets.

One more point, you should look at your family genetics, since you are looking to retire early and consider that with your withdraw rate.
Last edited by MrPotatoHead on Wed Mar 14, 2018 11:20 pm, edited 1 time in total.

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Watty
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Joined: Wed Oct 10, 2007 3:55 pm

Re: Can I Retire??

Post by Watty » Wed Mar 14, 2018 9:33 am

I looked back at the thread and it looks like you have several decisions that you can make separately which might be less confusing.

They are;

1) Should you take the early retirement package? Probably yes if it is a good one since you don't like your job and you are near retirement anyway.

2) Should you stop working or get another job? You could move and get another job in the new location if you wanted to.

3) Should you get legal advice before moving in with your boyfriend (or getting married)? Yes

4) Should your boyfriend stop working? Probably not since he has virtually no retirement savings and his pension is likely not adjusted for inflation. Since he was a contractor one option would be that he could work as a handyman and do as much or as little as he wants to do and he could probably do that until he is well into his 70's if he wanted to. At least around here a good handyman is hard to find and some of them charge $65 and hour or more when you can find one and I don't live in an expensive area. Working a couple of afternoons a week could add up.

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