Second Opinion(s) on Financial Situation Married Couple 55 years old.

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mtwhmemn
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Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Tue Jul 03, 2018 3:09 pm

Edited Aug. 5, 2018

Looking for more Constructive Criticism on Financial Situation.

(I've edited this post to reflect recent changes to portfolio with help from "free" Vanguard advisory services just completed and executed last week. Input reflects better bond allocation for withdrawals in retirement and placement of Total International Stock Fund in ROTHs to let that money grow for use after decades pass to allow it to grow and be used when RMDs are higher to minimize taxes in a few decades - at least that is how I understand it.)

Emergency fund / cash / liquid: $30K in Checking Accounts and Accounts Receivable from my business.

Debt: $190,000 owed on home at 3.125% (~ 5 years left on 10 year adjustable rate mortgage). House would sell for around $270,000 today - otherwise no other debt. May sell current home in 5 years / thinking about renting somewhere to live in retirement in another city. Don't know.

Tax Filing Status: Married Filing Jointly

Neither of us has a pension from an employer.

Tax Rate: Marginal Tax Rate 25%, Effective Fed Tax Rate from 2017 Tax Return 15% Federal, 5.49%% State

State of Residence: NC

Age: 55 (both of us)

Asset allocation of Sheltered + Taxable Retirement Portfolio: ~50% stocks / ~50% bonds

(International allocation: 20% of stocks)

Detailed sub-allocation below.

Current total portfolio: $1.915 million

Current retirement assets:

Taxable:

$70,000 Vanguard Total Stock Market Admiral Shares

Sheltered:

My SEP:
$133K Vanguard Total Bond Market Index Fund Admiral Shares
$34K Vanguard Total Stock Market Index Fund Admiral Shares

My ROTH
$125K Vanguard Total International Stock Index Fund Admiral Shares

My SIMPLE
$177K Vanguard Intermediate-Term Investment-Grade Fund Investor Shares
$82K Vanguard Total International Stock Index Fund Investor Shares
$169K Vanguard Total Stock Market Index Fund Investor Shares

Wife’s 403b
$234K Vanguard 2020 Target Retirement Fund (Thinking about moving this to Vanguard Target Retirement 2025 at beginning of 2019 when I can make a change because glide path gets too conservative in coming years and then rollover in ~3 years to match rest of allocation on retirement...sounds like simplest short term fix to me???).

Wife's ROTH
$129K Vanguard Total International Stock Index Fund Admiral Shares

Wife’s Rollover
$118K Vanguard Short-Term Investment-Grade Fund Admiral Shares
$161K Vanguard Total Bond Market Index Fund Admiral Shares

Wife's Inherited IRA
$224K Vanguard Total Stock Market Index Fund Admiral Shares

Wife's SIMPLE
$252 Vanguard Total International Bond Index Fund Investor Shares
$4K Vanguard Total Stock Market Index Fund Investor Shares

New 50/50 Portfolio from recent "free" Vangaurd Advisor:

Vanguard Total Stock Market Index Fund 30.00%
Vanguard Total International Stock Index Fun 20.00%
--------------------------------------------------------------------------
Vanguard Intermediate-Term Investment-Grade Fund 10.50%
Vanguard Total Bond Market Index Fund 17.50%
Vanguard Total International Bond Index Fund 15.00%
Vanguard Short-Term Investment-Grade Fund 7.00%

Currently contributing:
$24,500 wife’s 403b (7.5% employer matching contributions around $1800/year)
***Vanguard advised to stop contributing to 403B ASAP (fund only up to company match "free" money and no more) and just invest in taxable account. Same for me - whatever I can spare instead of continuing to invest $15,500 in my SIMPLE. I own the company and I can do a match but since it is my money don't know if it makes sense to continue???

Will continue to to Roths...
$6500 for me in Roth IRA as long as we are working...does this sound right or just invest in taxable???
$6500 in wife’s Roth IRA as long as we are working...does this sound right or just invest in taxable???

My SS benefit at 70 =$2,184 a month
Wife's SS benefit at 70 = $2,760 a month

My wife works at a University, grosses around $60K.

I’m self employed (S Corp) and net about $100,000, but my fluctuates for better or worse - feeling pretty pessimistic and “pre-retired” right now because of business is slowing down fast, hence this financial analysis, ha! My business isn't sale-able. I am the business. The value is only in equipment which would sell for maybe $30,000 on a good day.

I have a Term Life Policy on myselt, $1 million that’ll “expire” when I’m 63ish. Don’t know why I need this but it cheap so it’d be helpful to wife if I croak in the next 10 years. My wife only has Life Insurance her work “gives” her which is $50,000 or so I think?

We have an Umbrella policy, $1 million.

We have fairly high limits of liability on our cars - both are ~ 3 years old, paid for and in good shape.

I have an income replacement policy that’d pay me $1500/month after 90 day waiting period - cheap policy I got in my early 30s costs ~ $500/year. Don't know when I should stop paying this maybe in the next few years as income goes down because I'd guess they base payout on past income???

My wife has good health insurance with a the University that employs her and I’m on that policy at a good rate. Eye and Dental too.

Our only child graduated college last year and moved out with a good job and no debt. He’s on his own now.

Very high FICO 850 or so.

Our home is only around 15 years old, low maintenance and in very good shape. $1225/month included insurance and taxes.

HELOC for $30K never used it.

We have Wills & Living Wills.

My wife has lost both her parents, but both of mine in their 80s are doing really well and living at home. They have long term health care insurance.. My sibling and I share the possibility of going out of state to help out when time comes, but we will also share in the proceeds of the estate which won’t likely be more than a few hundred thousand. Not really looking for anything there - don't really want to think about that.

Goal is to retire and maintain similar lifestyle ASAP for me and 58 for wife with health insurance. Continue to travel occasionally, etc…. Both of us are in good health.

Right now expenses are $75,000/year but we are in the process of lowering unnecessary expenses. Not much hope of long term success in getting it down more than 5% or so, ha! Just being realistic here.

That’s all I can think of.

Reason for reviving thread:

Further tweaking / advise on what to change / improve because it appears I’m “becoming” retired over the next couple years. I want my wife to quit or just do what she wants at ~ 58. She’s happy to work as long as sensible if her current employer will “have her”. I want to start to enjoy life more, travel more, etc... I realize we benefit greatly from her insurance and, of course, the income. I've read here that if we keep our income under 4 times poverty level our out of pocket for good health care on the exchange is reasonable and fits our budget - this is hard to get a handle on. i-orp.com says $93K disposable income which sounds pretty good to me I guess I'm in shock all this is really coming together, but still concerned about unknowns e.g. healthcare expense and if we really will get the Social Security money. Thinking about long term health care insurance too.

Any input is appreciated. Thanks.
Last edited by mtwhmemn on Sun Aug 05, 2018 2:55 pm, edited 9 times in total.

bloom2708
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Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by bloom2708 » Tue Jul 03, 2018 8:27 pm

If you are worried about the near-term market, maybe 60-40 is too much stocks.

You have done well and don't need to take the risk if you can't sleep well at night at your current mix.

Consider a move to 50-50. Maybe trim 10% off your International allocation (to 30%). Just some ideas.

What are your annual expenses? Can you live off your wife's income and some part-time?

Now is a good time to start running some firecalc, closely tracking your expenses (really know what you spend) Personal Capital? and getting to an asset allocation you can live with 50/50 to 60/40 seems reasonable, but 50/50 might be a better spot at this point nearing retirement.

Spending time here and reading threads, asking questions will help you feel better about your scenario.

Timing the market doesn't work, but taking the appropriate risk for your situation does. Welcome!
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TheAncientOne
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Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by TheAncientOne » Tue Jul 03, 2018 8:46 pm

You're doing fine. Any suggestions would just be at the margin. If your wife enjoys her job, the insurance you get through it is extremely valuable. If she's ready to pack it in, however, the two of you have the option of living off what you've saved and invested. Given your low tax rate, I'd have both of you doing Roth IRAs for the duration of your working career.

livesoft
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Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by livesoft » Tue Jul 03, 2018 9:01 pm

I think you are doing more than fine. You may well ask, "Is that all there is to it?" and the answer is, "Yep, that's all there is."
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delamer
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Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by delamer » Tue Jul 03, 2018 9:14 pm

The issue is how your expenses compare to your income, both in the near future and in the long run.

We have a pretty good idea of your income for the immediate future.

But knowing your mortgage payment only gives us a limited idea of your expenses.

Health insurance is a huge issue for pre-Medicare retirees. If your wife retired, could she continue to get insurance?

For the longer run, do you have an estimate of your Social Security benefits?

livesoft
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Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by livesoft » Tue Jul 03, 2018 9:41 pm

delamer wrote:
Tue Jul 03, 2018 9:14 pm
But knowing your mortgage payment only gives us a limited idea of your expenses.
We can make an educated guess that expenses allow them to save 15.5K + 13K + ~24K or more than $52K into retirement plans every year on income of $135K.
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delamer
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Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by delamer » Tue Jul 03, 2018 9:50 pm

livesoft wrote:
Tue Jul 03, 2018 9:41 pm
delamer wrote:
Tue Jul 03, 2018 9:14 pm
But knowing your mortgage payment only gives us a limited idea of your expenses.
We can make an educated guess that expenses allow them to save 15.5K + 13K + ~24K or more than $52K into retirement plans every year on income of $135K.
Fair enough.

But he should make retirement decisions based on more than educated guesses (or at least they should be his guesses, not ours). And he does not even know his state tax rate.

megabad
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Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by megabad » Tue Jul 03, 2018 10:15 pm

mtwhmemn wrote:
Tue Jul 03, 2018 3:09 pm
1. Advise on what to change and improve because it appears I’m “becoming” retired over the next couple years. I want my wife to quit when it is logical, although she’s happy to work as long as sensible if her current employer will “have her”. I realize we benefit greatly from her insurance and, of course, the income.

You look to be in pretty good shape in my opinion and you are already thinking about health insurance which is good. If she is not eligible for retiree healthcare benefits (would double check since she works for university), than the cheap side of me wants to push her to work until Medicare eligibility, but I understand that this may not happen (by choice or by other means). So just be ready for that expense.

2. Glide path of Vanguard 2020 feels too conservative. but I’ve lost a lot of tolerance for downturns and I forecasted my income downturn years ago when I went all “Vanguard 2020”. Timing wasn't the best, but I sleep at night. I’ve become way more conservative in the past few years, especially with my business slowing down.

Of course only you and your wife can determine the right allocation for you. 2020 is about 50/50 as I recall now which isn't too far off from where I would be but maybe slightly conservative. I would shift to a lifestrategy fund soon to avoid the autodrop into target retirement income fund (too convervative for you in my opinion). I might just drop it all into moderate growth (after rollover). If your 403b account has a good stable value (or the good version of TIAA traditional) I might keep some there especially if you are market averse.

3. Thanks.
Only other things I would add is just to be ready for a big increase in the mortgage rate if you stick with your ARM. Nothing wrong with it, just reminding you to plan accordingly (which I am sure you have).

Would start planning your roth conversion strategy as well given your long time horizon until 70. I think you could be close to getting yourself into 12% bracket in retirement with some conversions. Otherwise you might be over with SS and RMDs (not sure and depends on future tax policy and market performance).

smitcat
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Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by smitcat » Wed Jul 04, 2018 6:58 am

You do not mention if either of you have any pension benefits.
Have you assessed your current SS estimated benefits for both of you?
Have you tried to run any of the calculators such as IORP , RPM, or others?

livesoft
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Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by livesoft » Wed Jul 04, 2018 7:03 am

The OP is close to this demographic in the ZERO taxes thread:

viewtopic.php?t=87471
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carolinaman
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Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by carolinaman » Wed Jul 04, 2018 8:13 am

delamer wrote:
Tue Jul 03, 2018 9:50 pm
livesoft wrote:
Tue Jul 03, 2018 9:41 pm
delamer wrote:
Tue Jul 03, 2018 9:14 pm
But knowing your mortgage payment only gives us a limited idea of your expenses.
We can make an educated guess that expenses allow them to save 15.5K + 13K + ~24K or more than $52K into retirement plans every year on income of $135K.
Fair enough.

But he should make retirement decisions based on more than educated guesses (or at least they should be his guesses, not ours). And he does not even know his state tax rate.
NC has a flat tax rate of 5.49% with very few exclusions. SS income is not taxed but pensions are.

mtwhmemn
Posts: 23
Joined: Tue Jul 03, 2018 12:07 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Wed Jul 04, 2018 8:42 am

bloom2708 wrote:
Tue Jul 03, 2018 8:27 pm
If you are worried about the near-term market, maybe 60-40 is too much stocks.

You have done well and don't need to take the risk if you can't sleep well at night at your current mix.

Consider a move to 50-50. Maybe trim 10% off your International allocation (to 30%). Just some ideas.

What are your annual expenses? Can you live off your wife's income and some part-time?

Now is a good time to start running some firecalc, closely tracking your expenses (really know what you spend) Personal Capital? and getting to an asset allocation you can live with 50/50 to 60/40 seems reasonable, but 50/50 might be a better spot at this point nearing retirement.

Spending time here and reading threads, asking questions will help you feel better about your scenario.

Timing the market doesn't work, but taking the appropriate risk for your situation does. Welcome!
Thanks for your input. All this discussion will allow me to sleep better. Back to the comments...

I was in error on my current asset allocation. (The fund is on a slow glide path as I'm sure all are aware.) Currently Vanguard Target Retirement 2020 Fund is ~ 54% stocks (21% international) / ~46% bonds.

I haven't created an exact budget/expenses. Every time I try to do that it makes me crazy and I abandon the project. We can live off my wife's income and my current business, no problem. Thanks for the ideas...firecalc, etc...I'll get on it. I'm already enjoying this forum more now that I've made the plunge into "contributing". I've been a lurker for years under a different and unretrievable user name, but not as dedicated as I should have been.

I don't want to attempt timing and I know that doesn't work hence the 2020 fund I moved everything to a few years ago! It felt really good to get down to one fund having had things spread out over 6-8 or so.

mtwhmemn
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Joined: Tue Jul 03, 2018 12:07 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Wed Jul 04, 2018 8:45 am

TheAncientOne wrote:
Tue Jul 03, 2018 8:46 pm
You're doing fine. Any suggestions would just be at the margin. If your wife enjoys her job, the insurance you get through it is extremely valuable. If she's ready to pack it in, however, the two of you have the option of living off what you've saved and invested. Given your low tax rate, I'd have both of you doing Roth IRAs for the duration of your working career.
Thanks for the input. I agree about the Roths!

mtwhmemn
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Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Wed Jul 04, 2018 8:46 am

livesoft wrote:
Tue Jul 03, 2018 9:01 pm
I think you are doing more than fine. You may well ask, "Is that all there is to it?" and the answer is, "Yep, that's all there is."
Thanks. Always room for improvement?

mtwhmemn
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Joined: Tue Jul 03, 2018 12:07 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Wed Jul 04, 2018 8:56 am

delamer wrote:
Tue Jul 03, 2018 9:14 pm
The issue is how your expenses compare to your income, both in the near future and in the long run.

We have a pretty good idea of your income for the immediate future.

But knowing your mortgage payment only gives us a limited idea of your expenses.

Health insurance is a huge issue for pre-Medicare retirees. If your wife retired, could she continue to get insurance?

For the longer run, do you have an estimate of your Social Security benefits?
I will work on an estimate of our expenses even if it kills me, at least come up with a good guesstimate.

I will find out about my wife and if health insurance is portable. I think not except for Cobra.

Great question about Social Security benefits. I will add this to original post. Mine is estimated at Estimated Benefit at Full
Retirement age (67) $1760/month & at (70) $2150 and my wife's

(Soc. Sec. disability is estimated at $1,888 a month for me.)

I can't seem to log in to my wife's SS benefits right now, but it is somewhere around the same as mine I think.

mtwhmemn
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Joined: Tue Jul 03, 2018 12:07 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Wed Jul 04, 2018 8:58 am

livesoft wrote:
Tue Jul 03, 2018 9:41 pm
delamer wrote:
Tue Jul 03, 2018 9:14 pm
But knowing your mortgage payment only gives us a limited idea of your expenses.
We can make an educated guess that expenses allow them to save 15.5K + 13K + ~24K or more than $52K into retirement plans every year on income of $135K.
Great, I don't have to do that budget//calculate expenses now!

mtwhmemn
Posts: 23
Joined: Tue Jul 03, 2018 12:07 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Wed Jul 04, 2018 8:59 am

delamer wrote:
Tue Jul 03, 2018 9:50 pm
livesoft wrote:
Tue Jul 03, 2018 9:41 pm
delamer wrote:
Tue Jul 03, 2018 9:14 pm
But knowing your mortgage payment only gives us a limited idea of your expenses.
We can make an educated guess that expenses allow them to save 15.5K + 13K + ~24K or more than $52K into retirement plans every year on income of $135K.
Fair enough.

But he should make retirement decisions based on more than educated guesses (or at least they should be his guesses, not ours). And he does not even know his state tax rate.
Agreed.

mtwhmemn
Posts: 23
Joined: Tue Jul 03, 2018 12:07 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Wed Jul 04, 2018 9:00 am

carolinaman wrote:
Wed Jul 04, 2018 8:13 am
delamer wrote:
Tue Jul 03, 2018 9:50 pm
livesoft wrote:
Tue Jul 03, 2018 9:41 pm
delamer wrote:
Tue Jul 03, 2018 9:14 pm
But knowing your mortgage payment only gives us a limited idea of your expenses.
We can make an educated guess that expenses allow them to save 15.5K + 13K + ~24K or more than $52K into retirement plans every year on income of $135K.
Fair enough.

But he should make retirement decisions based on more than educated guesses (or at least they should be his guesses, not ours). And he does not even know his state tax rate.
NC has a flat tax rate of 5.49% with very few exclusions. SS income is not taxed but pensions are.
Thanks. I'll edit original post to reflect 5.49%.

livesoft
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Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by livesoft » Wed Jul 04, 2018 10:02 am

mtwhmemn wrote:
Wed Jul 04, 2018 8:58 am
Great, I don't have to do that budget//calculate expenses now!
And if neither of you work, then you will not be paying FICA / medicare taxes which are not a small chunk of your current budget. Your health care expenses may go up once you all stop using health insurance from employer.
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Dandy
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Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by Dandy » Wed Jul 04, 2018 11:04 am

Maybe I missed it but didn't see anything about health insurance after retirement but before Medicare. Can be very expensive

If you have dental insurance make sure to get anything expensive done before retirement. Hard to get good coverage once you leave an employee (wife/s?) group coverage.

You might be selling the house in 5 years or so. How much will you net? Have you figured that into your retirement assets?

You might look into having the lower earning spouse collect SS at 62 or earlier than 70 to see if that income plan looks better.

You seem to be in good shape but a lot depends on your retirement expense run rate vs your retirement income and asset withdrawal rate, which hopefully be a bit less than 4% .

delamer
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Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by delamer » Wed Jul 04, 2018 11:15 am

mtwhmemn wrote:
Wed Jul 04, 2018 8:56 am
delamer wrote:
Tue Jul 03, 2018 9:14 pm
The issue is how your expenses compare to your income, both in the near future and in the long run.

We have a pretty good idea of your income for the immediate future.

But knowing your mortgage payment only gives us a limited idea of your expenses.

Health insurance is a huge issue for pre-Medicare retirees. If your wife retired, could she continue to get insurance?

For the longer run, do you have an estimate of your Social Security benefits?
I will work on an estimate of our expenses even if it kills me, at least come up with a good guesstimate.

I will find out about my wife and if health insurance is portable. I think not except for Cobra.

Great question about Social Security benefits. I will add this to original post. Mine is estimated at Estimated Benefit at Full
Retirement age (67) $1760/month & at (70) $2150 and my wife's

(Soc. Sec. disability is estimated at $1,888 a month for me.)

I can't seem to log in to my wife's SS benefits right now, but it is somewhere around the same as mine I think.

Well, I hope it does not come to that — in terms of the effect of doing the expenses’ estimate is concerned. It would kind of defeat the purpose. :o

You’ll basically have two retirements, in terms of finances. One is pre-Medicare, pre-Social Security. The other is with Medicare and SS. In the first, you’ll be living off your assets and any salary, plus paying for health insurance (which could be expensive. In the second, you’ll be living off of your assets and Social Security, plus paying for Medicare.

mtwhmemn
Posts: 23
Joined: Tue Jul 03, 2018 12:07 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Wed Jul 04, 2018 3:20 pm

megabad wrote:
Tue Jul 03, 2018 10:15 pm
mtwhmemn wrote:
Tue Jul 03, 2018 3:09 pm
1. Advise on what to change and improve because it appears I’m “becoming” retired over the next couple years. I want my wife to quit when it is logical, although she’s happy to work as long as sensible if her current employer will “have her”. I realize we benefit greatly from her insurance and, of course, the income.

You look to be in pretty good shape in my opinion and you are already thinking about health insurance which is good. If she is not eligible for retiree healthcare benefits (would double check since she works for university), than the cheap side of me wants to push her to work until Medicare eligibility, but I understand that this may not happen (by choice or by other means). So just be ready for that expense.

2. Glide path of Vanguard 2020 feels too conservative. but I’ve lost a lot of tolerance for downturns and I forecasted my income downturn years ago when I went all “Vanguard 2020”. Timing wasn't the best, but I sleep at night. I’ve become way more conservative in the past few years, especially with my business slowing down.

Of course only you and your wife can determine the right allocation for you. 2020 is about 50/50 as I recall now which isn't too far off from where I would be but maybe slightly conservative. I would shift to a lifestrategy fund soon to avoid the autodrop into target retirement income fund (too convervative for you in my opinion). I might just drop it all into moderate growth (after rollover). If your 403b account has a good stable value (or the good version of TIAA traditional) I might keep some there especially if you are market averse.

3. Thanks.
Only other things I would add is just to be ready for a big increase in the mortgage rate if you stick with your ARM. Nothing wrong with it, just reminding you to plan accordingly (which I am sure you have).


Would start planning your roth conversion strategy as well given your long time horizon until 70. I think you could be close to getting yourself into 12% bracket in retirement with some conversions. Otherwise you might be over with SS and RMDs (not sure and depends on future tax policy and market performance).
A lot to think about here. Lifestrategy Moderate may be in my future, makes a lot of sense and I do want to avoid "autodrop". My wife is not eligible for retiree healthcare benefits until she's 62 in ~ 7 years. I don't want her to work that long and will do whatever I can to pay for healthcare on the exchange at a low rate by using cash and Roth money to keep income low and cost down. Roth conversion is something I will look into. Many thanks.

mtwhmemn
Posts: 23
Joined: Tue Jul 03, 2018 12:07 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Fri Jul 06, 2018 8:39 am

Dandy wrote:
Wed Jul 04, 2018 11:04 am
Maybe I missed it but didn't see anything about health insurance after retirement but before Medicare. Can be very expensive

If you have dental insurance make sure to get anything expensive done before retirement. Hard to get good coverage once you leave an employee (wife/s?) group coverage.

You might be selling the house in 5 years or so. How much will you net? Have you figured that into your retirement assets?

You might look into having the lower earning spouse collect SS at 62 or earlier than 70 to see if that income plan looks better.

You seem to be in good shape but a lot depends on your retirement expense run rate vs your retirement income and asset withdrawal rate, which hopefully be a bit less than 4% .
We will have to get our own health insurance when my wife leaves her job. We'll get around $100,000 out of our house sale in 5 years is my best guess. No, I haven't included that in our retirement fund. I just think of that money as rent money for the future or a down payment on something else in some other city. Collecting SS at different times may make sense! About health insurance...won't it be really, really cheap if we don't show much of any income and live off cash/ROTH money or am I missing something?

mtwhmemn
Posts: 23
Joined: Tue Jul 03, 2018 12:07 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Fri Jul 06, 2018 8:40 am

delamer wrote:
Wed Jul 04, 2018 11:15 am
mtwhmemn wrote:
Wed Jul 04, 2018 8:56 am
delamer wrote:
Tue Jul 03, 2018 9:14 pm
The issue is how your expenses compare to your income, both in the near future and in the long run.

We have a pretty good idea of your income for the immediate future.

But knowing your mortgage payment only gives us a limited idea of your expenses.

Health insurance is a huge issue for pre-Medicare retirees. If your wife retired, could she continue to get insurance?

For the longer run, do you have an estimate of your Social Security benefits?
I will work on an estimate of our expenses even if it kills me, at least come up with a good guesstimate.

I will find out about my wife and if health insurance is portable. I think not except for Cobra.

Great question about Social Security benefits. I will add this to original post. Mine is estimated at Estimated Benefit at Full
Retirement age (67) $1760/month & at (70) $2150 and my wife's

(Soc. Sec. disability is estimated at $1,888 a month for me.)

I can't seem to log in to my wife's SS benefits right now, but it is somewhere around the same as mine I think.

Well, I hope it does not come to that — in terms of the effect of doing the expenses’ estimate is concerned. It would kind of defeat the purpose. :o

You’ll basically have two retirements, in terms of finances. One is pre-Medicare, pre-Social Security. The other is with Medicare and SS. In the first, you’ll be living off your assets and any salary, plus paying for health insurance (which could be expensive. In the second, you’ll be living off of your assets and Social Security, plus paying for Medicare.
About health insurance...won't it be really, really cheap if we don't show much of any income and live off cash/ROTH money or am I missing something?

delamer
Posts: 5802
Joined: Tue Feb 08, 2011 6:13 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by delamer » Fri Jul 06, 2018 11:07 am

mtwhmemn wrote:
Fri Jul 06, 2018 8:40 am
delamer wrote:
Wed Jul 04, 2018 11:15 am
mtwhmemn wrote:
Wed Jul 04, 2018 8:56 am
delamer wrote:
Tue Jul 03, 2018 9:14 pm
The issue is how your expenses compare to your income, both in the near future and in the long run.

We have a pretty good idea of your income for the immediate future.

But knowing your mortgage payment only gives us a limited idea of your expenses.

Health insurance is a huge issue for pre-Medicare retirees. If your wife retired, could she continue to get insurance?

For the longer run, do you have an estimate of your Social Security benefits?
I will work on an estimate of our expenses even if it kills me, at least come up with a good guesstimate.

I will find out about my wife and if health insurance is portable. I think not except for Cobra.

Great question about Social Security benefits. I will add this to original post. Mine is estimated at Estimated Benefit at Full
Retirement age (67) $1760/month & at (70) $2150 and my wife's

(Soc. Sec. disability is estimated at $1,888 a month for me.)

I can't seem to log in to my wife's SS benefits right now, but it is somewhere around the same as mine I think.

Well, I hope it does not come to that — in terms of the effect of doing the expenses’ estimate is concerned. It would kind of defeat the purpose. :o

You’ll basically have two retirements, in terms of finances. One is pre-Medicare, pre-Social Security. The other is with Medicare and SS. In the first, you’ll be living off your assets and any salary, plus paying for health insurance (which could be expensive. In the second, you’ll be living off of your assets and Social Security, plus paying for Medicare.
About health insurance...won't it be really, really cheap if we don't show much of any income and live off cash/ROTH money or am I missing something?

I assume that you are talking about getting subsidized premiums through the ObamaCare exchange?

The only way to find out is to input your income and other information into your state’s site.

Scrapr
Posts: 148
Joined: Sun May 09, 2010 9:19 am

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by Scrapr » Fri Jul 06, 2018 11:36 am

mtwhmemn wrote:
Wed Jul 04, 2018 8:58 am
livesoft wrote:
Tue Jul 03, 2018 9:41 pm
delamer wrote:
Tue Jul 03, 2018 9:14 pm
But knowing your mortgage payment only gives us a limited idea of your expenses.
We can make an educated guess that expenses allow them to save 15.5K + 13K + ~24K or more than $52K into retirement plans every year on income of $135K.
Great, I don't have to do that budget//calculate expenses now!
you may want to try Mint to track your expenses. I started at the first of the year and it's helpful. But I mix in some business expenses (Visa card) so have to back that out. I don't put our Vanguard stuff in there though. Because it's NOTB.

Otherwise I look at gross then back out savings and one time events to get to our spending

mtwhmemn
Posts: 23
Joined: Tue Jul 03, 2018 12:07 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Fri Jul 06, 2018 4:15 pm

Scrapr wrote:
Fri Jul 06, 2018 11:36 am
mtwhmemn wrote:
Wed Jul 04, 2018 8:58 am
livesoft wrote:
Tue Jul 03, 2018 9:41 pm
delamer wrote:
Tue Jul 03, 2018 9:14 pm
But knowing your mortgage payment only gives us a limited idea of your expenses.
We can make an educated guess that expenses allow them to save 15.5K + 13K + ~24K or more than $52K into retirement plans every year on income of $135K.
Great, I don't have to do that budget//calculate expenses now!
you may want to try Mint to track your expenses. I started at the first of the year and it's helpful. But I mix in some business expenses (Visa card) so have to back that out. I don't put our Vanguard stuff in there though. Because it's NOTB.

Otherwise I look at gross then back out savings and one time events to get to our spending
You mean you look at net/take home, back out savings and one time stuff, right?

delamer
Posts: 5802
Joined: Tue Feb 08, 2011 6:13 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by delamer » Fri Jul 06, 2018 4:21 pm

mtwhmemn wrote:
Fri Jul 06, 2018 4:15 pm
Scrapr wrote:
Fri Jul 06, 2018 11:36 am
mtwhmemn wrote:
Wed Jul 04, 2018 8:58 am
livesoft wrote:
Tue Jul 03, 2018 9:41 pm
delamer wrote:
Tue Jul 03, 2018 9:14 pm
But knowing your mortgage payment only gives us a limited idea of your expenses.
We can make an educated guess that expenses allow them to save 15.5K + 13K + ~24K or more than $52K into retirement plans every year on income of $135K.
Great, I don't have to do that budget//calculate expenses now!
you may want to try Mint to track your expenses. I started at the first of the year and it's helpful. But I mix in some business expenses (Visa card) so have to back that out. I don't put our Vanguard stuff in there though. Because it's NOTB.

Otherwise I look at gross then back out savings and one time events to get to our spending
You mean you look at net/take home, back out savings and one time stuff, right?
Gross income minus income taxes minus payroll taxes minus savings equals current expenses.

Once you have current expenses, add an estimate of income taxes in retirement. Subtract any expenses that will disappear in retirement — like commuting costs. Add any new expenses — like travel costs.

Scrapr
Posts: 148
Joined: Sun May 09, 2010 9:19 am

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by Scrapr » Fri Jul 06, 2018 9:22 pm

delamer wrote:
Fri Jul 06, 2018 4:21 pm
mtwhmemn wrote:
Fri Jul 06, 2018 4:15 pm
Scrapr wrote:
Fri Jul 06, 2018 11:36 am
mtwhmemn wrote:
Wed Jul 04, 2018 8:58 am
livesoft wrote:
Tue Jul 03, 2018 9:41 pm

We can make an educated guess that expenses allow them to save 15.5K + 13K + ~24K or more than $52K into retirement plans every year on income of $135K.
Great, I don't have to do that budget//calculate expenses now!
you may want to try Mint to track your expenses. I started at the first of the year and it's helpful. But I mix in some business expenses (Visa card) so have to back that out. I don't put our Vanguard stuff in there though. Because it's NOTB.

Otherwise I look at gross then back out savings and one time events to get to our spending
You mean you look at net/take home, back out savings and one time stuff, right?
Gross income minus income taxes minus payroll taxes minus savings equals current expenses.

Once you have current expenses, add an estimate of income taxes in retirement. Subtract any expenses that will disappear in retirement — like commuting costs. Add any new expenses — like travel costs.
yup. I'm a very simple (minded) guy.

mtwhmemn
Posts: 23
Joined: Tue Jul 03, 2018 12:07 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Tue Jul 10, 2018 3:03 pm

Thanks to all that have contributed to this thread. I have arrived at a number I feel pretty good about as to what we spend per year and I put that in the original post. I also incorporated a lot of things everyone asked for so the original post should be much complete & better to make an analysis of my situation. I ask that all please read the original post again with the new information and give me your thoughts. Thanks!

delamer
Posts: 5802
Joined: Tue Feb 08, 2011 6:13 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by delamer » Tue Jul 10, 2018 3:26 pm

The 10 year adjustable rate mortgage — does the interest rate reset in 5 years or will the loan be paid off in 5 years? If the answer is paid off, do you take into account that reduced expense?

It seems that you are in decent shape given your desired level of spending in full retirement. However, the health insurance through your wife’s job is important. Assuming that it is pretty highly subsidized by the university, it keeps your other expenses doable. If she stops working and loses the subsidy, your premiums will jump — and you may not get coverage that is as good — until you are Medicare eligible.

That would be the biggest obstacle to you both retiring today. If your wife is willing/able to work until 60, then you will be in good shape even with 5 years of health insurance premiums to pay for.

Try entering your data here: https://www.i-orp.com/GuarInc/index.html

I recommend the “extended” version.

EDIT: Earlier you mentioned subsidized premiums through ObamaCare. But if you need $80,000 or so in income for expenses, it is going to be a challenge to keep your withdrawals low enough for subsidies. Maybe you could do so by making use of the Roths first, as you mentioned.

mtwhmemn
Posts: 23
Joined: Tue Jul 03, 2018 12:07 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Tue Jul 10, 2018 3:55 pm

delamer wrote:
Tue Jul 10, 2018 3:26 pm
The 10 year adjustable rate mortgage — does the interest rate reset in 5 years or will the loan be paid off in 5 years? If the answer is paid off, do you take into account that reduced expense?

It seems that you are in decent shape given your desired level of spending in full retirement. However, the health insurance through your wife’s job is important. Assuming that it is pretty highly subsidized by the university, it keeps your other expenses doable. If she stops working and loses the subsidy, your premiums will jump — and you may not get coverage that is as good — until you are Medicare eligible.

That would be the biggest obstacle to you both retiring today. If your wife is willing/able to work until 60, then you will be in good shape even with 5 years of health insurance premiums to pay for.

Try entering your data here: https://www.i-orp.com/GuarInc/index.html

I recommend the “extended” version.

EDIT: Earlier you mentioned subsidized premiums through ObamaCare. But if you need $80,000 or so in income for expenses, it is going to be a challenge to keep your withdrawals low enough for subsidies. Maybe you could do so by making use of the Roths first, as you mentioned.
The mortgage is a 10 year ARM that could go up 2% in 5 years. I think we'll move by then. Maybe rent. I really don't know. I did the ARM to save a little money on the loan plus the fact we've had mortgages since 1988 and never had one for 10+ years. Maybe it was a mistake but it is done now. Balance will be around $165,000 in 5 years if I don't pre-pay.

I'm hoping to get the annual expense down to around $65 or so. I'll look at your other suggestions and circle back. Thanks.

mtwhmemn
Posts: 23
Joined: Tue Jul 03, 2018 12:07 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Tue Jul 10, 2018 4:23 pm

I did the i-orp, not the extended because I don't have enough info right now (or enough understanding - need to study it) and just put retirement as of today and it came out $80K after taxes. Sounds too good to be true.

victw
Posts: 71
Joined: Sat Feb 20, 2016 4:07 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by victw » Tue Jul 10, 2018 6:01 pm

I wasn't clear whether you estimated the SS based on the website which assumes you will be working until FRA or if you downloaded the calculator and figured out your PIA. Two different numbers.

Also the insurance numbers go up as you get older - it's a moving target. Look closely at your sites ACA site.

Vic

delamer
Posts: 5802
Joined: Tue Feb 08, 2011 6:13 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by delamer » Tue Jul 10, 2018 6:08 pm

mtwhmemn wrote:
Tue Jul 10, 2018 4:23 pm
I did the i-orp, not the extended because I don't have enough info right now (or enough understanding - need to study it) and just put retirement as of today and it came out $80K after taxes. Sounds too good to be true.

Based on the information you’ve provided here, that seems reasonable to me.

mtwhmemn
Posts: 23
Joined: Tue Jul 03, 2018 12:07 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Wed Jul 11, 2018 10:03 am

victw wrote:
Tue Jul 10, 2018 6:01 pm
I wasn't clear whether you estimated the SS based on the website which assumes you will be working until FRA or if you downloaded the calculator and figured out your PIA. Two different numbers.

Also the insurance numbers go up as you get older - it's a moving target. Look closely at your sites ACA site.

Vic
I did "SS based on the website which assumes you will be working until FRA", nothing more. I realize I'd get different results. So, I lowered SS benefits by 50% to be safe.

smitcat
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Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by smitcat » Wed Jul 11, 2018 10:46 am

mtwhmemn wrote:
Wed Jul 11, 2018 10:03 am
victw wrote:
Tue Jul 10, 2018 6:01 pm
I wasn't clear whether you estimated the SS based on the website which assumes you will be working until FRA or if you downloaded the calculator and figured out your PIA. Two different numbers.

Also the insurance numbers go up as you get older - it's a moving target. Look closely at your sites ACA site.

Vic
I did "SS based on the website which assumes you will be working until FRA", nothing more. I realize I'd get different results. So, I lowered SS benefits by 50% to be safe.
There is a calculator on the SS.gov website that allows you to put in your data and add zeros to any year(s) that you choose. That would give you a much better view of your SS due in each situation - I do not know if your 50% guess on a $52K per year SS is near correct but why guess if you can get a better number.

mtwhmemn
Posts: 23
Joined: Tue Jul 03, 2018 12:07 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Wed Jul 11, 2018 1:57 pm

smitcat wrote:
Wed Jul 11, 2018 10:46 am
mtwhmemn wrote:
Wed Jul 11, 2018 10:03 am
victw wrote:
Tue Jul 10, 2018 6:01 pm
I wasn't clear whether you estimated the SS based on the website which assumes you will be working until FRA or if you downloaded the calculator and figured out your PIA. Two different numbers.

Also the insurance numbers go up as you get older - it's a moving target. Look closely at your sites ACA site.

Vic
I did "SS based on the website which assumes you will be working until FRA", nothing more. I realize I'd get different results. So, I lowered SS benefits by 50% to be safe.
There is a calculator on the SS.gov website that allows you to put in your data and add zeros to any year(s) that you choose. That would give you a much better view of your SS due in each situation - I do not know if your 50% guess on a $52K per year SS is near correct but why guess if you can get a better number.
I agree on why guess. Just having looked, I'm having trouble finding that specific calculator you speak of. Is it the one with a Windows version and a Mac version you download? I tried the Mac version and it isn't compatible with an up to date Mac. Link?

smitcat
Posts: 1753
Joined: Mon Nov 07, 2016 10:51 am

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by smitcat » Wed Jul 11, 2018 2:31 pm

mtwhmemn wrote:
Wed Jul 11, 2018 1:57 pm
smitcat wrote:
Wed Jul 11, 2018 10:46 am
mtwhmemn wrote:
Wed Jul 11, 2018 10:03 am
victw wrote:
Tue Jul 10, 2018 6:01 pm
I wasn't clear whether you estimated the SS based on the website which assumes you will be working until FRA or if you downloaded the calculator and figured out your PIA. Two different numbers.

Also the insurance numbers go up as you get older - it's a moving target. Look closely at your sites ACA site.

Vic
I did "SS based on the website which assumes you will be working until FRA", nothing more. I realize I'd get different results. So, I lowered SS benefits by 50% to be safe.
There is a calculator on the SS.gov website that allows you to put in your data and add zeros to any year(s) that you choose. That would give you a much better view of your SS due in each situation - I do not know if your 50% guess on a $52K per year SS is near correct but why guess if you can get a better number.
I agree on why guess. Just having looked, I'm having trouble finding that specific calculator you speak of. Is it the one with a Windows version and a Mac version you download? I tried the Mac version and it isn't compatible with an up to date Mac. Link?
This page...
https://www.ssa.gov/planners/calculators/
Click on 'detailed calculator".

Maybe some of their other simpler calculators will be of interest o you as well .....

mtwhmemn
Posts: 23
Joined: Tue Jul 03, 2018 12:07 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Wed Jul 11, 2018 2:50 pm

Thanks!

mtwhmemn
Posts: 23
Joined: Tue Jul 03, 2018 12:07 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Sun Aug 05, 2018 2:54 pm

Reviving this thread as I've made some changes in our portfolio based on all the feedback and help here and from Vanguard's "free" advisory services. Please read original post again as I've changed a lot of the information. It felt great to edit the original post and get our situation out there on page! Thanks for the input. Let me know any other thoughts.

xwords59
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Joined: Sat Aug 04, 2018 9:58 am

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by xwords59 » Sun Aug 05, 2018 4:17 pm

If you are in pretty good health and need to purchase health insurance on your own, I would look at a Direct Primary Care membership coupled with Liberty Healthshare. Much better than any commercial policy. I have been doing this for almost two years and it has worked out well. Obamacare premiums were too much; I had to find a reasonable alternative.

crit
Posts: 426
Joined: Mon Jan 05, 2015 12:54 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by crit » Sun Aug 05, 2018 4:20 pm

Most of your concerns are beyond the scope of my experience, but -- it's not clear to me why your VG advisor advised you to reduce your contributions to the 403b. I think that's worth some discussion here?

mtwhmemn
Posts: 23
Joined: Tue Jul 03, 2018 12:07 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Sun Aug 05, 2018 4:23 pm

xwords59 wrote:
Sun Aug 05, 2018 4:17 pm
If you are in pretty good health and need to purchase health insurance on your own, I would look at a Direct Primary Care membership coupled with Liberty Healthshare. Much better than any commercial policy. I have been doing this for almost two years and it has worked out well. Obamacare premiums were too much; I had to find a reasonable alternative.
Hadn't even considered something other than Obamacare. WIll look into your suggestion when the time comes. Thanks.

mtwhmemn
Posts: 23
Joined: Tue Jul 03, 2018 12:07 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by mtwhmemn » Sun Aug 05, 2018 4:26 pm

crit wrote:
Sun Aug 05, 2018 4:20 pm
Most of your concerns are beyond the scope of my experience, but -- it's not clear to me why your VG advisor advised you to reduce your contributions to the 403b. I think that's worth some discussion here?
I'd like to hear some discussion about it as well. I think the recommendation has to do with accumulating more money in taxable account enabling us to keep MAGI down in early years of retirement.

delamer
Posts: 5802
Joined: Tue Feb 08, 2011 6:13 pm

Re: Second Opinion(s) on Financial Situation Married Couple 55 years old.

Post by delamer » Sun Aug 05, 2018 5:15 pm

mtwhmemn wrote:
Sun Aug 05, 2018 4:23 pm
xwords59 wrote:
Sun Aug 05, 2018 4:17 pm
If you are in pretty good health and need to purchase health insurance on your own, I would look at a Direct Primary Care membership coupled with Liberty Healthshare. Much better than any commercial policy. I have been doing this for almost two years and it has worked out well. Obamacare premiums were too much; I had to find a reasonable alternative.
Hadn't even considered something other than Obamacare. WIll look into your suggestion when the time comes. Thanks.

Liberty Healthshare isn’t health insurance. It is health cost sharing among Christians based on shared beliefs.

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