Ready for (forced) early retirement?

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Topic Author
nebogle
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Ready for (forced) early retirement?

Post by nebogle » Sun Jun 28, 2020 12:58 pm

Need advice if I'm ready for (forced) early retirement

Age: 53. I work in IT. The last few years have been very unstable and stressful. There could be significant layoffs in my industry in the next few months. I don't mind working in a non-IT job if I can find something post COVID.
Spouse: 48 (non-working)
Adult child who just started working.
Home: Paid off. We live in the North East (HCOL). Property taxes are 15K per year.
Cars: Two - Paid off. No plan to replace for at least 7+ years.
No other Debt.

Assets: 2.8MM (excluding home which is worth 550K).
Portfolio: 35 Equities/35 Bonds/30 Cash (High Yielding CD's/MM accounts). We are very risk averse.
Expenses: 75K per year.
SS: Eligible for 26K per year at 62 (more if I wait till age 65/70). Spouse is not eligible for SS.

Concerns
1. I'm estimating about 25K for ACA for me and spouse. Not sure if the actual cost would be significantly higher.
2. We are not planning to relocate to a LCOL/MCOL area for the next 10 years at least. Property taxes could keep jumping higher in our town.

Am I ready for retirement (forced or otherwise)?

Thanks in advance for all your guidance/support.
Last edited by nebogle on Sun Jun 28, 2020 4:23 pm, edited 2 times in total.

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geerhardusvos
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Re: Ready for (forced) early retirement?

Post by geerhardusvos » Sun Jun 28, 2020 1:05 pm

nebogle wrote:
Sun Jun 28, 2020 12:58 pm
Need advice if I'm ready for (forced) early retirement

Age: 53. I work in IT. The last few years have been very unstable and stressful. There could be significant layoffs in my industry in the next few months. I don't mind working in a non-IT job if I can find something post COVID.
Spouse: 48 (non-working)
Adult child who just started working.
Home: Paid off. We live in the North East (HCOL). Property taxes are 15K per year.

Assets: 2.8MM (excluding home which is worth 550K).
Portfolio: 35 Equities/35 Bonds/30 Cash (High Yielding CD's/MM accounts). We are very risk averse.
Expenses: 75K Net per year.
SS: Eligible for 26K per year at 62 (more if I wait till age 65/70). Spouse is not eligible for SS.

Concerns
1. I'm estimating about 25K for ACA for me and spouse. Not sure if the actual cost would be significantly higher.
2. We are not planning to relocate to a LCOL/MCOL area for the next 10 years at least. Property taxes could keep jumping higher in our town.

Am I ready for retirement (forced or otherwise)?

Thanks in advance for all your guidance/support.
Budget seems reasonably supported indefinitely by your portfolio. Consider increasing equities if you’re willing to support longevity of your portfolio. Nice work! Consider Roth conversions after retirement. ACA expectations look right, check out income subsidy limits for your state. I see no reason for you to have to move. Rest easy!
Last edited by geerhardusvos on Sun Jun 28, 2020 2:42 pm, edited 1 time in total.
VTSAX and chill

nix4me
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Re: Ready for (forced) early retirement?

Post by nix4me » Sun Jun 28, 2020 1:11 pm

Barely due to your AA. Your gonna have to step up your equities in order to sustain the needed 3-4% withdrawal rate. In my opinion.

You can live off 35K? How? Doesn’t seem possible in HCOL. 75k - 15k property tax - 24k ACA=

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cockersx3
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Re: Ready for (forced) early retirement?

Post by cockersx3 » Sun Jun 28, 2020 1:19 pm

Have you accounted for any ACA subsidies in your budget? Remember, when you are retired your spending does not necessarily equal your taxable income. For example, if you spend entirely from your cash allocation in a given year, your taxable income would be close to $0 which would impact healthcare spending. (In reality you would not actually want to do this since you'd likely end up with Medicaid at that income level, but hopefully you get the idea - ie that you have levers you can use to control your taxable income, which impacts your healthcare spending.)

Topic Author
nebogle
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Re: Ready for (forced) early retirement?

Post by nebogle » Sun Jun 28, 2020 1:24 pm

nix4me wrote:
Sun Jun 28, 2020 1:11 pm
Barely due to your AA. Your gonna have to step up your equities in order to sustain the needed 3-4% withdrawal rate. In my opinion.

You can live off 35K? How? Doesn’t seem possible in HCOL. 75k - 15k property tax - 24k ACA=
nix4me,

Good points. We may need to increase the Equity portion somewhat to sustain the 3% withdrawal rate. The 35K may also be a bit too tight. I guess I should add another 10K to the expenses.

delamer
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Re: Ready for (forced) early retirement?

Post by delamer » Sun Jun 28, 2020 1:27 pm

I’m not sure what you mean by “75K net expenses.” Net of taxes, ACA premiums, other?

Is your portfolio in tax-deferred, tax-advantaged, or taxable accounts?

Your spouse is eligible for a Social Security spousal benefit — the amount will be half of your benefit at your full retirement age (with some caveats). So that’s in the neighborhood of $15K/year, based on the info you provided. You can set up accounts for both of you on the Social Security website to get specifics.

In short, you (and we) need more information to decide whether a layoff means early retirement or a job search.

Ependytis
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Re: Ready for (forced) early retirement?

Post by Ependytis » Sun Jun 28, 2020 1:34 pm

Great job with the savings. I am really impressed. If you feel comfortable, I think it would help the community to learn how you accumulated so much wealth. With that said, I think you’re fine. With less than a 3% withdrawal rate I’d say you’re good to go. On a different note, for me, I was recently laid off. Because it wasn’t my decision I promised myself to look for six months. After six weeks, I have an offer pending and another interview with a major company. This makes it feel like it wasn’t someone else’s decision for me to retire. I’m not saying you’re in that situation but something to consider from a psychological perspective. I hope everything works out for you. All the best.

Topic Author
nebogle
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Re: Ready for (forced) early retirement?

Post by nebogle » Sun Jun 28, 2020 1:37 pm

delamer wrote:
Sun Jun 28, 2020 1:27 pm
I’m not sure what you mean by “75K net expenses.” Net of taxes, ACA premiums, other?

I was estimating 75K total expenses including ACA premiums. I assume my tax bracket would be the lowest since there would be no earned income. I would need to pay taxes only on the Dividends and Interest portion.

Is your portfolio in tax-deferred, tax-advantaged, or taxable accounts?

Portfolio details - Tax Deferred: 1.6MM, Taxable: 1.2MM

Your spouse is eligible for a Social Security spousal benefit — the amount will be half of your benefit at your full retirement age (with some caveats). So that’s in the neighborhood of $15K/year, based on the info you provided. You can set up accounts for both of you on the Social Security website to get specifics.

Didn't know about this nugget. That's great news. I'll look more into it.

In short, you (and we) need more information to decide whether a layoff means early retirement or a job search.

delamer
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Re: Ready for (forced) early retirement?

Post by delamer » Sun Jun 28, 2020 1:48 pm

nebogle wrote:
Sun Jun 28, 2020 1:37 pm
delamer wrote:
Sun Jun 28, 2020 1:27 pm
I’m not sure what you mean by “75K net expenses.” Net of taxes, ACA premiums, other?

I was estimating 75K total expenses including ACA premiums. I assume my tax bracket would be the lowest since there would be no earned income. I would need to pay taxes only on the Dividends and Interest portion.

Is your portfolio in tax-deferred, tax-advantaged, or taxable accounts?

Portfolio details - Tax Deferred: 1.6MM, Taxable: 1.2MM

Your spouse is eligible for a Social Security spousal benefit — the amount will be half of your benefit at your full retirement age (with some caveats). So that’s in the neighborhood of $15K/year, based on the info you provided. You can set up accounts for both of you on the Social Security website to get specifics.

Didn't know about this nugget. That's great news. I'll look more into it.

In short, you (and we) need more information to decide whether a layoff means early retirement or a job search.
Lowest bracket doesn’t mean no taxes. But yours will probably will be low.

If you withdraw funds from the tax-deferred accounts, you’ll pay tax at ordinary (earned) income rates.

Any dividends and interest thrown off by the taxable account will be taxed at 0%, 15%, or ordinary income rates. It depends.

If you sell shares in taxable, you may have capital gains taxes to pay.

You can use TaxCaster (a free app from TurboTax) to estimate your federal taxes. Does your state tax income?

Topic Author
nebogle
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Re: Ready for (forced) early retirement?

Post by nebogle » Sun Jun 28, 2020 1:54 pm

Ependytis wrote:
Sun Jun 28, 2020 1:34 pm
Great job with the savings. I am really impressed. If you feel comfortable, I think it would help the community to learn how you accumulated so much wealth. With that said, I think you’re fine. With less than a 3% withdrawal rate I’d say you’re good to go. On a different note, for me, I was recently laid off. Because it wasn’t my decision I promised myself to look for six months. After six weeks, I have an offer pending and another interview with a major company. This makes it feel like it wasn’t someone else’s decision for me to retire. I’m not saying you’re in that situation but something to consider from a psychological perspective. I hope everything works out for you. All the best.
Thanks geerhardusvos and Ependytis for your insights.

We have been very blessed and conservative - that is the approach to our accumulated wealth. My spouse is also very supportive of a bogleheads approach to our lifestyle.

Topic Author
nebogle
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Re: Ready for (forced) early retirement?

Post by nebogle » Sun Jun 28, 2020 1:57 pm

cockersx3 wrote:
Sun Jun 28, 2020 1:19 pm
Have you accounted for any ACA subsidies in your budget? Remember, when you are retired your spending does not necessarily equal your taxable income. For example, if you spend entirely from your cash allocation in a given year, your taxable income would be close to $0 which would impact healthcare spending. (In reality you would not actually want to do this since you'd likely end up with Medicaid at that income level, but hopefully you get the idea - ie that you have levers you can use to control your taxable income, which impacts your healthcare spending.)
Thanks cockersx3. I had conservatively estimated 25K for ACA - it may be lower due to the subsidies.

Topic Author
nebogle
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Re: Ready for (forced) early retirement?

Post by nebogle » Sun Jun 28, 2020 2:00 pm

delamer wrote:
Sun Jun 28, 2020 1:48 pm
nebogle wrote:
Sun Jun 28, 2020 1:37 pm
delamer wrote:
Sun Jun 28, 2020 1:27 pm
I’m not sure what you mean by “75K net expenses.” Net of taxes, ACA premiums, other?

I was estimating 75K total expenses including ACA premiums. I assume my tax bracket would be the lowest since there would be no earned income. I would need to pay taxes only on the Dividends and Interest portion.

Is your portfolio in tax-deferred, tax-advantaged, or taxable accounts?

Portfolio details - Tax Deferred: 1.6MM, Taxable: 1.2MM

Your spouse is eligible for a Social Security spousal benefit — the amount will be half of your benefit at your full retirement age (with some caveats). So that’s in the neighborhood of $15K/year, based on the info you provided. You can set up accounts for both of you on the Social Security website to get specifics.

Didn't know about this nugget. That's great news. I'll look more into it.

In short, you (and we) need more information to decide whether a layoff means early retirement or a job search.
Lowest bracket doesn’t mean no taxes. But yours will probably will be low.

If you withdraw funds from the tax-deferred accounts, you’ll pay tax at ordinary (earned) income rates.

Any dividends and interest thrown off by the taxable account will be taxed at 0%, 15%, or ordinary income rates. It depends.

If you sell shares in taxable, you may have capital gains taxes to pay.

You can use TaxCaster (a free app from TurboTax) to estimate your federal taxes. Does your state tax income?
Thanks. I'll check out TaxCaster. Yes, my state taxes income.

retired@50
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Re: Ready for (forced) early retirement?

Post by retired@50 » Sun Jun 28, 2020 2:07 pm

nebogle wrote:
Sun Jun 28, 2020 1:57 pm
cockersx3 wrote:
Sun Jun 28, 2020 1:19 pm
Have you accounted for any ACA subsidies in your budget? Remember, when you are retired your spending does not necessarily equal your taxable income. For example, if you spend entirely from your cash allocation in a given year, your taxable income would be close to $0 which would impact healthcare spending. (In reality you would not actually want to do this since you'd likely end up with Medicaid at that income level, but hopefully you get the idea - ie that you have levers you can use to control your taxable income, which impacts your healthcare spending.)
Thanks cockersx3. I had conservatively estimated 25K for ACA - it may be lower due to the subsidies.
There are a couple of terms you may want to get familiar with.

Federal Poverty Line is one of them. Depending on the household size (number of people) the number differs, and also changes from year to year with inflation. Income from 139% to 400% of FPL for your household puts you into the subsidy zone. 138% or below puts you into Medicaid zone. Above 400% of FPL puts you in no subsidy zone.

Start your ACA policy search at https://www.healthcare.gov/

See also: https://www.healthcare.gov/glossary/fed ... level-FPL/

You may or may not be re-directed to a health care site for your particular state.

Regards,
This is one person's opinion. Nothing more.

stan1
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Re: Ready for (forced) early retirement?

Post by stan1 » Sun Jun 28, 2020 2:11 pm

I'd recommend you look through the variable percentage withdrawal methodology and spreadsheets on this site. The spreadsheet is very simple so you will want to do some more research on the methodology.

https://www.bogleheads.org/wiki/Variabl ... withdrawal

Even if you chose a different draw down methodology understanding this approach and looking at the spreadsheets may help you build confidence.

marcopolo
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Re: Ready for (forced) early retirement?

Post by marcopolo » Sun Jun 28, 2020 2:11 pm

You seem to be in pretty good shape. A few things to consider:

1) 75k from 2.8M portfolio is only a 2.7% withdrawal rate so, I think you have room to expand your budget a bit, if needed.

2) $25k for ACA is reasonable guess (we use $30k, but are in a high cost state). You will most likely be able to qualify for tax credits to cover much of that (we get ~$24k/yr). We mentally "bank" the rest in anticipation of changes to come.

3) You will both get SS at some point, which will ease withdrawals from portfolio.

4) Consider how you will spend your free time and how that affects your anticipated budget. Depending on what you want to do in retirement, your current spending pattern may have little resembelence to your retirement budget. Our spending categories have changed drastically, and overall spending is up almost 50% from pre-retirement spending.

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

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Watty
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Re: Ready for (forced) early retirement?

Post by Watty » Sun Jun 28, 2020 3:56 pm

nebogle wrote:
Sun Jun 28, 2020 12:58 pm
2. We are not planning to relocate to a LCOL/MCOL area for the next 10 years at least. Property taxes could keep jumping higher in our town.
If you do not want to relocate to a different part of the country yet you could still look into relocating to a less expensive area in your current city. It will be different in different cities but where I live you can save a lot by moving 20 or 30 minutes farther out and the commute would not matter to you. It also sounds like you don't have any more kids in school so you also do not need to pay extra to get a house in a good school district.
cockersx3 wrote:
Sun Jun 28, 2020 1:19 pm
Have you accounted for any ACA subsidies in your budget?
One thing to keep in mind is that if the ACA does not change then you could manage your income so that you would qualify for the subsidy every other year if you are not able to qualify for it every year.

One thing I do to make sure that I can manage my income to qualify for an ACA subsidy is that I have a Home Equity Line of Credit on my paid off house. That way I can use the HELOC if I need to so that I do not need to make a large taxable withdraw from an IRA if I have an unexpected large expense. You might want to set up a HELOC now while you are still employed so that it will be easier to qualify for it.
nebogle wrote:
Sun Jun 28, 2020 12:58 pm
I don't mind working in a non-IT job if I can find something post COVID.
I retired a out of IT a few years ago. I did not do it but I know two people that were laid off from IT jobs when they were in their 50s and they were doing fine financially except for health insurance, and this was before the ACA so they needed some way to get health insurance. They ended up getting jobs as school bus drivers, it did not pay a lot but it came with benefits and they got summers and school holidays off. They seemed to actually like the job and it worked for them. At least around here they are always looking for school bus drivers and they will train you. This is because it does not pay enough for someone that needs a full time job. I also know someone that worked in a school cafeteria for similar reasons.

nix4me
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Re: Ready for (forced) early retirement?

Post by nix4me » Sun Jun 28, 2020 4:15 pm

Seriously though, low chance of getting 30 to 40 years out of 3% withdrawals from $2.8M with this:

Portfolio: 35 Equities/35 Bonds/30 Cash

Look at the trinity study chart or that fancy withdrawal chart to determine success rate. Or use FireCALC.

retiredjg
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Re: Ready for (forced) early retirement?

Post by retiredjg » Sun Jun 28, 2020 4:15 pm

nebogle wrote:
Sun Jun 28, 2020 12:58 pm
Expenses: 75K Net per year.
What does this mean? Will your expenses really be $100k with federal and state taxes?

TravelGeek
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Re: Ready for (forced) early retirement?

Post by TravelGeek » Sun Jun 28, 2020 4:21 pm

nebogle wrote:
Sun Jun 28, 2020 12:58 pm

1. I'm estimating about 25K for ACA for me and spouse. Not sure if the actual cost would be significantly higher.
I don't know how you estimated that, and obviously insurance rates vary across the country, but that's about 2X of what my wife and I pay (and we're a bit older than you guys). Granted, that's for a High Deductible Bronze plan and I don't know if your $25k estimate is for premiums only or is the total healthcare cost including deductibles, copay etc. healthcare.gov or your state's exchange should let you get accurate pricing for available plans in your area.

You may also want to look at using COBRA for the first 18 months to stay on your current employer plan. Your W2 should have the information to let you guestimate the cost of COBRA (Box 12, code DD).

Topic Author
nebogle
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Re: Ready for (forced) early retirement?

Post by nebogle » Sun Jun 28, 2020 4:23 pm

retired@50 wrote:
Sun Jun 28, 2020 2:07 pm
nebogle wrote:
Sun Jun 28, 2020 1:57 pm
cockersx3 wrote:
Sun Jun 28, 2020 1:19 pm
Have you accounted for any ACA subsidies in your budget? Remember, when you are retired your spending does not necessarily equal your taxable income. For example, if you spend entirely from your cash allocation in a given year, your taxable income would be close to $0 which would impact healthcare spending. (In reality you would not actually want to do this since you'd likely end up with Medicaid at that income level, but hopefully you get the idea - ie that you have levers you can use to control your taxable income, which impacts your healthcare spending.)
Thanks cockersx3. I had conservatively estimated 25K for ACA - it may be lower due to the subsidies.
There are a couple of terms you may want to get familiar with.

Federal Poverty Line is one of them. Depending on the household size (number of people) the number differs, and also changes from year to year with inflation. Income from 139% to 400% of FPL for your household puts you into the subsidy zone. 138% or below puts you into Medicaid zone. Above 400% of FPL puts you in no subsidy zone.

Start your ACA policy search at https://www.healthcare.gov/

See also: https://www.healthcare.gov/glossary/fed ... level-FPL/

You may or may not be re-directed to a health care site for your particular state.

Regards,
Thanks retired@50. The threshold for subsidy eligibility would be $68,960 or lower in my case. Is there a calculator for the subsidy calculator for my state?

Topic Author
nebogle
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Re: Ready for (forced) early retirement?

Post by nebogle » Sun Jun 28, 2020 4:25 pm

stan1 wrote:
Sun Jun 28, 2020 2:11 pm
I'd recommend you look through the variable percentage withdrawal methodology and spreadsheets on this site. The spreadsheet is very simple so you will want to do some more research on the methodology.

https://www.bogleheads.org/wiki/Variabl ... withdrawal

Even if you chose a different draw down methodology understanding this approach and looking at the spreadsheets may help you build confidence.
Thanks stan1. I'll look into this.

HomeStretch
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Re: Ready for (forced) early retirement?

Post by HomeStretch » Sun Jun 28, 2020 4:26 pm

You may want to use the tool at opensocialsecurity.com to help determine the best social security (SS) claiming strategy for you and spouse. In order to maximize ACA subsidies based on your income, you may want to delay claiming SS until you switch over to Medicare.

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LiveSimple
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Re: Ready for (forced) early retirement?

Post by LiveSimple » Sun Jun 28, 2020 4:27 pm

nebogle wrote:
Sun Jun 28, 2020 12:58 pm

1. I'm estimating about 25K for ACA for me and spouse. Not sure if the actual cost would be significantly higher.
What does this mean, you have to pay $25 K for healthcare ?

Topic Author
nebogle
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Re: Ready for (forced) early retirement?

Post by nebogle » Sun Jun 28, 2020 4:28 pm

nix4me wrote:
Sun Jun 28, 2020 4:15 pm
Seriously though, low chance of getting 30 to 40 years out of 3% withdrawals from $2.8M with this:

Portfolio: 35 Equities/35 Bonds/30 Cash

Look at the trinity study chart or that fancy withdrawal chart to determine success rate. Or use FireCALC.
nix4me - Firecalc gave me a 100% success rate for 35 years in retirement. Dead, Rich or Broke calculator seemed to be more conservative and gave failures after 31 years. I will be looking into changing my AA to 50/35/15.

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nebogle
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Re: Ready for (forced) early retirement?

Post by nebogle » Sun Jun 28, 2020 4:52 pm

retiredjg wrote:
Sun Jun 28, 2020 4:15 pm
nebogle wrote:
Sun Jun 28, 2020 12:58 pm
Expenses: 75K Net per year.
What does this mean? Will your expenses really be $100k with federal and state taxes?
I meant that we will spending 75K from savings each year. If I start withdrawal from my Taxable bucket, I'm guessing my taxes would be very low.

blahblahsunshine
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Re: Ready for (forced) early retirement?

Post by blahblahsunshine » Sun Jun 28, 2020 5:01 pm

OP I think the allocation you have is fine given the current situation we are in. In the long run based on historicals your allocation is sub-par, but it is also fair to ask where we are relative to historical performance/situations. Longer term I think you will want to reallocate to something more traditional, but having 35% in cash now seems reasonable form of near term diversification to me.

retiredjg
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Re: Ready for (forced) early retirement?

Post by retiredjg » Sun Jun 28, 2020 5:08 pm

nebogle wrote:
Sun Jun 28, 2020 4:52 pm
retiredjg wrote:
Sun Jun 28, 2020 4:15 pm
nebogle wrote:
Sun Jun 28, 2020 12:58 pm
Expenses: 75K Net per year.
What does this mean? Will your expenses really be $100k with federal and state taxes?
I meant that we will spending 75K from savings each year. If I start withdrawal from my Taxable bucket, I'm guessing my taxes would be very low.
If a large part of the $2.8 million is in tax deferred accounts you should do Roth conversions each year to reduce that balance. Not the focus of your question but something to consider when things get settled.

Outer Marker
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Re: Ready for (forced) early retirement?

Post by Outer Marker » Sun Jun 28, 2020 5:21 pm

Overall you look to be in good shape. Your thought to move to a 50/50 allocation for the long term is a good one, but I wouldn't be in any hurry to do so immediately amidst covid and the current wild market swings. Consider if there are ways to reduce your current expenses. Downsizing in your current town or accellerating your move to a LCOLA would increase your cushion. Do you need a second car now that you are no longer working, etc. etc.

I'm your same age. If I were no longer tied to my well paid job in my own HCOLA, I'd sell in a heartbeat and do all kinds of fun and eccentric things that would be funded by keeping my overhead low.

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Sandtrap
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Re: Ready for (forced) early retirement?

Post by Sandtrap » Sun Jun 28, 2020 5:37 pm

Beware the ACA Subsidy Cliff for Income.
Penalties can be severe.
Double check your policy’s deductibles and coverage to fit your needs.
You’re a long way to Medicare (age 65) so be careful.

j🌺
Wiki Bogleheads Wiki: Everything You Need to Know

Lalamimi
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Re: Ready for (forced) early retirement?

Post by Lalamimi » Sun Jun 28, 2020 5:39 pm

I worked in VERY stressful oil and gas jobs 2010- 2017. Laid off 2018 at age 64. Deal with the stress and keep working.

marcopolo
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Re: Ready for (forced) early retirement?

Post by marcopolo » Sun Jun 28, 2020 7:51 pm

Lalamimi wrote:
Sun Jun 28, 2020 5:39 pm
I worked in VERY stressful oil and gas jobs 2010- 2017. Laid off 2018 at age 64. Deal with the stress and keep working.

Till they die?!?

Surely, there would be some point at which one could (with millions of dollars of wealth) walk away from a job that is causing a lot stress?
Once in a while you get shown the light, in the strangest of places if you look at it right.

Topic Author
nebogle
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Re: Ready for (forced) early retirement?

Post by nebogle » Sun Jun 28, 2020 8:12 pm

blahblahsunshine wrote:
Sun Jun 28, 2020 5:01 pm
OP I think the allocation you have is fine given the current situation we are in. In the long run based on historicals your allocation is sub-par, but it is also fair to ask where we are relative to historical performance/situations. Longer term I think you will want to reallocate to something more traditional, but having 35% in cash now seems reasonable form of near term diversification to me.
Agreed. I'll be deploying the cash portion into Equities in the near/mid term.

retired@50
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Re: Ready for (forced) early retirement?

Post by retired@50 » Sun Jun 28, 2020 11:49 pm

nebogle wrote:
Sun Jun 28, 2020 4:23 pm

Thanks retired@50. The threshold for subsidy eligibility would be $68,960 or lower in my case. Is there a calculator for the subsidy calculator for my state?
I think you'll have to start at healthcare.gov and put in a few pertinent details, like family size, estimated income, etc. and see what it comes back with. As I understand it, you may or may not have to actually create an account on the system. Further, the offerings depend not only on your state, but the county within the state. Insurers can offer plans to specific counties if they choose. They typically have open enrollment every fall for policies starting on January 1, but if you stop working that will likely be considered a qualifying life event, which might allow you to purchase a plan in the middle of the year.

Regards,
This is one person's opinion. Nothing more.

Dottie57
Posts: 8683
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Ready for (forced) early retirement?

Post by Dottie57 » Sun Jun 28, 2020 11:59 pm

delamer wrote:
Sun Jun 28, 2020 1:48 pm
nebogle wrote:
Sun Jun 28, 2020 1:37 pm
delamer wrote:
Sun Jun 28, 2020 1:27 pm
I’m not sure what you mean by “75K net expenses.” Net of taxes, ACA premiums, other?

I was estimating 75K total expenses including ACA premiums. I assume my tax bracket would be the lowest since there would be no earned income. I would need to pay taxes only on the Dividends and Interest portion.

Is your portfolio in tax-deferred, tax-advantaged, or taxable accounts?

Portfolio details - Tax Deferred: 1.6MM, Taxable: 1.2MM

Your spouse is eligible for a Social Security spousal benefit — the amount will be half of your benefit at your full retirement age (with some caveats). So that’s in the neighborhood of $15K/year, based on the info you provided. You can set up accounts for both of you on the Social Security website to get specifics.

Didn't know about this nugget. That's great news. I'll look more into it.

In short, you (and we) need more information to decide whether a layoff means early retirement or a job search.
Lowest bracket doesn’t mean no taxes. But yours will probably will be low.

If you withdraw funds from the tax-deferred accounts, you’ll pay tax at ordinary (earned) income rates.

Any dividends and interest thrown off by the taxable account will be taxed at 0%, 15%, or ordinary income rates. It depends.

If you sell shares in taxable, you may have capital gains taxes to pay.

You can use TaxCaster (a free app from TurboTax) to estimate your federal taxes. Does your state tax income?
+1 on taxcaster. It has been a wonderful tool for me.

Before I retired, I went back through my checking account t really determine how muchI spent. I had to add back items subtracted from my paycheck - medical insurance and state/federal taxes. Using taxcaster I could determine fed taxes and and was fairly confident of my amounts. The area that bites is medical insurance. Medical insurance is the area which is most in flux.

smitcat
Posts: 5941
Joined: Mon Nov 07, 2016 10:51 am

Re: Ready for (forced) early retirement?

Post by smitcat » Mon Jun 29, 2020 7:06 am

nebogle wrote:
Sun Jun 28, 2020 4:52 pm
retiredjg wrote:
Sun Jun 28, 2020 4:15 pm
nebogle wrote:
Sun Jun 28, 2020 12:58 pm
Expenses: 75K Net per year.
What does this mean? Will your expenses really be $100k with federal and state taxes?
I meant that we will spending 75K from savings each year. If I start withdrawal from my Taxable bucket, I'm guessing my taxes would be very low.
A few thoughts:
- knowing your real costs is the key to these plans
- we pay less than your quote for ACA coverage in NY at higher ages.
- have you checked to see if retirees have any property or state tax advantages?
- have you checked to make sure your SS at 62 will be $26K with no earnings from now forward? (online calculators at SS.gov)
- if your true SS would be $26K (62) for you alone that would likely lead to something like $30K at 65 or $45K for your and your spouse at 65
That could lead you to a draw of $75K from 53 to 65 ($900K present $$) and something like a draw of $30K from 65 onward.
Those draws would be approximately 2.75% for 12 years and then less than 2% after that.
Good luck with whatever you decide.

Rudedog
Posts: 229
Joined: Wed Aug 01, 2018 3:15 pm

Re: Ready for (forced) early retirement?

Post by Rudedog » Mon Jun 29, 2020 7:42 am

Your net worth, including your house is over $ 3 million, with no debt. One thing to consider, you are many years from Medicare. However, I'm betting you could find a part-time job to fund your health insurance costs if you need to. In my mind, the wild card is health insurance, but that's how it is for everyone. Go for it.

Beehave
Posts: 730
Joined: Mon Jun 19, 2017 12:46 pm

Re: Ready for (forced) early retirement?

Post by Beehave » Mon Jun 29, 2020 9:18 am

Lots of good suggestions above.

I'd add to check to see if your real estate taxes are high compared to comparable properties to yours in your town. Zillow can help with seeing neighboring comps for home price and tax paid, and that data can feed the appeal. If your research indicates your taxes are high compared to other properties of equal value, see if a friendly realtor will help you understand the local terminology on the appeal forms before you fill them out and submit. If the taxes seem really high, a local lawyer who specializes in appeals might be worth engaging. If you go to the local variance and zoning board meetings you'll quickly figure out who the lawyers with the right local pull are by the way the local board treats them and their requests.

Understand the implications of Required Minimum Distribitions from your 401k and IRA holdings, how Roth conversions impact the RMDs, and how Social Security works for you and your spouse. You have time to learn the details and see trends of legislation and policy before making any big decisions. I joined bogleheads too late to learn, understand, and act effectively on Roth when it would have been optimal to do so.

Best wishes, and don't let the employment situation get you down. Work hard to make positive use of whatever situation develops.

Scooter57
Posts: 1349
Joined: Thu Jan 24, 2013 9:20 am

Re: Ready for (forced) early retirement?

Post by Scooter57 » Mon Jun 29, 2020 2:53 pm

Use your IT skills for something of your own. You are way too young to retire. You'll be bored after you recover from the stressful job and worse, you will find most people you would want to socialze with are still working and not around during the day.

I was in IT way back when and made the decision to leave back in the 1980s, but my software skills allowed me to do all kinds of things other people would have had to pay $$$$ for. Once you get out of the corporate headspace look for things you can do that use your skills, develop new ones, keep your mind engaged, and keep you from becoming a boring old person before your time. You have enough money that a relaxed self-driven business of some sort that earns you $20-40k a year is very possible and will allow you to stay risk adverse and not have to gamble your savings in the market.

The last thing you need is to go more heavily into stocks just as we go into a prolonged market decline that takes a decade to recover. The average return of the market looks great, but there are long down periods that average with the highs we have experienced this last 8 years.

bikesandbeers
Posts: 159
Joined: Thu Jun 13, 2019 2:08 am

Re: Ready for (forced) early retirement?

Post by bikesandbeers » Mon Jun 29, 2020 3:31 pm

Your portfolio balance looks great. Given your conservative AA, You might think about some part time work to deal with the longevity risk. Depending on your exact IT background, I feel like there could be some interesting remote/part time opportunities or consulting.
As other have noted, healthcare would be the biggest worry

Last year i was vacationing in a rural area and I did see a bunch of signs for school bus drivers. Billboards, plus banners on fences. I think you could do better with your IT background than driving kids around, but maybe it gives you access to a much better school health plan?

TheLaughingCow
Posts: 113
Joined: Tue Jul 01, 2014 9:41 pm

Re: Ready for (forced) early retirement?

Post by TheLaughingCow » Mon Jun 29, 2020 6:06 pm

nix4me wrote:
Sun Jun 28, 2020 4:15 pm
Seriously though, low chance of getting 30 to 40 years out of 3% withdrawals from $2.8M with this:

Portfolio: 35 Equities/35 Bonds/30 Cash

Look at the trinity study chart or that fancy withdrawal chart to determine success rate. Or use FireCALC.
With 0 real appreciation, a 3% withdrawal rate will be viable for 33 years. 30 to 40 years is quite realistic.

Topic Author
nebogle
Posts: 14
Joined: Sat Apr 27, 2019 2:13 pm

Re: Ready for (forced) early retirement?

Post by nebogle » Sun Jul 05, 2020 6:57 am

TheLaughingCow wrote:
Mon Jun 29, 2020 6:06 pm
nix4me wrote:
Sun Jun 28, 2020 4:15 pm
Seriously though, low chance of getting 30 to 40 years out of 3% withdrawals from $2.8M with this:

Portfolio: 35 Equities/35 Bonds/30 Cash

Look at the trinity study chart or that fancy withdrawal chart to determine success rate. Or use FireCALC.
With 0 real appreciation, a 3% withdrawal rate will be viable for 33 years. 30 to 40 years is quite realistic.
Thanks. I will be increasing my Equities portion since I realize this too conservative.

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