Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

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honigvod
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Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by honigvod »

Greetings Bogleheads!
I did a search of the forum back a ways but there are quite a lot of posts on here, so please forgive me if this is a common topic I glossed over. I borrowed some of the formatting and information below from some other threads but they didn't quite have the answers I was looking for.

I have a (very) rough draft for retiring in five years if everything works out. If it doesn't, I don't really have a problem waiting longer, but I would rather enjoy my retirement as long as I can instead of postponing it. If I need to work part time during 'retirement' to help even things out or keep busy then that works as well but would rather volunteer or do something that is not turning a hobby into a 'hustle' to stay afloat.

Currently Single, working full time. No dependents.
Age = 42 (in a few months)
401k: 165
Only in this past year have I been able to maximize my contributions of 19,500 + ~4,500 company match. Had it 10 years but was basically hitting minimums to get company match until I had house finances in order recently.
Roth: 115
Similar story as the 401k, but have had it a lot longer. One of the few forward thinking Ideas I had before I hit my 30s.
E-fund: 40 (Basic Savings account)

Pre-Retirement plans (next 5 years)
Max out My 401K
Max out Roth IRA
Talk to my company about switching to a HDHP next year and see if an HSA is viable. Last I looked it either wasn't available or was total crap. I forget.
Contribute to Taxable ~20k/year (might be less, probably more, depending on above)
I-bond E-fund rollover 10k/year

Planned retirement accounts in 5 years (assuming super conservative 4% returns to account for inflation/fluctuations), in today's dollars:
Traditional 401K: ~330k
Roth IRA: ~170k
Taxable account: ~120k
Only started this year since I will have leftover after fixing the above two accounts to max last year. Should be able to get 20k+ per year into it.
Emergency fund: ~50k
I-bond ladder I just started. Converting from basic savings. Will likely have a little more in cash as well.
Home worth: ~100k+
No idea how much it is really worth but a good guess based on estimates. Fully paid off last year along with my car.
Debts: 0

Yearly Expenses: ~30k. Will assume ~40k in retirement for some room and a little travel.

Year 2026: Quit somewhere between my 47th birthday and January 1st of next year (the ideal time to quit, right after new years for leave bucket and potential cash out).
COBRA continue healthcare (maybe) to cover gap if needed.
Sell house. Move to state beneficial for taxes with a LCOL: Eastern Tennessee, Wyoming, Western Nevada, etc. Either buy small house/condo or rent since the rest of my expenses will be low.
Put most/all of house sale into the taxable account and take from efund/cash reserves until I need to pull from it.

Year 2027:
Roll 401k into Traditional Ira.
Convert $20k to Roth IRA as the start of a conversion ladder. Because this will be my only 'income' of the year, ACA subsidies will be huge, and capital
gains tax nil.
Start ACA healthcare based on above.
The whole point of my Efund was to last until I got another job, so plan on draining it as cash over the next few years first before grabbing from taxable.

Year 2028-2031:
Same as above for four more years:
Convert 2-k as income.
Take 10k from E-fund and 30k (or less as needed) per year from taxable.

Year 2032-2038:
Continue converting IRA - Roth at $20k a year to have low income for ACA with an obscenely low tax rate (federal only) to maintain ladder.
Take 20k/year from previous conversion 5 years ago to live on. Use the remainder of the taxable as needed to fill in the gap.

Year 2039 (age 60, will be 59.5 in January):
Keep the conversion ladder running to have income, but taxable account will likely be low by now so start pulling from my original Roth that has been growing for the past 13 years basically untouched to fill in any gap.

Year 2049 (age 70):
Stop converting the year before I start taking SS (which will likely be also near 20k/year due only working until 47 and potential reduced benefits by then in general) but keep taking out conversions as needed, with the remainder of my original Roth and Traditional as a backup, likely with minimum distributions when they start.


Some Specific Questions:

Is the above viable?
I know I am 'burning' my accounts (taxable at least) rather than maintaining them and it can be risky, especially with any sort of market downturn, but this is more of an early plan to see if it *could* work, just in case. And I am taking as little from IRAs as possible for as long as possible. My job is rock solid the next five years but there will be a change around then that might be untenable to me. So, just in case I never want to work again by that point, I wanted to run the numbers as best I could.

Should I stop the conversions right before I hit 65 and start pulling just the accompanying 20k to match the previous ones?
I wouldn't need to worry about ACA anymore with medicare. I think?

Any pitfalls I am missing?

Any other suggestions on things to consider in my planning?

Should I get a retirement planner/tax advisor?

Any input will be greatly appreciated! And kudos to those that came to look. Have a good weekend!
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David Jay
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by David Jay »

Welcome to the forum!

Your plan is really "skinny", projection of 4% real is not "super conservative". But if - in 5 years - you have 600K+ and you can actually live on 30,000 2026 dollars (note: not 2021 dollars) then it may work.

A key: Will your SS benefit at age 70 cover all expenses including Medicare? If not, then I don't think this plan is viable.

I would use the site search function for "lean FIRE" to get additional background.
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JoeRetire
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by JoeRetire »

honigvod wrote: Thu Apr 29, 2021 10:44 pm Age = 42 (in a few months)

Any other suggestions on things to consider in my planning?
Consider what you will do with all your time, other than "not work".

Do you have a bunch of young retired friends that you will be socializing with?
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
sailaway
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by sailaway »

What you do at 65 will depend on the actual rules and your life conditions at the time.

More importantly, it sounds like your plan is to have just over $600k and be able to spend $40k. At best, you are aiming to save 25x $30k, even though you have already stated you expect to spend more.

Do your current expenses of $30k/year include things like replacing a car, major house repairs, etc.?
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KlingKlang
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by KlingKlang »

I agree with the above comments that retiring at age 47 with only $650k in financial assets sounds way too low. I would aim for at least a million. Your home value of $100k is not going to be a huge resource, even with downsizing you will be lucky to break even after transaction costs. At 47 there is no way that you would have contributed to Social Security for 35 years so your eventual SSA payments will be low as well.

While you do have a positive net worth, to be honest you have not done a very impressive job of accumulating financial assets up to this point in time. Go ahead and implement your plans to maximize retirement savings (and minimize expenses) and then track the growth in your net worth carefully.

Good luck, you may not be able to retire in 5 years but with diligence you will be able to eventually.
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Peter Foley
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by Peter Foley »

I think 10 years is more realistic than 5. You really need a bigger safety net, especially in terms of health care savings. At the age you propose a 2% to 3% withdrawal rate would be advisable.

As to seasonal timing, I think mid to late spring is the time to retire. You can fill your IRA and Roth and retire to create a relatively low cost year.
chw
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by chw »

Unless you expect a windfall, I would work and save at least another 10 years. You need to make your money last longer than the typical retiree, and you won’t have enough in 5 years IMO- you should have at a minimum 30-35x expenses saved due to the length of your retirement. Once you leave your human capital behind at retirement, it’s difficult to get it back if you start to run low on assets.
calwatch
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by calwatch »

Based on current laws I would be more optimistic you could get on a Silver ACA cost sharing plan and cut down on health care costs. By nature this is going to be a very frugal retirement but it is possible in five years and you won’t be starving. On the other hand, sitting around all day as a single person could get tiring after a while, so you might end up taking a part time job (the so called Barista FIRE) anyway.
Sahara
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by Sahara »

One thing I'm not sure you've accounted for are the capital gains and dividends from the Taxable account. Will these be used for expenses, will they affect your AGI for ACA, will they be taxable? Under current legislation at your projected income, your tax rate for these will be zero. At the same time it is an element you may want to consider as you map out your plan.
Topic Author
honigvod
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by honigvod »

David Jay wrote: Fri Apr 30, 2021 10:13 am Welcome to the forum!

Your plan is really "skinny", projection of 4% real is not "super conservative". But if - in 5 years - you have 600K+ and you can actually live on 30,000 2026 dollars (note: not 2021 dollars) then it may work.

A key: Will your SS benefit at age 70 cover all expenses including Medicare? If not, then I don't think this plan is viable.

I would use the site search function for "lean FIRE" to get additional background.
Thanks!

It is very skinny, and that is the point. This is my ‘I can’t stand working here anymore so can I survive if I absolutely had to’. My real world day-to-day expenses are under 30k now, and that is with some mad money included for hobbies and more. I want to plan for 40k as a just in case but will likely be less most of the time. 30k in 2026 dollars would be a lot less comfortable unless I have a windfall (house sold and move in with family rent free for example to let money grow a few more years).

Will my SS cover everything? Not likely. I will only have a bit over 20k based on best estimates I can figure out (based on what I would have now, working 5 more years.

The hope was to survive on house sale + cash + e-fund until the Roth ladder kicks in, but that 5 year wait is the sticking point, if it will last. After that, the 20k conveyed plus taxable account should see me until 60, and then conversion + roth until 70, then SS and 20/year until I expire.

But it depends on market staying normal, and nothing crazy happening. 4% is perhaps not a super conservative real return but it is a realistic one. Based on 7% minus inflation. Most of my retirement accounts will do about that and taxable likely better.

I will be revisiting this every year as things change, and will likely work my job longer, or part time/lower income ‘barista fire’ for a while if I can’t. I don’t see myself stopping work, but like to know I could at some point.

Thanks for replying and welcoming me!
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honigvod
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by honigvod »

JoeRetire wrote: Fri Apr 30, 2021 10:16 am
honigvod wrote: Thu Apr 29, 2021 10:44 pm Age = 42 (in a few months)

Any other suggestions on things to consider in my planning?
Consider what you will do with all your time, other than "not work".

Do you have a bunch of young retired friends that you will be socializing with?
Hah! Nope! Most of my socializing outside of work is with work friends. The vast majority of my time is spent on solo hobbies: hiking, gaming, writing, art, and extended family. It is very likely I will be living with or near family and spend a lot of time with them when I go there. But yes, that is part of why I expect my expenses to be a little higher than now, for things to do and some inexpensive travel. I’ve done part of the Appalachian trail and want to do all the big ones, which are 6 month hikes each.
Topic Author
honigvod
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by honigvod »

sailaway wrote: Fri Apr 30, 2021 10:34 am What you do at 65 will depend on the actual rules and your life conditions at the time.

More importantly, it sounds like your plan is to have just over $600k and be able to spend $40k. At best, you are aiming to save 25x $30k, even though you have already stated you expect to spend more.

Do your current expenses of $30k/year include things like replacing a car, major house repairs, etc.?
My hope is to not touch that 600k for a few years and live off immediate cash and a possible house sale before I start pulling from
It, but the goal is to be under 40k. It is quite possible, with my current car paid off, I would never have another one, either because of living situation or just not needing it.

40k a year plans for major repairs and more. 30k does not. So I will likely have to work a few more years to be safe. It’s possible it might just be at a lower income place if my job goes poof.
Topic Author
honigvod
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by honigvod »

KlingKlang wrote: Fri Apr 30, 2021 11:02 am I agree with the above comments that retiring at age 47 with only $650k in financial assets sounds way too low. I would aim for at least a million. Your home value of $100k is not going to be a huge resource, even with downsizing you will be lucky to break even after transaction costs. At 47 there is no way that you would have contributed to Social Security for 35 years so your eventual SSA payments will be low as well.

While you do have a positive net worth, to be honest you have not done a very impressive job of accumulating financial assets up to this point in time. Go ahead and implement your plans to maximize retirement savings (and minimize expenses) and then track the growth in your net worth carefully.

Good luck, you may not be able to retire in 5 years but with diligence you will be able to eventually.
My current according to ssa.gov, if I stopped working now, Social Security should be about 20k (in 2021 dollars) if I delayed to 70. It will be higher when I stop in 5 years but likely not much over 30 (that will be 31 years worked).

I was renting and living paycheck to paycheck with no plan until 31, then saving 10k a year until I learned more and stopped being an idiot. Not much to be impressed about living low income in a mid/low cost of living and having no idea what I’m doing. I’ve only gotten serious about this in the past 6 years when I went from 0 net worth to 400k.

If I do just as well over the next 5 years, I hope to meet the above and have the backup to do it soon after if I choose to. Honestly, I will delay it to 50, maaaybe 52 if I can make myself wait, but want to make sure I am doing everything I can in the meantime.
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honigvod
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by honigvod »

Peter Foley wrote: Fri Apr 30, 2021 11:03 am I think 10 years is more realistic than 5. You really need a bigger safety net, especially in terms of health care savings. At the age you propose a 2% to 3% withdrawal rate would be advisable.

As to seasonal timing, I think mid to late spring is the time to retire. You can fill your IRA and Roth and retire to create a relatively low cost year.
More realistic? Definitely. Just want to do all I can just in can to be as ready as early is possible so I can fall back to it when I want to instead of when I ‘have’ to.

Thanks for the idea on the seasonal timing! I will look into it a bit more. I still have a few years and thinks might shift before then anyway and I will have to adapt.
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honigvod
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by honigvod »

calwatch wrote: Fri Apr 30, 2021 11:58 am Based on current laws I would be more optimistic you could get on a Silver ACA cost sharing plan and cut down on health care costs. By nature this is going to be a very frugal retirement but it is possible in five years and you won’t be starving. On the other hand, sitting around all day as a single person could get tiring after a while, so you might end up taking a part time job (the so called Barista FIRE) anyway.
That is the plan! With current laws, and ‘income’ of 20k a year with the rest from why is essentially cash would give me the most advantageous ones they have. Medical and dental less than 1k a year. Assuming my health continues to be good and I won’t need help.

Realistically, if I do pull the trigger at 47, I will likely do the ‘barista fire’ route as a half time and/or seasonal job to keep busy and make this plan viable. I don’t think I could sit around more than a few months before I go that route but need to research the possibilities more.
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honigvod
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by honigvod »

Sahara wrote: Fri Apr 30, 2021 12:13 pm One thing I'm not sure you've accounted for are the capital gains and dividends from the Taxable account. Will these be used for expenses, will they affect your AGI for ACA, will they be taxable? Under current legislation at your projected income, your tax rate for these will be zero. At the same time it is an element you may want to consider as you map out your plan.
That is why I want to wait until the year after I stop working, where my income will be effectively 20k (possibly more with part time work) to make the gains tax zero and have them carry me over the first five years and possibly until 59.5.
calwatch
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by calwatch »

honigvod wrote: Fri Apr 30, 2021 1:12 pm
calwatch wrote: Fri Apr 30, 2021 11:58 am Based on current laws I would be more optimistic you could get on a Silver ACA cost sharing plan and cut down on health care costs. By nature this is going to be a very frugal retirement but it is possible in five years and you won’t be starving. On the other hand, sitting around all day as a single person could get tiring after a while, so you might end up taking a part time job (the so called Barista FIRE) anyway.
That is the plan! With current laws, and ‘income’ of 20k a year with the rest from why is essentially cash would give me the most advantageous ones they have. Medical and dental less than 1k a year. Assuming my health continues to be good and I won’t need help.

Realistically, if I do pull the trigger at 47, I will likely do the ‘barista fire’ route as a half time and/or seasonal job to keep busy and make this plan viable. I don’t think I could sit around more than a few months before I go that route but need to research the possibilities more.
Yes and with a part time job you can continue to shelter income via IRA and 401k (maybe solo 401k if you choose to do gig work). I like driving and doing some Postmates deliveries or Lyft driving gets me exploring different parts of the city I would have no reason to go otherwise, and all that flows into a solo 401k. You can also qualify for EITC and savers credit, although generally speaking the Roth conversions will be more valuable long term as a single person... the equation changes as a parent where phaseouts, ACA, and future college financial aid tend to lean towards minimizing taxable income while the kids are still kids.
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JoeRetire
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by JoeRetire »

honigvod wrote: Fri Apr 30, 2021 12:42 pm
JoeRetire wrote: Fri Apr 30, 2021 10:16 am
honigvod wrote: Thu Apr 29, 2021 10:44 pm Age = 42 (in a few months)

Any other suggestions on things to consider in my planning?
Consider what you will do with all your time, other than "not work".

Do you have a bunch of young retired friends that you will be socializing with?
Hah! Nope! Most of my socializing outside of work is with work friends. The vast majority of my time is spent on solo hobbies: hiking, gaming, writing, art, and extended family. It is very likely I will be living with or near family and spend a lot of time with them when I go there. But yes, that is part of why I expect my expenses to be a little higher than now, for things to do and some inexpensive travel. I’ve done part of the Appalachian trail and want to do all the big ones, which are 6 month hikes each.
So. living a long life of solitude. That's not something most folks would prefer.

Good luck.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
Sahara
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by Sahara »

honigvod wrote: Fri Apr 30, 2021 1:14 pm
Sahara wrote: Fri Apr 30, 2021 12:13 pm One thing I'm not sure you've accounted for are the capital gains and dividends from the Taxable account. Will these be used for expenses, will they affect your AGI for ACA, will they be taxable? Under current legislation at your projected income, your tax rate for these will be zero. At the same time it is an element you may want to consider as you map out your plan.
That is why I want to wait until the year after I stop working, where my income will be effectively 20k (possibly more with part time work) to make the gains tax zero and have them carry me over the first five years and possibly until 59.5.
Right. Let's say you have $120,000 in 5 years. I believe $120,000 in VTSAX could generate $1,200 to $2,400 in dividends annually. I just want to make sure you're accounting for that as well as any gains you realize by selling shares.
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Watty
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by Watty »

honigvod wrote: Thu Apr 29, 2021 10:44 pm Any pitfalls I am missing?
You have a very detailed plan without a lot of margin for error. Semi-retiring might be more realistic. I knew several people who were laid off in their 50s who were financially pretty OK but not fantastic. They ended up working as school bus drivers to get some income and the job came with benefits. It did not pay a lot but it worked for them and they got summers and school holidays off so they had plenty of free time. At least where I live they are always looking for school bus drivers since it does not pay enough for someone who needs a full time job. I also know someone who worked in a school lunchroom for the same type of situation.

One thing to watch out for if you are planning on using COBRA is that there may not be any in network doctors or other in network medical facilities in the state you end up moving to. If you have something like Blue Cross in your current state then you cannot assume that Blue Cross of Tennessee(or wherever) will have any in network medical providers for your employers medical plan.

When looking at your Social Security benefit estimates be sure that you change the defaults to assume that you will stop working early, they default to assume that you keep working until you are around 65.
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honigvod
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by honigvod »

Watty wrote: Fri Apr 30, 2021 11:41 pm
honigvod wrote: Thu Apr 29, 2021 10:44 pm Any pitfalls I am missing?
You have a very detailed plan without a lot of margin for error. Semi-retiring might be more realistic. I knew several people who were laid off in their 50s who were financially pretty OK but not fantastic. They ended up working as school bus drivers to get some income and the job came with benefits. It did not pay a lot but it worked for them and they got summers and school holidays off so they had plenty of free time. At least where I live they are always looking for school bus drivers since it does not pay enough for someone who needs a full time job. I also know someone who worked in a school lunchroom for the same type of situation.

One thing to watch out for if you are planning on using COBRA is that there may not be any in network doctors or other in network medical facilities in the state you end up moving to. If you have something like Blue Cross in your current state then you cannot assume that Blue Cross of Tennessee(or wherever) will have any in network medical providers for your employers medical plan.

When looking at your Social Security benefit estimates be sure that you change the defaults to assume that you will stop working early, they default to assume that you keep working until you are around 65.
Now that is exactly the stuff I am looking for. I want the ability to do a multi-month hike or, if the budget allows every few years, a longer overseas bit of travel to do similar. If I could do that with my current (high-ish paying for relatively low cost of living area) job, I could easily see myself staying to mid-50s. But I want that freedom to enjoy things earlier rather than later. A seasonal job would be perfect but I can’t believe I never thought of bus driver or other school related job that I could continue to do for keeping busy and supplementing my life when back home.

Oddly enough BC of Tennessee (even though I am halfway across the us) is the provider my company uses. Currently have a good of in-network so should be ok but might change if I move.

For SS: on the ssa.gov it is hard to predict what I will have in the future based on continued work, but I can set it to ‘I will never earn any more than now’ and see what I would have, then compare it to the ‘keep working at x income until official retirement age’ and I can guess 5 more years of work would be somewhere in-between. It gets a bit complicated with ‘bend points’ and the like but it seems like diminishing returns cut in hard after a certain point. Will have to do the math and see when I will reach that spot.

Thanks!
Sahara
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by Sahara »

The Personal Finance Toolbox has a tab where you can enter your income and make Social Security predictions of this type. https://drive.google.com/file/d/18uN77c ... aDf6p/view

School custodian is another part time option, especially if you prefer an afternoon/evening shift.
fortunefavored
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by fortunefavored »

I think it's natural to focus on the income side (all your complexities around roth conversions, when you withdraw from where, etc.)

But your biggest risk are expenses changing. Spouse? Kids? Family support? Aging parents? Your life, at 42 does not appear settled. I'm not saying it isn't, but only you can answer that.

This blog post is required reading for what you're planning to do: https://livingafi.com/2021/03/17/the-20 ... more-15998

All the best (I pulled the plug around the same age you're planning to, but by no means lean.. so I will simply wish you good luck!)
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honigvod
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Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by honigvod »

fortunefavored wrote: Sat May 01, 2021 9:03 am I think it's natural to focus on the income side (all your complexities around roth conversions, when you withdraw from where, etc.)

But your biggest risk are expenses changing. Spouse? Kids? Family support? Aging parents? Your life, at 42 does not appear settled. I'm not saying it isn't, but only you can answer that.

This blog post is required reading for what you're planning to do: https://livingafi.com/2021/03/17/the-20 ... more-15998

All the best (I pulled the plug around the same age you're planning to, but by no means lean.. so I will simply wish you good luck!)
Spouse: Nope! And no plans for it either. I like my friends, have fun making new ones from time to time, and might have short term roommates again (especially family), but I haven't been in a real long-term relationship ever. Asexual, no interest in romance, and only ever tried because it was 'expected' and everyone thought I was missing something. Twenty-some years later and I think I'm the point I can say ' old you so' with no regrets. It might change without constant work socializing but I doubt it.
Kids: Hell no!
Family support: I will have the support of nearby family, almost guaranteed.
Aging parents: They are 20 years older than me and both are already retired (this year!) and living off retirement and still very healthy. They both, together, are living on about what I plan to by myself.
We talk daily and I visit them often. Well, I did, and will again when things are better in the world. We've had serious discussions of me moving in with them someday, either to assist if they need a bit. That would be the true 'cant work anymore' point if they did need it. But they have plans in place already and don't include me helping as part of it.

My life wasn't settled for a long time (college then military with lots of travel and low income with no savings) but I have been pretty solid for the past few years and even more-so with all debts paid recently. It's odd, but even with the above I set into a routine 'life cost' that I could afford back and enjoy in my mid 20s. As my income has increased, 90% of it has been transparent to me. I spend a bit more on myself and the rest gets stacked away.

My cost have living has gone down since then without debt.
<5k a year on the house (taxes, insurance, utilities)
<5k a year for food n drink
<5k a year for car insurance/fuel/repair and daily incidentals
<5k a year for fun stuff (new computer and parts every 6 years, similar phone cycle, 'treat yo self' games n more, subscriptions, a little travel)... and that's it.
I budget for 30k because I might expand those categories when I have less work (and with housing and moving costs might be there again if I do move) and I want to set a goal of 40k to soak up hidden costs and unintended but possible larger purchases. So it doesn't feel lean at all to me.

I'm still figuring out my full budget now that I have maximized my retirement accounts for the past year in full: with leftover that increased my emergency fund by a lot, and more now that the car is paid off too. The next five years will tell me how well things are going by how well I can stick to this plan.

Can't quite hit my targets? That's fine. At least I am following a path to the end goal that might take a few more years.
Hit my targets? Awesome! Time to re-assess and see if it really is viable. Perhaps with part time or seasonal work.
Well ahead of my targets? Yay! Maybe I can make this crackpot idea work after all.

Thanks for the blog link! Giving it a good read.
Topic Author
honigvod
Posts: 12
Joined: Thu Apr 29, 2021 9:08 pm

Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by honigvod »

Sahara wrote: Sat May 01, 2021 8:43 am The Personal Finance Toolbox has a tab where you can enter your income and make Social Security predictions of this type. https://drive.google.com/file/d/18uN77c ... aDf6p/view

School custodian is another part time option, especially if you prefer an afternoon/evening shift.
Thanks for the link! I need to play around with it as there is quite a lot there. But it seems like I will have just ~26k if I delay taking it to 70 years old, assuming I stop working right now. ~32k assuming 5 more years work at this year's income (no raise), and nearly 40k at 10 more years of income (which is when about when I hit that 'wall' of the second bend point). Might have screwed something up but that also matches what I have seen elsewhere.

Another one to add to the list. Ideally I would do something a tiny bit more people-facing since I have a lot of solo hobbies. Librarian (assistant), national park seasonal job for higher traffic months, part time work during 'vacation' living somewhere in the short term. Still have lots of time to think about it, but thanks!
rhubarbpie
Posts: 3
Joined: Mon May 03, 2021 9:18 am

Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by rhubarbpie »

JoeRetire wrote: Fri Apr 30, 2021 2:07 pm So. living a long life of solitude. That's not something most folks would prefer.
Sounds pretty great to me! :happy

I just wanted to say thank you for your original post because I'm in a similar situation: same age range, single, no kids, similar accumulation. I found the process of thinking through "ok, what if I stop working soon, could I make it work if I had to?" really helpful.

I am also planning to move my e-fund into I bonds. EE bonds could be another option, if you could hold them 20 years - you could use them for income for the 62-70 age range before you start taking SS.

The availability of ACA plans and the PTC has really revolutionized the doability of retiring early or being self-employed. I was a freelancer for a few years about 15 years ago and individual medical insurance was ruinously expensive and didn't cover much anyway. Unless you happened to do something where you made tons o' money or had a spouse who could cover you, it was basically untenable.
Topic Author
honigvod
Posts: 12
Joined: Thu Apr 29, 2021 9:08 pm

Re: Early Retirement Plan Sanity Check: Roth Ladder, ACA, Pitfalls I'm missing

Post by honigvod »

rhubarbpie wrote: Mon May 03, 2021 1:43 pm
JoeRetire wrote: Fri Apr 30, 2021 2:07 pm So. living a long life of solitude. That's not something most folks would prefer.
Sounds pretty great to me! :happy

I just wanted to say thank you for your original post because I'm in a similar situation: same age range, single, no kids, similar accumulation. I found the process of thinking through "ok, what if I stop working soon, could I make it work if I had to?" really helpful.

I am also planning to move my e-fund into I bonds. EE bonds could be another option, if you could hold them 20 years - you could use them for income for the 62-70 age range before you start taking SS.

The availability of ACA plans and the PTC has really revolutionized the doability of retiring early or being self-employed. I was a freelancer for a few years about 15 years ago and individual medical insurance was ruinously expensive and didn't cover much anyway. Unless you happened to do something where you made tons o' money or had a spouse who could cover you, it was basically untenable.
I don't want total isolation but had so many dreams of multi-month hikes where I can get some time alone AND meet new and interesting people along the way. Also, foreign travel! If I don't have time constraints of expensive flights and hotels and resort-style food I can plan so much more: short term apartment stays, food at home, waiting for deals/alternate modes of travel. It all means I can do a lot more over more time for less. And I can still have my alone time when I need it. Would love to do it now but don't mind waiting a while, as long as its not too long. 5 years would be amazing, 10 is fine if I have to but would prefer not longer.

I am not entirely sure on EE bonds yet... It might be worthwhile to plan a front-to back cash part of my portfolio: Get I-bonds now over the next decade that can last me until the 20 year mark when EE bonds would take over.
Buy 10k I-bonds/10k EE each year over the next decade until 52. I bonds cash out between 52 and 62, EE from 62 to 72 as I transition... Its worth checking out. I will just keep an eye on my budget and how much 'spare' I have after 401k/roth/Ibonds. I still want to do a taxable account as well to supplement Ibonds so that might come first.

Yes! I really like having ACA as an option. I hope everything will still be there and as good as, if not better than now. As-is, there is a nice 'keyhole' where transferring up to 200% FPL to roth per year as 'income' gives amazing discounts (even greater just under 150%) at a low tax rate. If I can hold enough 'cash' (bonds/taxable) by then, it really stretches the possibilities by delaying pulling from retirement accounts and reducing tax and insurance expenses by a great deal. I was worried for a while until I read up on things more recently.

Here is to hoping, and good luck on your journey as well! Glad to see I'm not the only one working on things from the low end just in case. =)
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