| On the edge of retirement - has my plan missed anything |
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nguy44
New Poster
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Joined: 23 Jun 2017
Location: maryland
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| On the edge of retirement - has my plan missed anything |
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Hello,
No plans are perfect, and one cannot predict the future. But that does not stop me from planning. I believe I have accounted for most things, but am wondering if I have left any glaring holes open. Here are the messy details, which I can expand upon if needed. I apologize for the length, but wanted to put everything in one place. All amounts are in US dollars:
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Me and Family: I turned 59 this, wife will turn 60 in a month. We have three children, ages 32,30, and 23. The two oldest are on their own, the youngest has one more term of college.
Occupation: I provide IT sales and consulting support for a large fortune 500 corporation. I have been with the company for 38 years, through many mergers and acquisitions. Wife is a college professor and currently "retired" (i.e. she chooses to limit her teaching right now).
Salary: Mine is currently $180K base annually. Bonuses for hitting revenue and support incentives can potentially add another 35%. Wife taught at various schools as an adjunct professor and ever made much. So far this year her income is $7K. Her earnings were either saved/invested it or applied towards college expenses.
Expenses: We live comfortably below our means. We use Quicken to track expenditures. For the last 10 years we have saved annually between 26 and 41 percent of our gross income. The biggest impact has been taxes college expenses, but fortunately those expense are over or will be much lower.
Net Worth: Approximately $2.5M. We were not very serious about saving/investing for retirement until about 20 years ago. I started maxing out 401k savings at that point, along with getting our spending better under control with future retirement as a goal.
Assets:
- $380K cash (due to a combination of being able to sleep at night plus not wanting to be forced to sell
equities before we take SS)
- $357K non-retirement stock and bond mutual funds (77% stock, 23% bonds)
- $100K IRAs (100% stock mutual funds)
- $1.3M 401K (currently 43% stock mutual funds, 57% guaranteed bond fund)
- $470K home value (based on from local realtor's appraisals of its current condition)
Liabilities
- $68K mortgage at 2.875%, monthly payment is $616, at current rate will be paid off in 2028.
- $6K total car loan balance at 1.90%, both will be paid off within a year
Future Pension: If I retire this year it will be $72K annually, non-COLA. The company plan is fully funded so their is little risk.
SS: The earliest date we looking to take is 2021, when I will be 63. Based on the detailed SS calculator and not working beyond this year, I will get $25.8K annually, wife will get $12.5K annually. If we wait until my full retirement age in 2024, I will get $33.5K, wife will get $16.7K. The decision on when to take SS will be based on our financial and health situations in 2021 and subsequent years.
Target retirement expenses: Starting at $125K per year, with future adjustments for inflation. The amount is based our our historical spending and adjustment for post-retirement changes such as taxes and health care. From various calculators and a FPA I have access to via my company, this is a conservative amount based our own retirement income streams.
Initial retirement spending plan: At the beginning of each year, set aside the difference between the pension and our projected expenses into a "spending" account. Before SS, use $36K from cash and the rest from investments - first from income produced by non-retirement investments (we plan to start spending from them to avoid potentially massive RMDs at age 70.5), and then from retirement accounts. If the market was good the prior year, we might take out more. If it was not, we would just take out enough to meet our baseline.
Post-retirement income activities: My plan is to not require myself or Wife to work. But I do not mind picking up part time work that I would enjoy. There is a strong chance that my company would ask me to work part time, but I do not want to count on it. Also, former workers and clients have asked to let them know if I decide to retire. Or I might look for something part time that completely different, based on my hobbies. But I want this to be a choice based on desire and not necessity.
Current reasons for hesitation:
- Giving up my salary. Yes, I know of many folks who have died on the job, I hope not to be one of them. I never imagined earning this much money for a job that at times is like a lobby. I now work at home so no commute issues, but I do have out of town travel on average a couple of times a month. No job is perfect, and wanting to complete control over my time has become more important. This is more an emotional decision I need to deal with.
- The unknowns of health and LTC insurance. My company provides minimal retiree health insurance. We have just planned for a large amount to deal with any "gap" before we reach Medicare age. We are researching LTC and trying to figure out if we need a policy or can self fund.
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So this is where I stand. I feel like a fledgling that is on a branch at the edge of the nest, flapping its wings, strong enough to fly, but needing a "push" to make that first leap into the world of retirement. Of course, my company has regular layoffs several times a year, and may make the decision for me, which is fine.
Any thoughts or advice on things I have note considered in my plan are welcome.
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Sat Jun 24, 2017 3:58 pm |
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David B
First Time Poster
Cash: $ 0.20
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Joined: 08 Jul 2017
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I have started my own essay ontime business this year and I have earned so much many which I couldn’t earn in my last three years when I was doing job. So now I really recommend to others as well that you should do also your own business it will give you more benefit as compared to job.
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Sat Jul 08, 2017 5:39 pm |
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tl5tl5
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Joined: 30 Mar 2017
Location: Fresno
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| Questions |
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Hi Nguy44,
Congratulations on being close to retirement. It seems like you have done a great job at building up your assets over the years and it's been well worth it! I spoke with my son that does comprehensive financial planning after reading your post. Some common questions he gets a lot from clients is this which you have answered somewhat in your post:
1. What’s the best way to avoid the risk of outliving your assets? How much should I be taking out of my nest egg to sustain the life I’m living?
2. What’s the best way take income from your assets to minimize taxes? How should we take inflation into consideration for our plan?
3. When is it best to take Social Security for myself and my spouse?
4. What kind of LTC policy should I look into getting?
Have you thought about the right asset mix in your investment accounts once you get out of the accumulation phase and start with the preservation/spending phase? Also, I know you mentioned looking into LTC, any luck with that?
I hope this helps!
Tom.
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Fri Sep 15, 2017 4:58 pm |
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oldguy
Senior Member
Cash: $ 751.85
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Joined: 21 May 2006
Location: arizona
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quote:
$380K cash (due to a combination of being able to sleep at night
I retired about 19 years ago. After setting aside some cash, I learned that NOT being invested kept me awake, lol. I had been fully invested for so many decades that it bothered me to have 'dead' money sitting on the sidelines, not working for us.
One surprise for us was that, w/o the cost of SS, the 401k investments, the life insurance (we canceled ours), our budget in retirement was much lower than we expected. You will probably be surprised by how little you miss a paycheck - and you'll wonder why you didn't retire years earlier.
As for when to take SS - the planners seem to focus on how to get the most money out of SS during your life. But IMO that may be the wrong metric, I put more emphasis on the time-value of money. Eg, I'd rather have $8000 now than $10,000 8 years from now, I can grow that $8000 to a bigger value in 8 yrs.
As for worrying about what you'll do with your time - it on't even occur to you, you'll be too busy. We get up each morning at 5:30A out of habit - get in the car and go to a bagel place to read the paper and drink coffee.
Good luck, it's good fun. 
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Fri Sep 15, 2017 6:46 pm |
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kennyw
New Member
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Joined: 11 Jan 2018
Location: PNW
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Wow! I'm jealous! I have 2 defined benefit pensions. Both of them together are not gonna be equal to yours however. One, I'd already drawing. The other doesn't kick in til age 65.
Also, I don't want to take social security early. So, I'm planning on some pretty significant drawdowns to fund my early retirement. Then, We'll reduce our drawdowns as we begin receiving social security and pension.
I personally like having a couple of years worth of expenses in an e-bank savings account. This gives a cushion that is firewalled from the stock market and FDIC insured. So, I won't have to sell into a down market. And, I have enough to cover unplanned expenses if I'm having a really bad time and don't want to wreck the budget over it.
I've been reading books by Pfau and Collins. Good Stuff!
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Thu Jan 11, 2018 7:36 pm |
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