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Old 07-25-2014, 07:01 PM
 
Location: Right coast
4 posts, read 6,285 times
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I recently discovered CD and I wish I found it long time ago. Anyway I've been lurking a while so this is my first post. here's my question.

Can my wife and I afford to retire yet? We're both 61 so we'll be able to take SS soon. We have $1.1mio in our IRA. We've also got about $200k equity in our house. We'd be selling the house and moving to a cheaper part of the country. We also have a passive income of about $40k that should continue for the foreseeable future. No other debts and we pay cash for everything and don't live too expensive just too much eating out!

What kind of lifestyle could we look forward to in most parts of the country? (not northeast, California or other high cost areas). What we make now doesn't matter, I just want to know what life might be like with our situation. Any thoughts would be great, thanks you.
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Old 07-25-2014, 07:20 PM
 
Location: Long Island, NY
1,687 posts, read 2,057,134 times
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You're probably fine for most areas, but do you have health insurance?
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Old 07-25-2014, 07:21 PM
 
Location: it depends
6,074 posts, read 5,333,179 times
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I'd say you can take $55k out of the $1.1 million every year, if properly invested. Most others would say $44k. Add that to the $40k passive, and how much do you need? If in good health, defer Social Security. Unless you are a big-time spender, you got this.
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Old 07-25-2014, 07:26 PM
 
Location: Great State of Texas
86,093 posts, read 72,489,649 times
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There's a lot of variables to look at.

Is that $40K of passive income enough to live off of ?
If so then you should be fine.
Use the sale of your home to buy another outright.

What I did was set my retirement income when I was still working and tried to live off that for 1 year (excluding work related expenses). I under budgeted for what I spent. Made an adjustment and lived the next year off that and was fine.
So I pulled the plug.

The house and truck are paid for so my monthly expenses aren't that great.

I haven't touched my 401K yet and I'm years away from SS.

The actual dollar figure will be different for everyone.

Your $40K income is a good base..like a pension. Play with some budget numbers to see if that's enough.
Then the IRA is a fallback that you wouldn't need to touch for a while.

Just throwing out some suggestions.
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Old 07-25-2014, 07:35 PM
 
Location: Right coast
4 posts, read 6,285 times
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Quote:
Originally Posted by Chaser199 View Post
You're probably fine for most areas, but do you have health insurance?
Yes, have good health insurance
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Old 07-25-2014, 07:49 PM
 
Location: Right coast
4 posts, read 6,285 times
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Quote:
Originally Posted by HappyTexan View Post
There's a lot of variables to look at.

Is that $40K of passive income enough to live off of ?

If so then you should be fine.
Use the sale of your home to buy another outright.

What I did was set my retirement income when I was still working and tried to live off that for 1 year (excluding work related expenses). I under budgeted for what I spent. Made an adjustment and lived the next year off that and was fine.
So I pulled the plug.

The house and truck are paid for so my monthly expenses aren't that great.

I haven't touched my 401K yet and I'm years away from SS.

The actual dollar figure will be different for everyone.

Your $40K income is a good base..like a pension. Play with some budget numbers to see if that's enough.
Then the IRA is a fallback that you wouldn't need to touch for a while.

Just throwing out some suggestions.
No, not enough because if it were there would be no question. what's wrong with touching IRA? why is that just a fallback? To me it seems like passive income is more like a fallback because it can't be 100% guarenteed and might have a lifetime, like 10 years or so.

Last edited by zanshin; 07-25-2014 at 07:51 PM.. Reason: mAking clearee
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Old 07-25-2014, 09:22 PM
 
Location: Long Island, NY
1,687 posts, read 2,057,134 times
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Quote:
Originally Posted by zanshin View Post
Yes, have good health insurance
Then you should be fine financially. If you had no health insurance, you'd have to budget for medical care, which is obviously costly.

Have a great retirement.
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Old 07-25-2014, 09:24 PM
 
160 posts, read 89,118 times
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My husband and I have similar numbers to you. We also have the same amount in our IRA and have an income of a little over 45K. He's 62 and was suddenly laid off in January. At first he tried to find another job but he has a rare autoimmune illness which started getting worse about a month after he was home. So instead of looking for work he's been focusing on his health. He's much better now but not completely well. It looks like this is now retirement.

Being forced into retirement was a bit scary at first. We still have a mortgage and property taxes are high here. We thought about moving but after going over the numbers with our financial advisor (who happens to be my brother in law and is looking out for our best interest) we've decided to stay in the house a bit longer. So far our financial advisor has done very well for us and once we need to start drawing monthly cash we figured out what was needed. Between the other income that we have plus the amount needed from the IRA I think we should be fine. We plan on drawing between 4-5%.

At some point in the future we do plan on selling and moving into a less expensive place but we're taking it slowly for now. My husband really hopes to be well enough to return to work since he enjoyed the sort of work he did but he does keep himself busy. Who knows but I think you should be fine since you'll be living in a less expensive area and you can collect SS in another year.
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Old 07-25-2014, 10:04 PM
 
Location: Wyoming
9,416 posts, read 17,388,691 times
Reputation: 14079
Where I live in Wyoming the cost of living index is right at 100 (average), and you could live comfortably but certainly not lavishly on $50K, provided you have insurance, no debt, no mortgages and don't have any expensive hobbies like considerable traveling. I retired way too young and regret it, but you should be fine. Enjoy your retirement!
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Old 07-25-2014, 10:09 PM
 
10,813 posts, read 8,059,843 times
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Quote:
Originally Posted by zanshin View Post
To me it seems like passive income is more like a fallback because it can't be 100% guarenteed and might have a lifetime, like 10 years or so.
So you've a good chance of losing your $40K at 71 or so, after that will live on reduced SS and your IRA? With fiscal restraint, your dwelling paid for, and assuming the economy/market doesn't take a chunk out of your IRA when you need it most, it would be doable but not really comfortable in my neck of the woods (N TX, near DFW). You'll of course have tax due on the IRA but sounds like you'll be in a lower bracket, so all's well that ends well. I certainly wouldn't spend a penny of it before I needed to.
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