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Old 09-02-2014, 02:57 PM
 
3 posts, read 4,349 times
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Ok, so the DH and I have been really putting a lot of focus on planning for retirement for a while now. He's 59 and I'm 48. We've both been contributing to our 401ks since I was in my 20's and him in early 30's. We've both been putting in the max the last 10 years. He and I both will have small pensions and have a nice little chunk of change in the savings account for an emergency fund of 6-12 months of expenses. All cars are new and paid off and our newly built retirement home will be paid off in 2 years.

The plan once the house is paid off is to start living on what we think we be comfy with in retirement and socking the rest away. He'll retire at 66 1/2 but I'm hoping to throw in the towel at 55 when he retires. We are concerned about my healthcare coverage since I won't be old enough for medicare. Including the equity in our house and our investments, we're sitting on about 1 mil. now but of course that will increase between now the retirement day. We also live in a fairly low COLA state i.e. no state income tax but property taxes are a bit high. Can any of you professional retiree's advice me on anything you think we're leaving out that we need to consider that we may not be? Thanks for any advice or thoughts.
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Old 09-02-2014, 03:58 PM
 
Location: SoCal desert
8,093 posts, read 13,232,688 times
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Quote:
The plan once the house is paid off is to start living on what we think we be comfy with in retirement
This is one of the best things to do.
Put your budget in writing, see if it's hard to do, and find out where you're consistently over-spending. Or under-spending.

Quote:
anything you think we're leaving out that we need to consider that we may not be?
The decision of when to take and how to take Social Security.
Couples have a lot of decisions to make.
A lot of different ways to get the best benefit for you and the spouse
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Old 09-02-2014, 04:05 PM
 
Location: SC
8,791 posts, read 5,657,462 times
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Not to be a sour Sam, but when planning for your retirement. Work the numbers twice. Once for your life together and once for if you separate (though whatever means and cause).
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Old 09-02-2014, 04:06 PM
 
3 posts, read 4,349 times
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Can you expand on this please? This part is still a bit confusing to me and probably others as well

"The decision of when to take and how to take Social Security.
Couples have a lot of decisions to make.
A lot of different ways to get the best benefit for you and the spouse"
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Old 09-02-2014, 04:18 PM
 
Location: SoCal desert
8,093 posts, read 13,232,688 times
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Your age matters (age 62 to 70) as to how much you get, there's file and suspend, there's how your family health history factors in, there's a whole bunch of stuff that I didn't have to learn since I'm a single.

There are lots of posts (hundreds, I suspect) here in the Retirement Forum about how couples figure out which is the best way for them. All circumstances are different.

The couples will chime in here I'm sure, but here's 2 SSA publications/web sites to get you started.
When to start receiving retirement benefits?
Retirement Planner: Benefits For Your Spouse

Last edited by Gandalara; 09-02-2014 at 04:29 PM.. Reason: Fixed link
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Old 09-02-2014, 04:23 PM
 
3 posts, read 4,349 times
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Quote:
Originally Posted by Gandalara View Post
Your age matters (age 62 to 70) as to how much you get, there's file and suspend, there's how your family health history factors in, there's a whole bunch of stuff that I didn't have to learn since I'm a single.

There are lots of posts (hundreds, I suspect) here in the Retirement Forum about how couples figure out which is the best way for them. All circumstances are different.

The couples will chime in here I'm sure, but here's 2 SSA publications/web sites to get you started.
[URL="http://ssa.gov/pubs/EN-05-10147.pdf"]When to start receiving retirement benefits?[/URL]
[URL="http://www.city-data.com/forum/Retirement Planner: Benefits For Your Spouse"]Retirement Planner: Benefits For Your Spouse[/URL]

From what I've read, looks like he'll start his SS at 65 but I'll wait until 70 but still weighing out the options.
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Old 09-02-2014, 06:39 PM
 
Location: Great State of Texas
86,093 posts, read 72,507,006 times
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My suggestion is to try to live on your projected retirement income for 1-2 years. Exclude any work related expenses or expenses that will disappear after you retire.

I did that and had to readjust after the first year and then was fine.
So I wasn't surprised post retirement.
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Old 09-02-2014, 08:00 PM
 
Location: 2016 Clown Car...fka: Wisconsin
738 posts, read 813,511 times
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I think you have thought through the logistics quite well actually and wish everyone would take such a pro-active approach to planning and funding their retirement. I do agree that health care costs would be a deal breaker because you can never really 'plan' for health care crises that arise as well as the aftercare.

FWIW...I think a lot depends on how you want to live after you're both retired. Do you want to travel? Make sure you figure that amount in. Do you want to start a business? Include it. But if you're relatively happy puttering in the garden or volunteering at your local church, you won't incur as many 'extracurricular' expenses. I faced a similar situation a while ago while trying to 'forecast' how long our retirement income would last. Thankfully, it has worked out.

The way I projected our financial future was pretty much based on the formula below. However, this is only one perspective from the expense side only. (It does not take into account the amount of interest generated by your investments, the addition of social security income, pensions or gifts. You will have to apply that to the income side to get a more accurate picture).

Your expenses now (I used $3,000+10%) X 12 months X number of years (I selected 20 from a retirement date of 65)

So it looks like this: $39,600 x 20 = $792,000

To assess the impact that inflation will have on those expenses, you need to take $792,000 and multiply that amount by your best guess as to what the rate of inflation will be. For my purposes, I used an average of 3% and applied it over a period of those same 20 years in order to estimate a retirement lifetime's worth of expenses.

So it looks like this: $792,000 x (1.03 to the 20th power) 1.81 = $1,433,520.

Since you have already noted that you have a large chunk of funds set aside and you have relatively little debt, it seems perfectly reasonable in the above scenario, that you should be able to meet your expenses. But...if you require $6,600 a month, then the picture looks very different:

$6,600 X 12 X 20 = $1,584,000
$1,584,000 X 1.81 = $2,867,040

If that amount is closer to what you think you'll need, then you may have a longer wait until retirement.

Yes, this is a very rough way of projecting, but at least it may help you to formulate a different strategy going forward if you're not close to your financial goals.

RVcook
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Old 09-02-2014, 08:17 PM
 
Location: Central Massachusetts
4,800 posts, read 4,847,776 times
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Quote:
Originally Posted by RVcook View Post
I think you have thought through the logistics quite well actually and wish everyone would take such a pro-active approach to planning and funding their retirement. I do agree that health care costs would be a deal breaker because you can never really 'plan' for health care crises that arise as well as the aftercare.

FWIW...I think a lot depends on how you want to live after you're both retired. Do you want to travel? Make sure you figure that amount in. Do you want to start a business? Include it. But if you're relatively happy puttering in the garden or volunteering at your local church, you won't incur as many 'extracurricular' expenses. I faced a similar situation a while ago while trying to 'forecast' how long our retirement income would last. Thankfully, it has worked out.

The way I projected our financial future was pretty much based on the formula below. However, this is only one perspective from the expense side only. (It does not take into account the amount of interest generated by your investments, the addition of social security income, pensions or gifts. You will have to apply that to the income side to get a more accurate picture).

Your expenses now (I used $3,000+10%) X 12 months X number of years (I selected 20 from a retirement date of 65)

So it looks like this: $39,600 x 20 = $792,000

To assess the impact that inflation will have on those expenses, you need to take $792,000 and multiply that amount by your best guess as to what the rate of inflation will be. For my purposes, I used an average of 3% and applied it over a period of those same 20 years in order to estimate a retirement lifetime's worth of expenses.

So it looks like this: $792,000 x (1.03 to the 20th power) 1.81 = $1,433,520.

Since you have already noted that you have a large chunk of funds set aside and you have relatively little debt, it seems perfectly reasonable in the above scenario, that you should be able to meet your expenses. But...if you require $6,600 a month, then the picture looks very different:

$6,600 X 12 X 20 = $1,584,000
$1,584,000 X 1.81 = $2,867,040

If that amount is closer to what you think you'll need, then you may have a longer wait until retirement.

Yes, this is a very rough way of projecting, but at least it may help you to formulate a different strategy going forward if you're not close to your financial goals.

RVcook

First RV I agree OP has done good planning to this point. Your calculations should help them decide on the when and how.

OP I think you are right as to the ages you should take SS. Your age differences are as such that filing and suspending will not be a good option. Even waiting until you reach full retirement age your DH will be well into 70's. Just one last thing. I cant say this enough. Your 401k savings will be a great asset to you. Just make sure you take your required minimum distribution RMD at 70.5. Your individual accounts are taken into consideration based on the age of the holder. DH 401k begins first for obvious reason then when you reach 70.5 your account will need to be tapped for RMD. The reason is that 50% penalty for missing it. You pay to the IRS 50% penalty on the money you should have taken.

Oh and OP you have done a great job to this point. I believe you will have the resources to enjoy life after work.

Last edited by oldsoldier1976; 09-02-2014 at 08:19 PM.. Reason: Just adding a congrats on the planning.
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Old 09-02-2014, 09:08 PM
 
Location: Whereever we have our RV parked
8,786 posts, read 7,704,486 times
Reputation: 15057
There's no way to know what health care insurance/Obamacare will be like in 7 years. Pay attention to changes, educate yourself and wait to see what happens.
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