Is Our Plan Solid ?

[honobob]

Aloha, what happens with the wife's pension and SS when she's no longer there? Have you looked into the different strategies of claiming on the spouses SS to maximize the benefit. It seems that you'd be better off delaying the claim on YOUR SS til 70.

Also do you really want a house in retirement? It will probably make you car dependent. I don't understand being in a suburban house in Hawaii that could pretty much be anywhere on the mainland. I am retired and have a SFR in SFBay area but would not live there unless I was out anyway for work. I chose a condo outside Waikiki. On the beach, ocean and Diamond Head view and a 15 minute walk to Waikiki. That's Hawaii to me. But I'm giving up square feet but it actually forces me to not clutter up my life. I considered outer islands but health care is an issue. Also I think the pace of life would be TOO slow. I'm still new at this so would like to hear your thoughts on location and housing type.

[roninop]

Folk's, thank you for all the replies. To answer some of the questions: Wife's pension has a 100% spouse survivor benefit, we opted to take this when she retired. We are "bogleheads" and yes we invest mostly in low cost index funds at VG and FIDO. We started investing in the early 80's when the DOW was around 2,600 IIRC. We have no children so we were able to save 50% of our income and LBYM for a long time. We are very modest in our life and pretty happy that way.

I would rather not touch the principal although I have a good grasp of the total return approach in retirement and the 4 % SWR. Yes, we can increase our income but want to do it as tax efficiently as possible. I have a meeting in the near future with our FIDO and VG rep's to discuss a course of action.

honobob, yes we could optimize our SS and may yet do that. DW wanted to take hers at 62 for reasons too long to go into here, so I can either go half at my FRA which is 66.4 or, defer until 70 for the maximum benefit. I haven't fully decided except that I will add there is not significant longevity on the male side. Maybe the gene will jump the shark and miss me and I get to 89 or longer. Either way, take it early defer using some assets or go the other way. I have 3 years to figure it out. BTW, that particular topic is a constant source of debate on the boglehead forum.

A number of my family live on Oahu and are born there. We come out once or twice a year and have also visited the other Islands extensively. We were married on Maui which I love, but being close to our younger family members is pretty important. Hence, while we could buy a nice home on the BI (I have a relative there as well) our heart is set on Oahu.

We've been to the BI twice in the last two years looking at RE and honestly, it's just not for us. Much to slow and I have some concerns about health care. We also enjoy some city life and love having the wide variety of restaurants on Oahu. We looked at many homes on the BI, our favorite was about 1,400 sq. foot 2 BR/2 Bath with a nice patio. We have 2,200 here in OP and spend 90 % of our time on the main floor. We also have a full basement (unfinished) which we simply do not use except for box storage and such. So, getting around half of what we currently live in is our comfort spot. Not too big that we can't take care of and not so small we would feel cramped.

Thank you all for taking time to respond, it's been very helpful to hear from each and every one of you. I promise to come back and give you an update on what we finally decide to do.

[davephan]

You're not a winner in 'life's lottery', you lived your life the right way, making the sacrifices in life to get ahead, and living below your means. However, there's always some random chance in life that can make things better or worse, but you can only do what you can do, living in a responsible way. We are also extreme savers. One concern with retiring before 65 is health care, but it sounds like that's already under control.

It sounds like you done all the research the need to be done to make the move! I talked story for about an hour with a local who was fishing that I happened across on the Big Island. He said it took him about a year to get used to how much slower life was on the Big Island after living a long time on Oahu.

It makes sense to take social security early if you don't need social security to eat and to live, if it's just extra money to invest. If invested, it should outperform the higher social security payment, and sacrifice in delaying social security. You might also consider the number of years it takes to break even if you defer social security. In many cases it take 13 to 14 years to break even. By that time, you might paying the higher social security benefits to the nursing home, or worse yet, you might not live long enough to break even. If one spouse made significantly less money in their working career, then collecting one social security account with the spouse collecting half might make sense. I don't think that works very well if you both made a lot of money in your careers.

If your ages are close, then the pension payments probably aren't reduced by too much for 100% spouse coverage. You might check if the pension has 'bounce back'. That is where you took the payment reduction for the 100% spouse coverage, but the spouse dies before you, then the pension reverts back to the higher single life pension.

The "Bogleheads" are a group to learn from. Recently, I started reading several "Boglehead" books. Thomas Stanley's "The Millionaire Next Door", and "Stop Acting Rich" are also very good books about the right way to live your life.

[honobob]

Oahu Real Estate Instant Search

Well now that I know that the pension continues I'd say you are probably selling yourself short on the housing. Why move thousands of miles to be near family only to have a two hour drive to see them. If you add $600,000 mortgage to your $550,000 you'd have a nice house NEAR family. Here in Hawaii the appreciation on homes pay YOU to live in them. At low rates today your payment will be less than $2700.

I'm on the fence with SS but if you don't need it why collect now? The thing is the larger SS will help you with LTC if needed and is pretty good longevity insurance . You have a good nest egg but when you have potential LTC at $250,000-300,000 a year 20 years from now the larger SS and pension will slow the drain on the nest egg.

[blau808]

Originally Posted by roninop

A number of my family live on Oahu and are born there. We come out once or twice a year and have also visited the other Islands extensively. We were married on Maui which I love, but being close to our younger family members is pretty important. Hence, while we could buy a nice home on the BI (I have a relative there as well) our heart is set on Oahu.

.

Your younger family members will probably have the best advice for you, ask them!