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We met with our Planner tonight and one of the questions for which I asked him to generate a prepared answer was "What will our monthly income be if I retire in January 2020, and in January 2023?
The Good News:
We can retire in January 2020 (I will be age 63-6) with a sufficient financial safety margin to continue increasing our Net Worth until our death.
The Bad News:
He recommends delaying the start of our guaranteed income streams from two of our Annuities until my wife is 65, which would make me age 67-9. This means our income will be less than our expenses for four years, and the Gap would need to be closed by taking money from accumulated savings. Part of me says this should be no big deal, after all that is why we saved for decades. The flip side of my brain says "What, draw off savings starting in month #1?!"
The Good News Part 2:
The amount of money we would need to draw off our investments is less than the projected annual income produced by our savings balance, so our Net worth would continue to climb during those four years, just not as much. For years #5 till death our guaranteed income will exceed our projected expenses.
Decisions:
Retire as planned in at age 63-6 and draw off annual investment income to cover living expenses.
Work until age 67-9 at same job and have investments grow faster.
Retire at age 63-6 and then become a Contract Employer at the same job but earning 2x what I am paid now. Either full-time or half time, (half time would be for same total annual income I am receiving now). No guarantee this is possible but many others do exactly this. Maybe for two of the four years, or all four years, of the Gap period.
Two hours since our meeting but I am leaning toward retiring at the initially planned time, working part-time as a Contract Employee for a two year period. The decision is for my wife and I to make, but I have no need to rush the decision.
Now you have two problems. First you need to decide whether your advisor is giving you reliable advice. Second you need to decided whether you should take that advice or not. Personally I think your advisor has it right but you did not provide enough details to be able to make that determination.
Drawdown, and when, from each savings source will present good or bad tax situations. SSN decisions will funnel more coin into pocket. When as how this blends into your financial plan (when to exit the workforce) makes performance the key.
Now, having time to evaluate the Wednesday meeting, the battle with the brain begins. Fear is a strong emotion and often plays a much greater role in decision making than logic. Best to you in this determination.
Thanks for the comments. We have been working with our Planner for 15 years so we have confidence in his advice. Inflation was included in his spreadsheet that he provided us. Tax implications were not included and he told us that. However, when he did a very quick Tax Implications analysis after my wife's tax question it indicated a probable maximum 12% tax rate on the income above the new Std Deduction amount.
My mother did the third option--worked as a contract worker for a little over 2 years. She did 20 hours a week, mostly from home. It was really the best of both worlds for her.
My mother did the third option--worked as a contract worker for a little over 2 years. She did 20 hours a week, mostly from home. It was really the best of both worlds for her.
That is the direction I am currently leaning. My wife favors this approach too, staying just shy of saying "You can't retire yet."
I talked to one of the recent retirees now working as a Contract Employee in our Group to learn how this re-employment strategy is initiated. Sounds doable and with a high degree of success. If my initial approaches to the various Managers who might be able to use my services as a Contracted Retiree are not positive, then I simply delay retirement - or retire and accept a nearly flat growth rate of assets for four years because of the draw-down.
My advice take the money as soon as you can and enjoy your life. Tomorrow is not guaranteed. Live your life. Oh and BTW I am not a financial planner
Agree.
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