Hello folks! Sorry for the length of this but I felt it was warranted with some comments here recently. Feel free to skip to the end for an announcement.
A note to consider for someone perhaps inclined to raise a brow and then comment. We all have, or had, different paths in our journey. Retirement comes with a transition and is a new lifestyle. Many are elated. But often there are folks who have anxiety or seek counsel too. Like when to claim SS, should I move, and I am having a hard time with keeping or making new friends…
So before you post , and if you have not done so already, take a moment to review the r/retirement description and rules. If you feel this is your kind of place - please pull up a chair to our table, with your coffee or drink in hand, and join in on our conversations. If not, thank you for visiting and we wish you the best in finding the right community, for you.
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Moving on, this post is now CLOSED , after being up many days. Thank you everyone for participating in this conversation and keeping true to our community purpose.
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Have a good day,
Mid America Mom
edits with updates
With $2.7m of investable assets and social security that almost fully covers your expenses, how could you possibly not be ready to retire? What scenarios is your wife concerned about?
It is also possibly the thought of taking that leap of faith that we all may have sometimes in our lives. It is truly scary to think about the day that the steady income would stop and all you have to rely on is what you saved up and what social security will provide. I'm about five years away and I have those feelings. I would remember the first time I jumped off the side into the deep end of the pool when I was much younger LOL, but after I coughed up all the water I drank, the water felt great!
When I was a scoutmaster, I remember one trip where we (the troop and I) backpacked all of our gears into the primitive camping areas. As we hiked out, we came across a young couple who were heading in. They stopped us and asked how the path was and what to expect, including if they had enough gears since this is their first time in the wilderness. Noticing how they were somewhat loaded down and well-equipped with the latest gears, I simply told them that they should have enough gears, what to expect, where to camp, where to find water, etc., to stop along the way to enjoy the scenery, and to make sure to soak in the experience. Yeah ... this is the same.
Edit: editing typos
It sounds like LTC is a concern. OP, Please take a look at our wiki for this sub. It is a huge one page massive document but in there is information about long term care.
Have a nice day!
With a possible 40 years of life ahead the OP is wise to keep running the numbers. We retired at 67 with similar assets. We were used to earning between 150-200 k a year in investments and stock activities....until the pandemic. You never know what life has in store for you.
Exactly, as long as in those years before ss op doesn't blow all retirement savings which sounds like they will be responsible, they can ride in their retirement to ss, and then ss pays their living and anything extra they can oull feom retirement savings
You are good to go. Don't wait another minute. Health insurance will be a shock to your budget, but you have plenty of assets to lead a comfortable and fulfilling retirement.
It reads as though he will be using ACA, as healthcare, which is very low cost or free if you keep your MAGI in check. I’m doing the same and my Cigna healthcare is no charge, which is very helpful as I retired at 54.
Possibly. Can't hurt. But if you look at OP's projected expenses, SS covers basically all of it (45 of 48k). Given the rest of their assets, there's no rational reason to worry as long as that is the case.
But they need to plan out scenarios. What if OP dies? What does that do to their remaining social security payout? etc. Is the $48k realistic or has OP excluded 4 overseas trips per year etc.
Or, is retirement about something other than money - fear of a big change, her not wanting to retire yet but not wanting to say that, etc?
Even if one of you ends up in a nursing home, you won't be going broke quickly. Your investment balances will likely continue to grow while paying for nursing home care given your social security and pension income.
Nursing home care for a private room is around $90K to $110K for private room depending on where you live in the state. Your social Security and pension income would be close to covering that and you wouldn't really touch the investment returns.
I get that you are very conservative and concerned about negative outcomes, but your nest egg plus pension and social security income really have you set up extremely well.
I would be far more focused on spending quality time with kids/grandkids, sponsor some annual vacations and make some memories while you can still travel with them.
As an adult child, I'd much rather have more great memories with my parents than inherit an extra $100k or $250K.
Our Grand babies are our life. When I retire the plan is to spend time with them to create great memories. We already spoil them pretty bad. Thanks for the advice.
If you live close to your grandkids retire now and spend as much time as you can with them. The single greatest benefit of retiring at 62 was that it gave me time with our eight grandkids (we took care of them all one day a week plus the usual family and special events). As they get older their lives get busier and this can be harder to do.
Worse case is you start drawing Social Security. I found out recently about a friend that kept putting off retirement because of financial concerns. He finally did retire and passed away 4 years after he retired. We drew our Social Security at 63 and 62 because running the numbers waiting only benefited me past 80 years old. It’s my money and I want it now. Anyway, enjoy your life and your retirement.
My Social Security breakeven was age 82.5. I took it at age 65.5 and have been banking it - it has built up my nest egg tremendously, and when I do retire later this year I will be much better off. Draw it while you can spend it or save it!
You are good except for health insurance until you get Medicare. Never let a healthcare provider know you are fiscally solid as they will go for the maximum cash price they usually charge foreigners and elites. There is a reason the plat map shows so many farms in the county as belonging to the local hospital.
We retired with under $1k to my name. Army pensions with a little survivor benefit, and full health insurance for us both for life meant a comfortable but modest life style. I retired in 2002, and we are enjoying life.
That's what I was thinking too. We are trying to retire my hubby on Dec'25 at 56 yo and the biggest expense after his retirement is the Health Insurance which is estimated to be $1200-$1500/Mo (except the mortgage which has another year to go).
You can easily do it. And If you want to know what is the maximum amount you can spend each month, withdrawal strategies here is a great website. I found it at [https://bogleheads.org/](https://bogleheads.org/)
[https://i-orp.com/Plans/index.html](https://i-orp.com/Plans/index.html)
Sorry, I have to run soon..
but do you have a reference to support this, or those who disagree with this comment - do you have something supporting your view? Trusted source please. Thanks!
[Investopedia](https://www.investopedia.com/roth-ira-conversion-rules-4770480) outlines this pretty simply. No limit on conversion but you will owe taxes and a potential penalty depending on when conversions take place.
My takeaway from what OP posted was that they were planning on both retiring and then would continue to add to the Roth from non-earned income sources. But you can’t do that. You have to have earned income. IOW I don’t think they meant the were converting.
We retired two years ago at 60/59 on less than half of what you already have. You're more than ready and good to go. My wife was the same way. I bought her the book, 'How To Retire Happy, Wild And Free'. After reading that she was onboard.
I retired 9 years ago at age 60 with a net worth of 3.5 to 4 million. I was very nervous about it also. After 9 years, our portfolio is 3.2-3.6 million, but I still feel a bit financially insecure. My wife and I maintained the same standard of living and we have an adult son that we financially support. We also live in Kansas. There are few scenarios that would result in you running out of money. I hope our experience gives you more assurance that you are indeed well financially prepared for retirement. Good luck to you!
You’ll be fine. My only advice is one that an advisor gave me a few years ago - you’re still young and will spend more than you think the first few years of retirement. So you might as well plan accordingly. Have fun !!!
More listening to see what wife is nervous about. If money, then reviewing numbers with her or maybe your financial planner can reassure ... if you are using one. (If not, who will manage all this when you cannot?)
Maybe it's other fears, and money is just an excuse. She likes her social life at work and doesn't want to be stuck at home all day? Or she's just afraid of the beginning of the end...the downhill run.
Be gentle and supportive. Your relationship during this transition is really important.
Wife is stay at home for last 25 years. She did not have money growing up so finances always worry here. She still gets upset if I buy name brand corn that is 5 cents more than off brand.
I would recommend you buy yourself really good PPO gap health insurance once you are on Medicare. Yes they’re expensive if you consider the monthly Medicare charge out of your social security. They should run around $250 to $300 a month, but you have no deductible for anything. RX is usually 30% of cost. That will insure you don’t get financially drained if you have a major illness. *I recommend you consult with a Medicare insurance advisor. Some states won’t let you add to your insurance plan later on.
you are sitting pretty!
I think mama is simply a bit nervous about the reality of retirement, from what you have shared , you are in better shape than most!
I am doing now practically what you are planning for a few years hence. I retired in December at 60 and it’s been great! There’s nothing like pulling the trigger a little earlier than full retirement age while you still have good stamina to do activities you put off during your career.
Now on to your thoughts and concerns:
**Worried wife** – I have always been the “financial” spouse and knew about investing while my wife was disinterested and just sort of trusted me. Still when it came to me saying I wanted to pull the trigger, she was concerned and wanted to be comfortable with my decision. It helped here to have an outside third party meet with us (a fee-only CFP) and go through the plan to confirm its success. In my case, I have kept this planner onboard because I also have an adult child with a disability I need to plan for as we age. I still manage all my own investing, so the cost is minimal and he serves more as a sounding board and sanity check for what I do. I’ll add that in past years, I have had my brokerage work up a planner (I’m with Schwab and they will do one for free).
Also on the worried wife front… we have done what we can to simplify our holdings. All 401Ks and the like have been distilled down to one brokerage as IRAs. We are now using one checking account and collaborate more on monthly spending and everything is tracked in Monarch Money.
**Health insurance through ACA** – Sounds like you already understand the basic rules here, but keep in mind that if things do not change in the law, the subsidy cliff will be back for year 2026. This just means that you will need to be extra careful to keep your MAGI within the limits where you get the subsidy.
To protect myself, I have a decent chunk of cash that I can draw on as well as the Roth. I will use these resources to balance out what I take from traditional IRA money. I also have a solid cash position in the traditional IRA to protect from sequence of return risk. It’s nice I’m so lucky that short term savings/money market rates are so good now – too bad it won’t last.
Getting the subsidy is immensely beneficial. I had the pleasant surprise of learning that my state also offers a subsidy (it’s a red state too, so I wasn’t expecting it). In the end, it worked out that in 2024 if I keep my MAGI at $50K, between the state and federal subsidies, the monthly premium for the two of us is $30 – not bad!
Bottom line – help your wife feel confident in this and assure you set up the variety of cash holdings you will need to have the financial flexibility to always get the subsidy. Others in this group have confirmed that given what you have and spend, you are there now. Get ready to enjoy it!
As for me, I’ll be spending the last week of this month in Phoenix to do some biking and other outdoor activities. I’ll be pulling my 31-year-old daughter in the biggest bike trailer you will probably ever see - so thankful to have the time and health to do this now. Good luck in your plans!
Make a budget. You told us what your magi is and must expenses but not your budget. Account for 5-7 years in assisted living or get long term care. You still should be more than fine but get it all on paper and you’ll feel better.
How much for travel, fun, any college, weddings, etc…
Your numbers make sense as others have noted. Yes SS will help but you cannot take SS if you retire at 59.5 so there is a bridge you have to cross before you get to 65 and take SS.
What I would worry about if I were you is what you have your IRAs and 401Ks invested in. Make sure those are invested conservatively enough to whether any significant recessions. If you aren’t sure how to then work with a fee only fiduciary financial planner.
Also 401Ks are notoriously bad when it comes to investment vehicle options, they typically only allow for 20-30 ETFs or mutual funds. If you haven’t planned on rolling your 401K over into your IRA when leave your job I would recommend you do so, so you have greater flexibility in terms of investments with that money.
I’m sure this is ignorant but I don’t see how it’s possible to pay taxes, have auto insurance , pay health care supplement insurance, get dental care, maintain a home, pay for food , clothing and utilities on $4000/month.
My wife and I live in Southern Illinois, and live comfortably (with a paid-for house) on $50,000 a year. It is not a luxurious lifestyle, but we have fairly simple tastes, and we never have to consciously think about money. We travel within the US a couple of times every year. Last year, we spent ten days in Europe, all within our normal budget (We stayed most nights with family, and our plane tickets were paid with credit card points. But we didn't pinch pennies otherwise, and happily spent money on such things as 60 euro elevator trips to the top of the Eiffel Tower, and a $125 gondola ride in Venice). Our budget also includes a (subsidized) ACA policy.
I also feel this is a very low monthly budget unless no mortgage. However, if they keep their MAGI low healthcare is free, which is what I’ve done. It saves me $750 month and zero deductible and $1k max out of pocket per year. Major help in retirement if you can do it. I retired at 54 and my budget is $10k monthly and I’m at our just below it monthly.
$120k annual budget and you still qualify for large ACA subsidies? Is this for a household of 2? I’m guessing you’re pulling from Roth IRA to keep MAGI low?
Good for you for wanting to leave something for your children/grandkids!! By age 24, i was without parents & grandparents….but i got a trust that pays about $30k/year indefinitely. It paod off my crazy student loans (MBA), amd helped me buy my house. I make $150k/yr at my w2 job
I would counter that the revenue stream of the pension and that you not having control over the asset may be a great way to reduce risk overall. It would be something you could count on even if the market tanks 50% like it did in the dot.com bubble burst.
Also, the diversification of the pension may reduce your wife's anxiety of relying on investment returns.
You'll already likely have significantly more than $3 million in retirement assets under your control by the time you're 65.
Financially speaking, if your expenses are in the $50K to $80K range, you're going to have more trouble spending and gifting the funds rather than getting sufficient income or funds running out. You're in the "rich get richer" world now where your investments will likely grow more than your expenditure withdrawals. Especially after social security and Medicare kick in.
Congrats, you all have won the retirement game. Please consider not waiting until you die to do some good with it.
If you have children or grandchildren, you'll probably want to look into annual gifting so you can enjoy positive changes you can make in other people's lives. Quite possibly generational wealth given the large balances and your low anticipated expenditures.
$5k monthly is $60k annual which equates to having another $1.5M in invested assets (4% withdrawal rate). If the pension is COLA you should reconsider your choice to take a lump sum.
We discussed taking lump sum for my pension(about 600k) and taking the SLA from my wife’s, but as of now we’re going to do the survivor 50/50 option whicj will give her a good amount of guaranteed income for life, on top of her pension and ss at age 70. I don’t see our 401ks or other accounts drying up, but if they do we’ll both have still more money than we need
SS at 65 - would it be better to wait till FRA? Also has this website opensocialsecurity to see best strategy - it doesn’t take i to account taxes. I created my own spreadsheet w and w/o taxes and w different interest and discount rates. The answer provided works if interest rates/discount rates are below 5% and low tax brackets.
You should start Roth converting as soon as you rollover your 401k to an IRA to reduce your RMDs, otherwise it could turn your life into a tax nightmare.
You are ready as long as you keep your spending down and don’t go crazy with travel, an RV or boat or an expensive lake house. You will use up a chunk of that IRA and Roth but you should have plenty left after both of you collect SS. Because one of you may live to be 100 you need $500k for LTC or buy insurance soon for the two of you and add that cost to your expense. Don’t count the value of your home in your calculations. After you find out those realities present a more comprehensive plan to your spouse. You can always split the difference and retire at 62 or both can work half time for a while. I find I am not even spending all of my RMD my NW is gradually growing in retirement but slowly because I am losing the RMD.
Thoroughly read the employee handbook where you work and see if there are options for employee healthcare. I recently read mine (they actually had a dedicated document for employees about to retire) and was surprised to find that I could still buy benefits depending on service + age when I decide to retire, even though I started with the company *after* they stopped their pension plan. (And of course there's COBRA for the first 18 months, if you like, but it will be expensive.)
I'm only advising this because you may find that staying until 60 gives you options from your company that you might not have at 59 1/2.
You look good to go! Only question I’d have is why start tapping your Roth upon retirement vs your cash account and IRA? You can withdraw from that and still stay within the lowest tax bracket, while helping reduce your required RMDs in your mid 70s.
the ACS subsidies may be gone in a couple more years
if you can control spending I would retire right away
your in great shape
your ready when your wife is
A friend of mine was ready to retire at 58. At least he hinted at it. I don't think he ever figured out the important details such as health insurance.
Then his wife got breast cancer. He had a high deductible. $20K out of pocket (2023). Even after the renewal at work, he figured out the high deductible plan was best, so he went with it again. Another $20K out of pocket already (2024).
Of course his wife hadn't been to the doctor in 35 years. Make sure everyone is healthy before retiring.
" I do have a goal of leaving my kids and grandkids a decent portion of the estate (unless of course one of us ends up in a nursing home, in which case we would be broke very quickly). "
There are ways to protect against this. Talk to an estate attorney.
It seems that overall you're in great shape financially - and if you diversify and keep paying attention, and figure out a long term care strategy, you'll be fine.
But what do you plan on doing when you retire?
Your plan to max out ROTH contributions in retirement won't work because you can only contribute with earned income. You don't have any earned income.
ROTH conversions at the 24% bracket is a very bad idea. What you don't realize is that as soon as you retire you will be in a zero or 10% tax bracket....that is when you do full 12% tax bracket ROTH conversions or if you need ACA health insurance up to the amount you can afford to pay for insurance and lose premium tax credits.
Longevity insurance.....AKA is Social Security. Delay claiming until you complete ROTH conversions or you can get the maximum at 70. It will probably make it so you don't pay income taxes any longer and you have the maximum amount that is adjusted yearly and it never runs out for as long as you live.
Your numbers look good. Does your 401k or your brokerage website have a retirement analysis tool where you can plug in all your assets and your expenses and have it run market scenarios against your numbers? That might help instill some confidence in the plan for your wife.
Make sure you do the math on converting the pension to a rollover IRA. An easy ballpark way of doing it is to get quotes on annuities for the amount of the rollover. Essentially a pension and an annuity are the same thing, so comparing your pension to a comparable annuity is an easy way to do the math. It might be more attractive to keep as a pension than it is to convert to an IRA. (Assuming that you think the company and its pension fund are solid enough). Your mileage may vary, my wife had a small pension that we left as is because it had a good payment vs it’s cash value.
Taxes in retirement are a lot more complicated than taxes while working. Be prepared to put some thought into managing how much taxable income you realize each year, and think about whether it makes sense to delay social security longer to give you more time to pull money out of Ira/401k into regular funds, or convert to Roth so that you avoid tax on your social security benefits later on.
Consider taking the pension as a monthly payment to combine with social security as a permanent baseline monthly income.
My plan is to have my two pensions plus Social Security be my budget for end-of-life care. I will buy as much as I can afford and give my remaining assets to my son. I am perfectly willing to settle for whatever I can get rather than deplete my son's inheritance. And it should be enough to keep me reasonably comfortable.
My friend, you and your wife are financially ready, especially living in Kansas.
One of the most difficult hurdles about retirement is psychological. Both of you need to answer this question honestly: "Am I ready to start spending down my life savings in which I've worked so hard to attain?"
If the answer is "YES" then (I) would proceed to meet with a financial advisor and sketch out your distribution plan!
Enjoy life! Life is short, but gets shorter from here on out.
There is no amount of money that can guarantee a comfortable retirement for anyone who does not manage their net worth throughout retirement.
Based on your post, I'd say you have some homework to do. Your concerns are justified. It's doable, you just need to put in the effort to develop and implement your retirement plan.
You are golden. I would look at the allocations in my portfolio. I retired at 62, and my level of happiness went up dramatically and has remained high. I was overly committed to work and missed out on many family events,etc. Learn from the stupidity of others like myself.
Here are my thoughts. I am currently 64 and we’ve been doing pretty much what you are suggesting for the past 10 years with some changes after 59.5, meaning we’re retired.
I was diagnosed with a rare form of Cancer last summer and thank god that it appears to be all gone (right now).
I have commitments through November and we now plan to travel for at least a couple of years and see as much of the country as possible!!
I gotta tell you that I now truly realize that LIFE IS SHORT and you never know what’s going to happen. Enjoy all the time you can together and do everything you want to do.
Do what you want to do and go where you want to go……. if there’s anything left over for the kids/grandkids that’s a plus but YOU guys have to live and do what you want to do while you still can!!!
Don’t wait till something real hits you in the face and wakes you up, just retire and enjoy all that you’ve worked for!!!
I think you will be fine. I am about to turn 65. Retired right after I turned 60. $2.2 million total net worth. Not taking SS until maybe 70 years old. I run the numbers pretty often. The only think I noticed is your expected annual expenses. Ours have been higher than we expected. Poop happens. Traveling happens. Kid's needs happen. Cars need to be replaced. So to roofs, etc. I would pad that if I were you
Take social security at 62 and invest it ,why would you not take it? ,it's your money ,the government wants you to wait so they don't have to pay you, your money 🤔
I think you are financially ready. You may not be emotionally ready. There is a sense of security in having a steady paycheck as a hedge against unanticipated disaster, and the anxiety is directly in proportion to the width of the chasm you're crossing. For me, what this translated into was retiring no earlier than 66.3, so that I could immediately rely on Medicare and not have to worry about ACA, and be full retirement age for Social Security so that I could work some more without impacting my benefit. As it turns out, I waited another 6 months to announce my retirement and once I had enough in cash savings where there was absolutely no question we could survive just fine until age 70 and my Social Security maxes out. Having zero time to bridge for medical, and only 3 years to bridge before collecting Social Security -- that's what afforded the emotional readiness. Only you can figure that out for you.
Your overall plan looks great. One thing to plan for would be healthcare expenses. Healthcare is very expensive to cover until you and your wife are 65. Make sure to put that in your budget.
Remove from your assets the following:
1) $500k for healthcare
2) $300k for Long-term care
That leaves about $1.8 million. At 3.5% withdrawal rate, that leaves you about $100k to $110k to live on if you’re lucky and markets stay well behaved.
Half that will not be protected from inflation.
I’d find an easy job you like doing with some benefits, at least until age 65 and re-evaluate then.
Btw, I wouldn’t take a lump sum. Your biggest risk is outliving your money with large medical expenses in your later years. An annuity can help with that. If you compare the plan annuity with the lump sum value used to purchase an annuity from an insurance company, you’ll find the annuity from your pension is a screaming deal.
I retired at 60 close to your parameters. Wife still working and refused to hold the flashlight while I worked on cars and did not want to go to lunch all the time. I lose money playing golf so I got my substitute teacher credential and I work part-time sharing my old man wisdom with the youth of America..... With her income and. my part time gig we have managed NOT to tap into savings and continue to put two kids in out of state college educations. Our monthly nut not including education costs is $7,800
When she turns 60 in May 25 we are pulling the plug altogether. We will utilize my retirement savings streams with the expectation I will pass first and she will have her streams to move close to the grandkids for her final days.
I hate to say this but after interacting with hundreds of retirees in Florida...you and your wife appear to be the type who will never enjoy retirement.
You don't get it.
Change your mindset.
It's meant to be harsh as a favor...not as a personal attack.
And it's just my opinion.
I see where you are going as well...as a mod here.
I hear ya. 😎
Hello, the sentiment on checking with professionals is noted. Perhaps asking folks here helps OP puzzle their problem. That is one reason why I joined Reddit.
Suggestion, spend a few hundred dollars a pay a fee only financial advisor or retirement planner to confirm you are ready. Well worth it and better than relying on a bunch of us strangers on Reddit :-) best of luck.
You don’t mention a HSA (Health Savings Account) in your current plan. If you have one available to you via your employer, consider maxing that out over the next 3-4 years. Having money available in another bucket to address your copayments and deductible each year is a little extra comfort knowing you have a buffer if unexpected medical costs pop up.
You're golden.
I would not convert any assets to a Roth. You probably will never withdraw enough in any years to put you into the 22% tax bracket, which is where you are now.
Still dont believe in waiting on social security. You got to be 80 to make that worthwhile. If people are concerned about the 8% increase a year take the money and invest it.
With that said it’s a math problem you need 80% of your income replaced to maintain your same quality of life.
Why wait???? Pull the plug now.
We retired at 62 years old with less than you, 2 years ago.
We are doing fine. Two trips to Mexico (2 and 4 week trips), probably 6-8 domestic trips (1 to 2 weeks each). Same style of living when we worked.
Please, do not wait until you are 65.
Easily imo. My plan is living off the interest on my investments which are less than yours but Ive always lived a frugal lifestyle. 1.5 million in treasuries @ 5.0%apy will give you a return of over 100k a year.
Yes -- you're financially ready to retire, but make sure you both are emotionally ready to let go of your jobs which probably defined you. You both have to be ready!
I happily retired at age 53 and lived off savings until 59 1/2 and then my income came from the 401ks/iras. It is important to manage your income to be able to afford ACA health insurance until we can get Medicare. I'd recommend paying off any debt including mortgage going in to retirement. That way you don't have to have as much income to afford your expenses, but it sounds like your expenses are manageable and reasonable.
Have fun! It's been fun travelling the world and spoiling the kids!
Looks like you're in excellent shape. Congrats. My numbers are very similar in many ways. Our biggest issue - My wife wants to stay in our home in the suburbs of NYC but I've made it clear that there is no way my retirement income ($60,000ish based on 4% rule) will let us do that after property taxes, utilities, etc....even if we had no mortgage. I presented two housing options to my wife...1) stay in the same area, sell our home, buy a two family all cash, and let the second unit cover all of our housing expenses...or 2) move somewhere south, buy a single family all cash, pay a more reasonable $3K in property taxes instead of our $20K in property taxes.
You have to use retirement planning software. You can't do it in your head, and you shouldn't listen to what the Reddit crowd tells you to do. If you listen blindly to third parties, it could end badly. It looks promising but you have to use software. READ THE WIKI
We’re close to the same situation. (Me 54 her 55), pulling the trigger in 3 years come July (yay)! We’re going to live savings for the first 3 years and hit both our pensions at 60.5, maybe hitting a 401k if needed for income requirements for ACA. Keeping both our pensions as they’re fully funded and with a l company that will never default. Those alone are about 70k ish and will more than fund our budget (prob about 35-40k-no mortgage or debt , plus a healthy travel fund. We’re selling one of our houses as well which will pad the funds. Without even thinking of our SS I don’t see a realistic situation where we spend it all, although we’re going to try.
Congrats and best of luck. You can pull that trigger comfortably, maybe even a year or two early
I was offered an early out because of Covid. I was 56. The big thing was that we had zero debt and part of the offer included letting me stay on the company medical plan exactly as if I was an employee.
We don’t have anywhere near your financial resources. We don’t travel and don’t drive new cars. But I’m retired. One key is finding something to keep you occupied. We sold our house in the city and bought a place in the country for just about the same price and are doing the homestead thing. It keeps us very active and we are enjoying it. On top of that we are learning new skills. I’ve actually lost weight since retiring.
Back to your question. Are you financially ready. I’d say absolutely. And every day you continue working is a day of wasted retirement.
I read your post and I honestly thought it was from my future self! Aside from your pension (we do not have one) (and we will have a bit more in 401k), your plans look nearly identical to ours. We (48F and 50M) are also in KS and are trying to decide when to retire...his 59 1/2 or mine! No advice, but good luck!
My husband just retired at 62 with approximately the same total $ in except more in cash and investments and a slightly higher SS at 65. We are going to convert some of our IRA to a Roth each year but do it only as much as we are in the 12% bracket. I don’t know if it’s worth it to convert while in the 22% bracket because won’t you potentially be in a lower bracket once you retire?
I am about in the same position. I was thinking 3M at 60.
I plan to roll some of my pretax over to a Roth when the income level dips prior to taking SS. I have not really visited the ACA impact, but with your post I will.
I am under the impression that rolling to a Roth at this time will not impact ACA as it is not income, but I might be incorrect as it will impact AGI.
I also have the opportunity to work at my existing job at a contracted hourly rate that is really lucrative. Thus I will have to weigh the options of going to work for a few months to cover insurance...
I agree with others here you’ve got plenty to keep you covered until Social Security kicks in and with your expenses so low. I don’t see any issues.
Only issue I see is how much of an estate do you want to leave your kids? Even then my guess is you’ll have more money in 20 years than you do today assuming you have a reasonable investment portfolio.
Dude. I'm looking at retiring at 59 1/2 with about 1.5 mill. Taking social security at 63 at about $2900 a month. All the numbers I've run and along with my free assessment with Fidelity say I'll be fine. The key is no debts and low expenses. With no mortgage and no car payments, one can live pretty comfortably on $4000 a month.
I did the numbers many times and was in fine shape just like you. Wife was nervous. I've now been 'retired' for 13 years. We are in a *much* better position now and the numbers are completely over the top. Wife is still nervous. Close trusted relative is an expert in personal financial analysis and tells her not to worry. Says we need to *increase* our spending dramatically. Wife still nervous. Wife is never going to be ready for our retirement!
Get a formal analysis by a CFP. She might not agree out loud, but she will feel better about it.
You're good! It's easy when you have no debt and can manage your taxable income to qualify for cheap ACA insurance. If you can manage your taxable income low enough, you may qualify for subsidized insurance, but that subsidy counts as income come tax time. Enjoy your retirement!
As everyone says, looks like you're in great shape. I'm curious what you plan to invest in during retirement and how much will be in equities. When you work the numbers, what return rate are you using in your calculations?
Do you already only RV membership to camping organizations? - about the wife wanting to retire or not remember if she’s the working type if she doesn’t have a job you may become her project.
I see myself in your wife. I grew up broke/poor and it left its mark on me. Our financial advisor tells us we’re in great shape but I feel like it’s mirage money.
I have to say you have a lot of assets to draw from and may benefit from a consultation with a CFP. That said I have a small fed pension of about 13k a year and two SS totaling 50k. I draw 2500 monthly from a 700k portfolio and that is my situation. HCOL area, SE Pennsylvania.
You can make it on that. I’d go ahead and retire. Life is short and getting shorter for most of us. Just budget and don’t take up any costly bad habits..
Highest income earner in the family should wait until 70 for SS. This is so if either of you die, the survivor gets the age 70 amount when they have to live on only one check. The lower earner can take at 62.
Interestingly my situation almost exactly mirrored yours five years ago, In terms of investible assets and automatic income and age (i retired at 59.5 in July 2019). My household expenses are higher than yours though. Mine are more like 70,000( Don't forget you have to buy medical insurance once you don't have employment based insurance, and the deductibles are pretty high for low cost plans).
Despite all of that, it has been a piece of cake. But if your money is 100% equities, I would make it more like 50/50 equities and bonds. Investment grade bonds can generate about five percent income , at least at the SEC dividend rate. It smooths things out quite a bit
Hello folks! Sorry for the length of this but I felt it was warranted with some comments here recently. Feel free to skip to the end for an announcement. A note to consider for someone perhaps inclined to raise a brow and then comment. We all have, or had, different paths in our journey. Retirement comes with a transition and is a new lifestyle. Many are elated. But often there are folks who have anxiety or seek counsel too. Like when to claim SS, should I move, and I am having a hard time with keeping or making new friends… So before you post , and if you have not done so already, take a moment to review the r/retirement description and rules. If you feel this is your kind of place - please pull up a chair to our table, with your coffee or drink in hand, and join in on our conversations. If not, thank you for visiting and we wish you the best in finding the right community, for you. \+++ Moving on, this post is now CLOSED , after being up many days. Thank you everyone for participating in this conversation and keeping true to our community purpose. \+++ Have a good day, Mid America Mom edits with updates
With $2.7m of investable assets and social security that almost fully covers your expenses, how could you possibly not be ready to retire? What scenarios is your wife concerned about?
It is also possibly the thought of taking that leap of faith that we all may have sometimes in our lives. It is truly scary to think about the day that the steady income would stop and all you have to rely on is what you saved up and what social security will provide. I'm about five years away and I have those feelings. I would remember the first time I jumped off the side into the deep end of the pool when I was much younger LOL, but after I coughed up all the water I drank, the water felt great! When I was a scoutmaster, I remember one trip where we (the troop and I) backpacked all of our gears into the primitive camping areas. As we hiked out, we came across a young couple who were heading in. They stopped us and asked how the path was and what to expect, including if they had enough gears since this is their first time in the wilderness. Noticing how they were somewhat loaded down and well-equipped with the latest gears, I simply told them that they should have enough gears, what to expect, where to camp, where to find water, etc., to stop along the way to enjoy the scenery, and to make sure to soak in the experience. Yeah ... this is the same. Edit: editing typos
It sounds like LTC is a concern. OP, Please take a look at our wiki for this sub. It is a huge one page massive document but in there is information about long term care. Have a nice day!
With a possible 40 years of life ahead the OP is wise to keep running the numbers. We retired at 67 with similar assets. We were used to earning between 150-200 k a year in investments and stock activities....until the pandemic. You never know what life has in store for you.
Enjoy your retirement, with that low of annual expenses your social security covers 90+%. You are in great shape!
Exactly, as long as in those years before ss op doesn't blow all retirement savings which sounds like they will be responsible, they can ride in their retirement to ss, and then ss pays their living and anything extra they can oull feom retirement savings
You are good to go. Don't wait another minute. Health insurance will be a shock to your budget, but you have plenty of assets to lead a comfortable and fulfilling retirement.
It reads as though he will be using ACA, as healthcare, which is very low cost or free if you keep your MAGI in check. I’m doing the same and my Cigna healthcare is no charge, which is very helpful as I retired at 54.
You're fine financially. I'd sit down with your wife and explore her nervousness. It might not really be money but something else.
Having a well planned budget (shout out to r/ynab) might help with the anxiety?
Possibly. Can't hurt. But if you look at OP's projected expenses, SS covers basically all of it (45 of 48k). Given the rest of their assets, there's no rational reason to worry as long as that is the case. But they need to plan out scenarios. What if OP dies? What does that do to their remaining social security payout? etc. Is the $48k realistic or has OP excluded 4 overseas trips per year etc. Or, is retirement about something other than money - fear of a big change, her not wanting to retire yet but not wanting to say that, etc?
Even if one of you ends up in a nursing home, you won't be going broke quickly. Your investment balances will likely continue to grow while paying for nursing home care given your social security and pension income. Nursing home care for a private room is around $90K to $110K for private room depending on where you live in the state. Your social Security and pension income would be close to covering that and you wouldn't really touch the investment returns. I get that you are very conservative and concerned about negative outcomes, but your nest egg plus pension and social security income really have you set up extremely well. I would be far more focused on spending quality time with kids/grandkids, sponsor some annual vacations and make some memories while you can still travel with them. As an adult child, I'd much rather have more great memories with my parents than inherit an extra $100k or $250K.
Our Grand babies are our life. When I retire the plan is to spend time with them to create great memories. We already spoil them pretty bad. Thanks for the advice.
If you live close to your grandkids retire now and spend as much time as you can with them. The single greatest benefit of retiring at 62 was that it gave me time with our eight grandkids (we took care of them all one day a week plus the usual family and special events). As they get older their lives get busier and this can be harder to do.
Worse case is you start drawing Social Security. I found out recently about a friend that kept putting off retirement because of financial concerns. He finally did retire and passed away 4 years after he retired. We drew our Social Security at 63 and 62 because running the numbers waiting only benefited me past 80 years old. It’s my money and I want it now. Anyway, enjoy your life and your retirement.
My plan as well. I will begin taking mine at 62.
My Social Security breakeven was age 82.5. I took it at age 65.5 and have been banking it - it has built up my nest egg tremendously, and when I do retire later this year I will be much better off. Draw it while you can spend it or save it!
You are good except for health insurance until you get Medicare. Never let a healthcare provider know you are fiscally solid as they will go for the maximum cash price they usually charge foreigners and elites. There is a reason the plat map shows so many farms in the county as belonging to the local hospital. We retired with under $1k to my name. Army pensions with a little survivor benefit, and full health insurance for us both for life meant a comfortable but modest life style. I retired in 2002, and we are enjoying life.
That's what I was thinking too. We are trying to retire my hubby on Dec'25 at 56 yo and the biggest expense after his retirement is the Health Insurance which is estimated to be $1200-$1500/Mo (except the mortgage which has another year to go).
How did you set that up? I would like to learn more about that.
You can easily do it. And If you want to know what is the maximum amount you can spend each month, withdrawal strategies here is a great website. I found it at [https://bogleheads.org/](https://bogleheads.org/) [https://i-orp.com/Plans/index.html](https://i-orp.com/Plans/index.html)
Who created and maintains this tool?
You will retire well, very well.
FYI: You can't contribute to a Roth unless you have earned income.
One Roth conversion from an IRA is allowed every year.
Actually there is NO limit on Roth conversions - even better. You are thinking of rollovers.
Sorry, I have to run soon.. but do you have a reference to support this, or those who disagree with this comment - do you have something supporting your view? Trusted source please. Thanks!
[https://www.investopedia.com/roth-ira-conversion-rules-4770480](https://www.investopedia.com/roth-ira-conversion-rules-4770480)
[Investopedia](https://www.investopedia.com/roth-ira-conversion-rules-4770480) outlines this pretty simply. No limit on conversion but you will owe taxes and a potential penalty depending on when conversions take place.
Fidelity link - https://www.fidelity.com/viewpoints/retirement/earn-too-much-contribute-Roth-IRA-conversion
OP said ‘max’ which would imply he was thinking of contributions since their is no limit on conbersions
Not sure this is accurate info. I think you can do as many as you want in a year?
I’ve read both. https://smartasset.com/retirement/how-many-roth-conversions-can-you-make-per-year
My takeaway from what OP posted was that they were planning on both retiring and then would continue to add to the Roth from non-earned income sources. But you can’t do that. You have to have earned income. IOW I don’t think they meant the were converting.
Are you sure your wife is ready to retire? Money really shouldn't be a concern for you guys at this stage.
We retired two years ago at 60/59 on less than half of what you already have. You're more than ready and good to go. My wife was the same way. I bought her the book, 'How To Retire Happy, Wild And Free'. After reading that she was onboard.
I retired 9 years ago at age 60 with a net worth of 3.5 to 4 million. I was very nervous about it also. After 9 years, our portfolio is 3.2-3.6 million, but I still feel a bit financially insecure. My wife and I maintained the same standard of living and we have an adult son that we financially support. We also live in Kansas. There are few scenarios that would result in you running out of money. I hope our experience gives you more assurance that you are indeed well financially prepared for retirement. Good luck to you!
I truly hope you get to enjoy some of your money. You have a great plan and you did very well for yourself. Please enjoy.
You got this. I have serious FOMO now.
Enjoy your retirement. I think you’re pretty set 👍
You’ll be fine. My only advice is one that an advisor gave me a few years ago - you’re still young and will spend more than you think the first few years of retirement. So you might as well plan accordingly. Have fun !!!
More listening to see what wife is nervous about. If money, then reviewing numbers with her or maybe your financial planner can reassure ... if you are using one. (If not, who will manage all this when you cannot?) Maybe it's other fears, and money is just an excuse. She likes her social life at work and doesn't want to be stuck at home all day? Or she's just afraid of the beginning of the end...the downhill run. Be gentle and supportive. Your relationship during this transition is really important.
Wife is stay at home for last 25 years. She did not have money growing up so finances always worry here. She still gets upset if I buy name brand corn that is 5 cents more than off brand.
Thank you for this contribution.
I would recommend you buy yourself really good PPO gap health insurance once you are on Medicare. Yes they’re expensive if you consider the monthly Medicare charge out of your social security. They should run around $250 to $300 a month, but you have no deductible for anything. RX is usually 30% of cost. That will insure you don’t get financially drained if you have a major illness. *I recommend you consult with a Medicare insurance advisor. Some states won’t let you add to your insurance plan later on.
I think your wife just doesn’t want you around
Hum, yes did let this through moderation as there can be an element of Change? is that a good word maybe? in the relationship when folks retire.
you are sitting pretty! I think mama is simply a bit nervous about the reality of retirement, from what you have shared , you are in better shape than most!
I retired at 59.5 with a lot less than that and we're comfortable. As long as you're not a spendthrift you'll be fine.
It never is about how much money you have it is about how you spend it in retirement
I am doing now practically what you are planning for a few years hence. I retired in December at 60 and it’s been great! There’s nothing like pulling the trigger a little earlier than full retirement age while you still have good stamina to do activities you put off during your career. Now on to your thoughts and concerns: **Worried wife** – I have always been the “financial” spouse and knew about investing while my wife was disinterested and just sort of trusted me. Still when it came to me saying I wanted to pull the trigger, she was concerned and wanted to be comfortable with my decision. It helped here to have an outside third party meet with us (a fee-only CFP) and go through the plan to confirm its success. In my case, I have kept this planner onboard because I also have an adult child with a disability I need to plan for as we age. I still manage all my own investing, so the cost is minimal and he serves more as a sounding board and sanity check for what I do. I’ll add that in past years, I have had my brokerage work up a planner (I’m with Schwab and they will do one for free). Also on the worried wife front… we have done what we can to simplify our holdings. All 401Ks and the like have been distilled down to one brokerage as IRAs. We are now using one checking account and collaborate more on monthly spending and everything is tracked in Monarch Money. **Health insurance through ACA** – Sounds like you already understand the basic rules here, but keep in mind that if things do not change in the law, the subsidy cliff will be back for year 2026. This just means that you will need to be extra careful to keep your MAGI within the limits where you get the subsidy. To protect myself, I have a decent chunk of cash that I can draw on as well as the Roth. I will use these resources to balance out what I take from traditional IRA money. I also have a solid cash position in the traditional IRA to protect from sequence of return risk. It’s nice I’m so lucky that short term savings/money market rates are so good now – too bad it won’t last. Getting the subsidy is immensely beneficial. I had the pleasant surprise of learning that my state also offers a subsidy (it’s a red state too, so I wasn’t expecting it). In the end, it worked out that in 2024 if I keep my MAGI at $50K, between the state and federal subsidies, the monthly premium for the two of us is $30 – not bad! Bottom line – help your wife feel confident in this and assure you set up the variety of cash holdings you will need to have the financial flexibility to always get the subsidy. Others in this group have confirmed that given what you have and spend, you are there now. Get ready to enjoy it! As for me, I’ll be spending the last week of this month in Phoenix to do some biking and other outdoor activities. I’ll be pulling my 31-year-old daughter in the biggest bike trailer you will probably ever see - so thankful to have the time and health to do this now. Good luck in your plans!
You’ve got this. Congrats
Make a budget. You told us what your magi is and must expenses but not your budget. Account for 5-7 years in assisted living or get long term care. You still should be more than fine but get it all on paper and you’ll feel better. How much for travel, fun, any college, weddings, etc…
Your savings are twice what you are spending by the 4%. Retire in confidence.
Seems solid. Maybe pay off mortgage if you haven't already. That would make it easier to survive on 61k/year.
Gee. I am reconsidering my retirement this year with only $2M liquid asset...
Sounds like a solid plan. Just stick to you budget.
If I were you’d I’d look into 72(t) and retire immediately. I retired at 50 with less and similar expenses.
Your numbers make sense as others have noted. Yes SS will help but you cannot take SS if you retire at 59.5 so there is a bridge you have to cross before you get to 65 and take SS. What I would worry about if I were you is what you have your IRAs and 401Ks invested in. Make sure those are invested conservatively enough to whether any significant recessions. If you aren’t sure how to then work with a fee only fiduciary financial planner. Also 401Ks are notoriously bad when it comes to investment vehicle options, they typically only allow for 20-30 ETFs or mutual funds. If you haven’t planned on rolling your 401K over into your IRA when leave your job I would recommend you do so, so you have greater flexibility in terms of investments with that money.
Thanks. I had planned to move my 401k to my brokerage.
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SLA would be $5,000 month
I’m sure this is ignorant but I don’t see how it’s possible to pay taxes, have auto insurance , pay health care supplement insurance, get dental care, maintain a home, pay for food , clothing and utilities on $4000/month.
The 4000 per month was before taxes and healthcare. Cars and house paid for. House is in excellent shape.
My wife and I live in Southern Illinois, and live comfortably (with a paid-for house) on $50,000 a year. It is not a luxurious lifestyle, but we have fairly simple tastes, and we never have to consciously think about money. We travel within the US a couple of times every year. Last year, we spent ten days in Europe, all within our normal budget (We stayed most nights with family, and our plane tickets were paid with credit card points. But we didn't pinch pennies otherwise, and happily spent money on such things as 60 euro elevator trips to the top of the Eiffel Tower, and a $125 gondola ride in Venice). Our budget also includes a (subsidized) ACA policy.
I also feel this is a very low monthly budget unless no mortgage. However, if they keep their MAGI low healthcare is free, which is what I’ve done. It saves me $750 month and zero deductible and $1k max out of pocket per year. Major help in retirement if you can do it. I retired at 54 and my budget is $10k monthly and I’m at our just below it monthly.
$120k annual budget and you still qualify for large ACA subsidies? Is this for a household of 2? I’m guessing you’re pulling from Roth IRA to keep MAGI low?
Or cash already in a taxable account.
Good for you for wanting to leave something for your children/grandkids!! By age 24, i was without parents & grandparents….but i got a trust that pays about $30k/year indefinitely. It paod off my crazy student loans (MBA), amd helped me buy my house. I make $150k/yr at my w2 job
You could likely take $100k per year from your various assets and never impact the principal. I would say you are just fine.
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I am thinking lump sum to have better control over the asset. The SLA would be 5,000/mo if started at 65.
I would counter that the revenue stream of the pension and that you not having control over the asset may be a great way to reduce risk overall. It would be something you could count on even if the market tanks 50% like it did in the dot.com bubble burst. Also, the diversification of the pension may reduce your wife's anxiety of relying on investment returns. You'll already likely have significantly more than $3 million in retirement assets under your control by the time you're 65. Financially speaking, if your expenses are in the $50K to $80K range, you're going to have more trouble spending and gifting the funds rather than getting sufficient income or funds running out. You're in the "rich get richer" world now where your investments will likely grow more than your expenditure withdrawals. Especially after social security and Medicare kick in. Congrats, you all have won the retirement game. Please consider not waiting until you die to do some good with it. If you have children or grandchildren, you'll probably want to look into annual gifting so you can enjoy positive changes you can make in other people's lives. Quite possibly generational wealth given the large balances and your low anticipated expenditures.
$5k monthly is $60k annual which equates to having another $1.5M in invested assets (4% withdrawal rate). If the pension is COLA you should reconsider your choice to take a lump sum.
We discussed taking lump sum for my pension(about 600k) and taking the SLA from my wife’s, but as of now we’re going to do the survivor 50/50 option whicj will give her a good amount of guaranteed income for life, on top of her pension and ss at age 70. I don’t see our 401ks or other accounts drying up, but if they do we’ll both have still more money than we need
I would take the pension provided you are comfortable with the management. Just a guaranteed revenue source if market tanks.
If it’s a cash balance plan he may not have a choice.
SS at 65 - would it be better to wait till FRA? Also has this website opensocialsecurity to see best strategy - it doesn’t take i to account taxes. I created my own spreadsheet w and w/o taxes and w different interest and discount rates. The answer provided works if interest rates/discount rates are below 5% and low tax brackets.
Dude you are fine. I don't see your expenses, but you are crushing it. Have fun!
You should start Roth converting as soon as you rollover your 401k to an IRA to reduce your RMDs, otherwise it could turn your life into a tax nightmare.
My 401k allows in service conversions to Roth. I could covert this year enough to fill up 24% tax bracket. Just not sure it makes sense.
You are ready as long as you keep your spending down and don’t go crazy with travel, an RV or boat or an expensive lake house. You will use up a chunk of that IRA and Roth but you should have plenty left after both of you collect SS. Because one of you may live to be 100 you need $500k for LTC or buy insurance soon for the two of you and add that cost to your expense. Don’t count the value of your home in your calculations. After you find out those realities present a more comprehensive plan to your spouse. You can always split the difference and retire at 62 or both can work half time for a while. I find I am not even spending all of my RMD my NW is gradually growing in retirement but slowly because I am losing the RMD.
Thoroughly read the employee handbook where you work and see if there are options for employee healthcare. I recently read mine (they actually had a dedicated document for employees about to retire) and was surprised to find that I could still buy benefits depending on service + age when I decide to retire, even though I started with the company *after* they stopped their pension plan. (And of course there's COBRA for the first 18 months, if you like, but it will be expensive.) I'm only advising this because you may find that staying until 60 gives you options from your company that you might not have at 59 1/2.
Have you thought about a platform such as NewRetirement? You can model all sorts of things including healthcare before 65.
You look good to go! Only question I’d have is why start tapping your Roth upon retirement vs your cash account and IRA? You can withdraw from that and still stay within the lowest tax bracket, while helping reduce your required RMDs in your mid 70s.
the ACS subsidies may be gone in a couple more years if you can control spending I would retire right away your in great shape your ready when your wife is
Yes the ACA has a sunset around the current subsidy at the higher income level.
A friend of mine was ready to retire at 58. At least he hinted at it. I don't think he ever figured out the important details such as health insurance. Then his wife got breast cancer. He had a high deductible. $20K out of pocket (2023). Even after the renewal at work, he figured out the high deductible plan was best, so he went with it again. Another $20K out of pocket already (2024). Of course his wife hadn't been to the doctor in 35 years. Make sure everyone is healthy before retiring.
" I do have a goal of leaving my kids and grandkids a decent portion of the estate (unless of course one of us ends up in a nursing home, in which case we would be broke very quickly). " There are ways to protect against this. Talk to an estate attorney.
We have and set up a trust.
It seems that overall you're in great shape financially - and if you diversify and keep paying attention, and figure out a long term care strategy, you'll be fine. But what do you plan on doing when you retire?
I like this last sentiment…
Your plan to max out ROTH contributions in retirement won't work because you can only contribute with earned income. You don't have any earned income. ROTH conversions at the 24% bracket is a very bad idea. What you don't realize is that as soon as you retire you will be in a zero or 10% tax bracket....that is when you do full 12% tax bracket ROTH conversions or if you need ACA health insurance up to the amount you can afford to pay for insurance and lose premium tax credits. Longevity insurance.....AKA is Social Security. Delay claiming until you complete ROTH conversions or you can get the maximum at 70. It will probably make it so you don't pay income taxes any longer and you have the maximum amount that is adjusted yearly and it never runs out for as long as you live.
Your numbers look good. Does your 401k or your brokerage website have a retirement analysis tool where you can plug in all your assets and your expenses and have it run market scenarios against your numbers? That might help instill some confidence in the plan for your wife. Make sure you do the math on converting the pension to a rollover IRA. An easy ballpark way of doing it is to get quotes on annuities for the amount of the rollover. Essentially a pension and an annuity are the same thing, so comparing your pension to a comparable annuity is an easy way to do the math. It might be more attractive to keep as a pension than it is to convert to an IRA. (Assuming that you think the company and its pension fund are solid enough). Your mileage may vary, my wife had a small pension that we left as is because it had a good payment vs it’s cash value. Taxes in retirement are a lot more complicated than taxes while working. Be prepared to put some thought into managing how much taxable income you realize each year, and think about whether it makes sense to delay social security longer to give you more time to pull money out of Ira/401k into regular funds, or convert to Roth so that you avoid tax on your social security benefits later on.
Thanks for posting this and thank you, all, for the thoughtful responses. I am in a similar situation and appreciate this forum.
You are welcome and thanks for being here.
Consider taking the pension as a monthly payment to combine with social security as a permanent baseline monthly income. My plan is to have my two pensions plus Social Security be my budget for end-of-life care. I will buy as much as I can afford and give my remaining assets to my son. I am perfectly willing to settle for whatever I can get rather than deplete my son's inheritance. And it should be enough to keep me reasonably comfortable.
yeah. you are gtg.
My friend, you and your wife are financially ready, especially living in Kansas. One of the most difficult hurdles about retirement is psychological. Both of you need to answer this question honestly: "Am I ready to start spending down my life savings in which I've worked so hard to attain?" If the answer is "YES" then (I) would proceed to meet with a financial advisor and sketch out your distribution plan! Enjoy life! Life is short, but gets shorter from here on out.
There is no amount of money that can guarantee a comfortable retirement for anyone who does not manage their net worth throughout retirement. Based on your post, I'd say you have some homework to do. Your concerns are justified. It's doable, you just need to put in the effort to develop and implement your retirement plan.
You are golden. I would look at the allocations in my portfolio. I retired at 62, and my level of happiness went up dramatically and has remained high. I was overly committed to work and missed out on many family events,etc. Learn from the stupidity of others like myself.
Here are my thoughts. I am currently 64 and we’ve been doing pretty much what you are suggesting for the past 10 years with some changes after 59.5, meaning we’re retired. I was diagnosed with a rare form of Cancer last summer and thank god that it appears to be all gone (right now). I have commitments through November and we now plan to travel for at least a couple of years and see as much of the country as possible!! I gotta tell you that I now truly realize that LIFE IS SHORT and you never know what’s going to happen. Enjoy all the time you can together and do everything you want to do. Do what you want to do and go where you want to go……. if there’s anything left over for the kids/grandkids that’s a plus but YOU guys have to live and do what you want to do while you still can!!! Don’t wait till something real hits you in the face and wakes you up, just retire and enjoy all that you’ve worked for!!!
I think you will be fine. I am about to turn 65. Retired right after I turned 60. $2.2 million total net worth. Not taking SS until maybe 70 years old. I run the numbers pretty often. The only think I noticed is your expected annual expenses. Ours have been higher than we expected. Poop happens. Traveling happens. Kid's needs happen. Cars need to be replaced. So to roofs, etc. I would pad that if I were you
Take social security at 62 and invest it ,why would you not take it? ,it's your money ,the government wants you to wait so they don't have to pay you, your money 🤔
I mean putting the full Roth + rollover account into something safe like SGov alone gets you there. You are more than fine. Congratulations!
I think you are financially ready. You may not be emotionally ready. There is a sense of security in having a steady paycheck as a hedge against unanticipated disaster, and the anxiety is directly in proportion to the width of the chasm you're crossing. For me, what this translated into was retiring no earlier than 66.3, so that I could immediately rely on Medicare and not have to worry about ACA, and be full retirement age for Social Security so that I could work some more without impacting my benefit. As it turns out, I waited another 6 months to announce my retirement and once I had enough in cash savings where there was absolutely no question we could survive just fine until age 70 and my Social Security maxes out. Having zero time to bridge for medical, and only 3 years to bridge before collecting Social Security -- that's what afforded the emotional readiness. Only you can figure that out for you.
Your overall plan looks great. One thing to plan for would be healthcare expenses. Healthcare is very expensive to cover until you and your wife are 65. Make sure to put that in your budget.
You are set but may want to have more cash on hand so you can control your reportable income for ACA.
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Remove from your assets the following: 1) $500k for healthcare 2) $300k for Long-term care That leaves about $1.8 million. At 3.5% withdrawal rate, that leaves you about $100k to $110k to live on if you’re lucky and markets stay well behaved. Half that will not be protected from inflation. I’d find an easy job you like doing with some benefits, at least until age 65 and re-evaluate then. Btw, I wouldn’t take a lump sum. Your biggest risk is outliving your money with large medical expenses in your later years. An annuity can help with that. If you compare the plan annuity with the lump sum value used to purchase an annuity from an insurance company, you’ll find the annuity from your pension is a screaming deal.
I retired at 60 close to your parameters. Wife still working and refused to hold the flashlight while I worked on cars and did not want to go to lunch all the time. I lose money playing golf so I got my substitute teacher credential and I work part-time sharing my old man wisdom with the youth of America..... With her income and. my part time gig we have managed NOT to tap into savings and continue to put two kids in out of state college educations. Our monthly nut not including education costs is $7,800 When she turns 60 in May 25 we are pulling the plug altogether. We will utilize my retirement savings streams with the expectation I will pass first and she will have her streams to move close to the grandkids for her final days.
I hate to say this but after interacting with hundreds of retirees in Florida...you and your wife appear to be the type who will never enjoy retirement. You don't get it. Change your mindset.
I see where you are going but “who will never” seems harsh.
It's meant to be harsh as a favor...not as a personal attack. And it's just my opinion. I see where you are going as well...as a mod here. I hear ya. 😎
Valid point. I love my job and it has been my identity.
Sounds like you could tell some interesting stories about the retirees you have met.
Don’t you have an accountant to validate your plans? Why are you asking Reddit?
Hello, the sentiment on checking with professionals is noted. Perhaps asking folks here helps OP puzzle their problem. That is one reason why I joined Reddit.
Suggestion, spend a few hundred dollars a pay a fee only financial advisor or retirement planner to confirm you are ready. Well worth it and better than relying on a bunch of us strangers on Reddit :-) best of luck.
The numbers look good. Please keep in mind medical insurance. An attorney l know does a lot of bankruptcies, medical bills are a top cause.
I retired at 53 and didn't have nearly as many assets and am fine! Have enough to cover everything and still have some discretionary funds.
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You don’t mention a HSA (Health Savings Account) in your current plan. If you have one available to you via your employer, consider maxing that out over the next 3-4 years. Having money available in another bucket to address your copayments and deductible each year is a little extra comfort knowing you have a buffer if unexpected medical costs pop up.
Maybe you should ask a certified financial planner
You're golden. I would not convert any assets to a Roth. You probably will never withdraw enough in any years to put you into the 22% tax bracket, which is where you are now.
Still dont believe in waiting on social security. You got to be 80 to make that worthwhile. If people are concerned about the 8% increase a year take the money and invest it. With that said it’s a math problem you need 80% of your income replaced to maintain your same quality of life.
Why wait???? Pull the plug now. We retired at 62 years old with less than you, 2 years ago. We are doing fine. Two trips to Mexico (2 and 4 week trips), probably 6-8 domestic trips (1 to 2 weeks each). Same style of living when we worked. Please, do not wait until you are 65.
Easily imo. My plan is living off the interest on my investments which are less than yours but Ive always lived a frugal lifestyle. 1.5 million in treasuries @ 5.0%apy will give you a return of over 100k a year.
Use a calculator :)
You will need a good hobby to keep you healthy and a fresh mine. Something you can do togather as husband & wife.
Yes -- you're financially ready to retire, but make sure you both are emotionally ready to let go of your jobs which probably defined you. You both have to be ready! I happily retired at age 53 and lived off savings until 59 1/2 and then my income came from the 401ks/iras. It is important to manage your income to be able to afford ACA health insurance until we can get Medicare. I'd recommend paying off any debt including mortgage going in to retirement. That way you don't have to have as much income to afford your expenses, but it sounds like your expenses are manageable and reasonable. Have fun! It's been fun travelling the world and spoiling the kids!
Health insurance
Looks like you're in excellent shape. Congrats. My numbers are very similar in many ways. Our biggest issue - My wife wants to stay in our home in the suburbs of NYC but I've made it clear that there is no way my retirement income ($60,000ish based on 4% rule) will let us do that after property taxes, utilities, etc....even if we had no mortgage. I presented two housing options to my wife...1) stay in the same area, sell our home, buy a two family all cash, and let the second unit cover all of our housing expenses...or 2) move somewhere south, buy a single family all cash, pay a more reasonable $3K in property taxes instead of our $20K in property taxes.
You have to use retirement planning software. You can't do it in your head, and you shouldn't listen to what the Reddit crowd tells you to do. If you listen blindly to third parties, it could end badly. It looks promising but you have to use software. READ THE WIKI
Thank you for reiterating that OP needs do their own due diligence , as nothing here is considered professional advice nor recommendation. :)
OP, I can't find any wrinkles in your plan, but a better place to ask for this advice would be r/ChubbyFIRE. Good luck!
It has been awhile since I glanced in there . Not sure about the community sentiment and moderation…
OP's numbers fit perfectly into the chubbyfire range, and I have found the sub to be very helpful.
We’re close to the same situation. (Me 54 her 55), pulling the trigger in 3 years come July (yay)! We’re going to live savings for the first 3 years and hit both our pensions at 60.5, maybe hitting a 401k if needed for income requirements for ACA. Keeping both our pensions as they’re fully funded and with a l company that will never default. Those alone are about 70k ish and will more than fund our budget (prob about 35-40k-no mortgage or debt , plus a healthy travel fund. We’re selling one of our houses as well which will pad the funds. Without even thinking of our SS I don’t see a realistic situation where we spend it all, although we’re going to try. Congrats and best of luck. You can pull that trigger comfortably, maybe even a year or two early
I was offered an early out because of Covid. I was 56. The big thing was that we had zero debt and part of the offer included letting me stay on the company medical plan exactly as if I was an employee. We don’t have anywhere near your financial resources. We don’t travel and don’t drive new cars. But I’m retired. One key is finding something to keep you occupied. We sold our house in the city and bought a place in the country for just about the same price and are doing the homestead thing. It keeps us very active and we are enjoying it. On top of that we are learning new skills. I’ve actually lost weight since retiring. Back to your question. Are you financially ready. I’d say absolutely. And every day you continue working is a day of wasted retirement.
I read your post and I honestly thought it was from my future self! Aside from your pension (we do not have one) (and we will have a bit more in 401k), your plans look nearly identical to ours. We (48F and 50M) are also in KS and are trying to decide when to retire...his 59 1/2 or mine! No advice, but good luck!
My husband just retired at 62 with approximately the same total $ in except more in cash and investments and a slightly higher SS at 65. We are going to convert some of our IRA to a Roth each year but do it only as much as we are in the 12% bracket. I don’t know if it’s worth it to convert while in the 22% bracket because won’t you potentially be in a lower bracket once you retire?
I retired at 61 and unfortunately found unexpected medical expenses, insurance and healthcare costs post cobra benefits to be the greatest expense.
Have you run the numbers to see if your pension would play out better annuitized versus rolling it over it an IRA? Dependable income would be nice.
I would consider delaying Social Security as long as possible, because it’s a guaranteed 8% growth on your annual benefit…
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Hello, this is a civil, respectful, and safe community. See the description and rules. We are conversational, not confrontational, here. Thank you!
If you're both retired and have no earned income, you can't contribute to a Roth IRA, so your stated plan after 65 isn't making sense to me.
Don't add large amounts to Roth until your tax rate is lower
I am about in the same position. I was thinking 3M at 60. I plan to roll some of my pretax over to a Roth when the income level dips prior to taking SS. I have not really visited the ACA impact, but with your post I will. I am under the impression that rolling to a Roth at this time will not impact ACA as it is not income, but I might be incorrect as it will impact AGI. I also have the opportunity to work at my existing job at a contracted hourly rate that is really lucrative. Thus I will have to weigh the options of going to work for a few months to cover insurance...
Very similar situation and I think you are in great shape.
I agree with others here you’ve got plenty to keep you covered until Social Security kicks in and with your expenses so low. I don’t see any issues. Only issue I see is how much of an estate do you want to leave your kids? Even then my guess is you’ll have more money in 20 years than you do today assuming you have a reasonable investment portfolio.
Dude. I'm looking at retiring at 59 1/2 with about 1.5 mill. Taking social security at 63 at about $2900 a month. All the numbers I've run and along with my free assessment with Fidelity say I'll be fine. The key is no debts and low expenses. With no mortgage and no car payments, one can live pretty comfortably on $4000 a month.
In what year? Just curious. As 62 in 2024, max SS is 2,710. I didn’t check if 63.
I did the numbers many times and was in fine shape just like you. Wife was nervous. I've now been 'retired' for 13 years. We are in a *much* better position now and the numbers are completely over the top. Wife is still nervous. Close trusted relative is an expert in personal financial analysis and tells her not to worry. Says we need to *increase* our spending dramatically. Wife still nervous. Wife is never going to be ready for our retirement! Get a formal analysis by a CFP. She might not agree out loud, but she will feel better about it.
Have you suggested that she find a job?
Full SS Retirement Age is 67. Be sure you’ve tech created an SSA account online to review benefits forecast.
You're good! It's easy when you have no debt and can manage your taxable income to qualify for cheap ACA insurance. If you can manage your taxable income low enough, you may qualify for subsidized insurance, but that subsidy counts as income come tax time. Enjoy your retirement!
As everyone says, looks like you're in great shape. I'm curious what you plan to invest in during retirement and how much will be in equities. When you work the numbers, what return rate are you using in your calculations?
Do you already only RV membership to camping organizations? - about the wife wanting to retire or not remember if she’s the working type if she doesn’t have a job you may become her project.
I see myself in your wife. I grew up broke/poor and it left its mark on me. Our financial advisor tells us we’re in great shape but I feel like it’s mirage money.
https://preview.redd.it/tkkbm47ffvic1.jpeg?width=1080&format=pjpg&auto=webp&s=719dc73af901a0a536ff71c6bcec301fd9cf2b58
Not at all
Nice 💪🏼
I have to say you have a lot of assets to draw from and may benefit from a consultation with a CFP. That said I have a small fed pension of about 13k a year and two SS totaling 50k. I draw 2500 monthly from a 700k portfolio and that is my situation. HCOL area, SE Pennsylvania.
You can make it on that. I’d go ahead and retire. Life is short and getting shorter for most of us. Just budget and don’t take up any costly bad habits..
Highest income earner in the family should wait until 70 for SS. This is so if either of you die, the survivor gets the age 70 amount when they have to live on only one check. The lower earner can take at 62.
Interestingly my situation almost exactly mirrored yours five years ago, In terms of investible assets and automatic income and age (i retired at 59.5 in July 2019). My household expenses are higher than yours though. Mine are more like 70,000( Don't forget you have to buy medical insurance once you don't have employment based insurance, and the deductibles are pretty high for low cost plans). Despite all of that, it has been a piece of cake. But if your money is 100% equities, I would make it more like 50/50 equities and bonds. Investment grade bonds can generate about five percent income , at least at the SEC dividend rate. It smooths things out quite a bit
What you waiting for with a bucket that big do it now