Retirement

[gregf]

Hey guys, I know we have some retirees and younger folks here.  I thought I'd share that I retired back in July , a few months shy of 55. 
     For those retired, what are some unexpected pluses or minuses of choices made?  Many I talk to miss the social life of work.
    For the younger guys, here's some things I learned. Try not to raid the 401k or home equity. RMD: Required minimum 401k distribution starts at 72. Basically, the govt wants you to draw down what you put in tax free over a set amount of years. When I started planning a conservative retirement, the money manager projected a significant income jump at 72 based on RMD.  I then recalculated my 401k withdrawal more aggressively to have a long term even draw. 
    Rule of 55.  The last job you worked at this age, you can withdraw from 401k at 55 without early penalties.  Some states allow 50 for emergency responders. 
    How much is enough?   My perspective is about 70% of current income is break even.  Ex, if you make 150k, but put 25k into 401k plus 7200, plus 3k into stated disability, that's 35k you won't need in retirement. Plus tax bracket will lower. The big worry though is a medical account budget.
    Budget in SS, I'm withdrawing at 62, and when home loan will be paid off. This allows a harder withdraw upfront, knowing the back end is more padded
   4% withdrawal is the long term standard to also account for inflation.  I'm drawing down at 5% until 62, then will dial back to 3 or 4 depending on portfolio.  I'm ok drawing down a little harder in my 50's at the risk of a tighter budget in my late 70s.
     Nobody is guaranteed tomorrow and our health will deteriorate at some point.
      Goals:  I have a 5 year travel plan to start with. A certain amount of international, domestic, rv trips etc.  with the understanding to take on more physical goals now.  In July I got scuba certified in Malaysia.  I'm planning on the great loop one year boat trip as well. My youngest son teaches in Japan.  I plan to visit every 4 months.
   In summary, my dad, step dad, grandparents, never had a retirement per health or financial reasons.  I saw 3 coworkers of mine, my age, die in a 1 month stretch during 2020.  I could easily work longer, but time is the more valuable commodity now. 

[T200]

That's awesome, Greg! Congratulations!

I'm 54 and looking to fully retire in April 2027 when I'm 57. It's my minimum retirement age from the federal government.

My financial situation is much different from yours. My wife already collects her military retirement. I will have two government pensions (military reserve and federal civilian), not counting our TSP (401K plan for military/government).

Post-retirement plans are similar, though. We plan on doing a lot of traveling, joining Len and Doris on some cruises. I do a lot of bowling and will travel for tournaments around the country. I also plan on learning how to do some woodworking and building little things around the house. Our summers will be busy taking the two grandkids on trips around the world to get them some international exposure and experience.

Where in Japan is your son? If it's Okinawa, there are amazing scuba spots all around the island!

[gregf]

That's awesome to hear Tim.   I have so many activities on my list, like sailing classes.  I have one grandchild now and am hoping for another soon. Government pensions are fantastic. Most younger workers will not see a pension, hence the emphasis on 401k planning. I'm super lucky to have both!
    He's 2 hours by train west of Tokyo.  Each trip I plan to explore a different area.  Kyoto is next time.  Will definitely look for a dive trip when I hit Okinawa

[LennG]

Gosh, I wish I could have retired when I was 55, but alas, bills needed to be paid so I waited until I was 62 and started drawing SS then. Since I worked for myself thru most of my working years, I had no retirement plan, just a small IRA. I had to wait until my wife retired about 6 years after me, so we were still limited in traveling. Once she retired and we saw you can travel and cruise, in the so-called 'off season' for maybe 1/2 of what we used to pay, we never looked back. We are still waiting on Tim and Sharon, but you can join us also. We have 4 booked for 2025.
At 55, you should expect many good years to enjoy yourself, but what we have seen from far too many friends, is that they tend to keep putting off things that they did want to do when they retired, and then things come up and they never got to do them. I will be 79 next year and as of now, I want to go and see as much as possible. That is our 'thing' Others may not agree with that but we simply love to travel, meet new people, and see as much of the world as we can. We have friends our age and younger than us who put these things off and now cannot travel, for medical reasons. Go for it while you can.

I LOVE being retired as well as my wife. We have friends who are simply bored with being retired and refuse to stop working. Fine for them, but not for us.

To each their own. If you fall into that category, then fine, work part-time but don't let it interfere with any plans you want to make. Once retired you can see your family when you want, you can spend the day doing so many things, or spend the darn day doing absolutely nothing and no one cares.

If you have the money, I see NO reason why anyone can't enjoy retirement. There are no minuses. If you miss the challenge of what work may have brought you, volunteer and keep active.

And again, anytime you want to cruise anywhere, ask about cruising, just give us a holler.

[LennG]

 I was looking for this, something a friend sent me years ago that I always look at several times a year.

TIME DOES NOT STOP

 

Life is a task that we do ourselves every day. When you look... it's already six in the afternoon; when you look... it's already Friday; when you look... the month is over; when you look... the year is over; when you look... 50, 60, 70 and 80 years have passed!

 

When you look... we no longer know where our friends are.

 

When you look... we've lost the love of our life and now, it's too late to go back.

 

Do not stop doing something you like due to lack of time. Do not stop having someone by your side, because your children will soon not be yours, and you will have to do something with that remaining time, where the only thing that we are going to miss will be the space that can only be enjoyed with the usual friends. The time that, unfortunately, never returns.

 

The day is today! WE ARE NO LONGER AT AN AGE TO POSTPONE ANYTHING.

 

[Sem]

Congratulations Greg, @gregf  It sounds like you have a well thought out plan which is key. Do the things you most enjoy while you're able to, I'm sure you've worked hard to get to this point, and you've earned it.

And good luck with your plan Tim, @T200 those two plus years will fly by. Sounds like all the pieces are falling into place for you and your wife. It'll soon be time to really enjoy the fruits of your labor. The golden years as they say.


My wife and I retired for good a little over two years ago. It was a hard decision for me as I truly loved my job, it was a second, somewhat unexpected career that I really enjoyed. Going into work every day those last few years didn't even seem like work at all. It was a couple months past my 65th birthday when I actually retired, a tough decision for me, but now I'm glad I did. I still meet a few of the guys I worked with for lunch every couple weeks. My wife and I are fortunate in that both she and I each are collecting two pensions. Together with social security gives us 6 income streams, which puts us close to what we were making before we retired. Additionally, I had a healthy 401k from a previous job that I took with me when I left in 2012. It has since more than doubled, and I had some of it converted to an IRA and some converted to a Roth IRA. We have yet to start drawing down on any of those, but we'll start soon. We want to continue to travel while it's still relatively easy for us to do so.

[gregf]

Len, great stuff. Thanks! I love cruising!  I've done Alaska , Panama Canal, east and west Caribbean, Mexico etc. ironically I did 2 med floats while in Marine corp. I'm eyeballing a 30 day world cruise too down the road.  Before that though, I want to buy a boat in Florida and do the 6300 mile great loop over a year. Up the east coast, up the Hudson, 130 locks through Great Lakes, down Ohio and missipi rivers, across the Gulf of Mexico!

[gregf]

Thats awesome Sem! Working in one place for 31 years, I made some strong friendships at work were we met outside of work. It's important for me to keep those going as well as more family time.   FYI, I was able to manage my net income about 5% higher as a retiree than working!  My investor set up a 40 year plan to increase annually for inflation

[gregf]

SEM, taught my kids early about investing. Ex, the rule of 72. If you make 10% interest annually, your investment will double in 7 years.
    The first year my son worked in the refinery at 21, I made him invest 50% of his pay while he was living at home. By 22, he had 50k that has continued to grow over last 10 years. 

[Bill Brown]

In the vein of retirement, I'm curious about what you have for health insurance. We have a Medicare advantage plan. Overall I am pretty happy with it. We are in pretty good health so fortunately we haven't had to use it that often. A couple of downfalls is it doesn't do much for eye or dental issues.  Next year the plan I chose will cover 1 eye exam. The only real issue is that I have 1 prescription for my COPD inhaler cost me a couple of hundred a month because it's a high tier drug. But other than we are pretty happy with it. No monthly cost is a good thing.

Bill

[Bob In PA]

Hey guys, I know we have some retirees and younger folks here.  I thought I'd share that I retired back in July , a few months shy of 55. 

Greg: For what it's worth, I tell everyone to retire as soon as they are certain they can afford to do so, unless they are still really like going to work every day and doing the work they do -or- unless you can't think of anything to do in retirement.

Sounds to me like you're ready financially and won't miss your job, and you've got a solid list of things to do. Since you mentioned traveling, my experience is that traveling can get very difficult, very quickly, with each passing year.

All in all, it sounds as though you have already thought things through, so congratulations and best wishes for a long, healthy and happy retirement.

Bob

PS. I waited until 60, but I'm a "belt-and-suspenders" type of person.  55 would have been even better.

[T200]

@Sem - Steve, congrats on your retirement as well!

@gregf - I worked with a guy in Okinawa. He came over as a government contractor and lived there for about 10 years and bought a boat early on. He kept a large map in his office and put stick pins on it to mark all of his dive sites. Those pins almost completely outlined the island! Hopefully you can get there. He had nothing but great things to say about it.

[Bob In PA]

My wife and I retired for good a little over two years ago.

Steve: Sounds like you're living what they used to call "The Life of Riley."  Congratulations. Bob

[MightyGiants]

Hey guys, I know we have some retirees and younger folks here.  I thought I'd share that I retired back in July , a few months shy of 55. 
     For those retired, what are some unexpected pluses or minuses of choices made?  Many I talk to miss the social life of work.
    For the younger guys, here's some things I learned. Try not to raid the 401k or home equity. RMD: Required minimum 401k distribution starts at 72. Basically, the govt wants you to draw down what you put in tax free over a set amount of years. When I started planning a conservative retirement, the money manager projected a significant income jump at 72 based on RMD.  I then recalculated my 401k withdrawal more aggressively to have a long term even draw. 
    Rule of 55.  The last job you worked at this age, you can withdraw from 401k at 55 without early penalties.  Some states allow 50 for emergency responders. 
    How much is enough?   My perspective is about 70% of current income is break even.  Ex, if you make 150k, but put 25k into 401k plus 7200, plus 3k into stated disability, that's 35k you won't need in retirement. Plus tax bracket will lower. The big worry though is a medical account budget.
    Budget in SS, I'm withdrawing at 62, and when home loan will be paid off. This allows a harder withdraw upfront, knowing the back end is more padded
   4% withdrawal is the long term standard to also account for inflation.  I'm drawing down at 5% until 62, then will dial back to 3 or 4 depending on portfolio.  I'm ok drawing down a little harder in my 50's at the risk of a tighter budget in my late 70s.
     Nobody is guaranteed tomorrow and our health will deteriorate at some point.
      Goals:  I have a 5 year travel plan to start with. A certain amount of international, domestic, rv trips etc.  with the understanding to take on more physical goals now.  In July I got scuba certified in Malaysia.  I'm planning on the great loop one year boat trip as well. My youngest son teaches in Japan.  I plan to visit every 4 months.
   In summary, my dad, step dad, grandparents, never had a retirement per health or financial reasons.  I saw 3 coworkers of mine, my age, die in a 1 month stretch during 2020.  I could easily work longer, but time is the more valuable commodity now. 

If you have financial concerns, I suggest speaking to a certified advisor/planner.  If you just want reassurance, I would suggest listening to the Morningstar podcast (go look through past episodes), as they focus heavily on retirement and near-retirement financial issues and playing.

5% is high, and I would calculate what that would leave you as 65.  From there, you would calculate your projected income using 4% (although I have heard some conservative people say 3% is a better number)

Taking SS early has its pluses and minuses.  The longer you wait the higher your annual income when you do start collecting.  The general rule of thumb is unless you think you will have a shorter life span or have pressing needs, wait on collecting SS.

The 70% is a good rule of thumb, or better yet, do an itemized projected budget including your travel expenses and likely increased medical expenses.

[Sem]

Very good advice Rich. In our case we work with someone who is both a CFP and CPA. He's able to advise us both from an investment as well as a tax perspective.