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Old 04-20-2015, 10:01 AM   #1
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Retirement question

After working, saving and investing for a lifetime, how do I get comfortable with the mindset that we will have to start spending (drawing down) our retirement assets? It is just the opposite of what we have been doing for almost 40 years. Background: planning to retire in September when we turn 60 years old, no debt, no pension, but enough to retire comfortably on, including buying private healthcare ins. Social Security and Medicare will be a nice bonus when we get there.We went thru 4 RV'rs when the kids were young and loved it. Class A DP with a toad seems the way to go and we intend to keep our home. Reason for retiring at 60 is wife's osteoarthritis is increasingly affecting her mobility (three joint replacements already) and if we are lucky, she may have 5-10 active years left. Any comments or guidance from others that are doing it would be appreciated.
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Old 04-20-2015, 10:11 AM   #2
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I am glad you asked that question. I am 61 and am planning to retire next year. I would be very interested in hearing everyone's opinion(s). My main concern is healthcare. I am as healthy now as I was at 21 (which only shows how decrepit I was at 21), but I really don't want to keep working just to get health insurance coverage through an employer.
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Old 04-20-2015, 10:12 AM   #3
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Do you contemplate LTC insurance ? Have you considered a reverse mortgage (or do you want one) ? Do you have a living trust (or want one) ? Do you have a financial advisor (or do you want one) ?
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Old 04-20-2015, 10:32 AM   #4
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The most difficult thing is determining how long you will need that money stash to remain "comfortable".

Costs go up.

It is tough to make money on money with current low interest rates to keep up with cost increases.

Market crashes like 2008 take a toll on assets unless you are iron willed and just stayed invested through the recovery.

With all those grim thoughts said, life is at most one more day at a time.

We all have an expiration date but do not know when it is.

So if a Class A is you final hurrah, do it!
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Old 04-20-2015, 11:05 AM   #5
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I retired at the age of 55, I am now 72 so have been at it a few years. My DW retired 2 years later. You will have to finance the first years without any help from SSI or medicare. Our son in law just looked into buying medical insurance for himself and our two grandsons @ over $20,000 per year. (My daughters is paid for because of a disability).
You must remember that you will now have 24 hours a day/ 7 days a week that you need to fill your time with. Are you expecting to travel. A two week trip to Europe or a Cruise will cost several thousand for each of you + airfare. An RV spot in south Florida will cost an additional $1200 per month just for the RV, and getting there with the RV using 6 to 10 MPG ain't cheap. Yet if you keep the house up North the utilities and taxes keep coming (more each year) Simply stated it "Will" cost you more, not less to live for the first few years as you are now "living the dream ". I retired with more hobbies that any one could have time for, but using a complete woodshop in the North and living in your RV in the winters in the south means an empty work shop most of the year. However, if you do get a chance to build something the hardwood is now $4 or $5 a board ft and a gallon of paint is $20, or 30 a gallon. Golf with a cart is $45 or more, you going to golf 7 days a week? Maybe you will now bowl in a senior league a few days a week, @ a minimum of $8 each + refreshments, How about a new bowling ball, only another $200. Meet the gang for dinner once a week at the local steak house will cost plenty and then the waist size increases. Living the Dream is hard work!
Then there is the fact that there has been 0% inflation for the last few years and the prices on everything has doubled. At least twice in my 17 years the market has gone in the cra---er! So has a bit of that nest egg. With the need to become a bit more conservative in your investment stratagies as you grow older, your ability to recover from those dips are further limited.
Have fun in your retirement, "you deserve it" just be sure you can afford it.
I don't mean to be so negative, we have truely been living the dream for 17 years and would not want to have it any other way. Just remember, unless you plan on spending your day watching out the window for the mailman to come (with all those non profit solicitations) make sure the financial plan is sound!
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Old 04-20-2015, 11:17 AM   #6
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Good sound advice from luckiest dreamer. I retired 18 months ago with a pension plus health insurance. I find myself busy with chores around the house, helping some of my neighbors and traveling when we want to go.
However, there is not an unlimited income stream so we plan our trips, enjoy seeing kids and grandkids in 3 different states and friends and family. Though we always stay in our coach, we aren't out spending money on entertainment.
We also don't draw more than 4% from our investments either. Seems to work ok for us.
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Old 04-20-2015, 11:34 AM   #7
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It seems you've planned for it, its just hard to stop saving and start spending. If you are going to do 3-4% drawdown on your savings, just make sure it includes savings. In other words, make your budget from a 3-4% drawdown, and include let's say a line item in the budget for savings. Probably 10% of your drawdown. If that works in your budget, then you won't have that sinking feeling that you aren't saving once your new savings account starts growing.
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Old 04-20-2015, 11:47 AM   #8
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I've been retired for three years now, we spent years saving and putting money into three residential properties(one of which we live in), and savings. We weathered the recession and didn't sell our properties and now they are recovering quite well. Although I have a great pension, I too still worried about giving up a "Great Job", just to start enjoying life. I think the biggest thing is a mental issue to get over in that most of us have never been without a job and the fear of the unknown. We bought our new MH last year and have taken several trips in it. Although we do babysit our grandkids a lot, buying the MH was a great investment in our lifestyle, and the freedom to travel.


For us the bottom line is we are still able to enjoy life without really budgeting(although I'm pretty frugal and don't go crazy) and still have been able to save money each month, so our savings has increased, as well as our property investment values. You will not regret retiring if your financial house is in order, which in your case seems to be as you have described it. Like you said you need to get out and enjoy traveling while you both still feel healthy enough to do so, your quality of life issues can change in an instant, some you have no control over. There are a lot of people who worked hard all their life and never got to enjoy one day of retirement due to the unexpected.


Being retired doesn't necessarily mean you will spend more money. You don't have to live beyond your means, or any different for that matter, just because you retired. But, if you have always been a big spender, that also will not change just because you retire. Only you know the answer to that. So my advice is to retire and enjoy life, if you have prepared well, then you will never look back, after you get over the mental block of not having a job. For me that was the hardest part, but you have to remember that we have paid our dues, and now it's time to enjoy what we worked so hard for. The worst day of fishing, is better than the best day of work, and you can apply that to whatever your hobbies may be.
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Old 04-20-2015, 11:49 AM   #9
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Subscribed just to hear responses.

My wife and I are still about 10+ years away from retirement and still in the stashing money away mode.

Mike.
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Old 04-20-2015, 12:25 PM   #10
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We are two years away from retirement now. We set that date based on a number of things, but we only felt comfortable doing so after we had figured out how to do it without sweating whether we were going to be in a reasonable financial situation.

With our financial advisor, we set up an annual budget taking into account our current lifestyle, the lifestyle we expect to have in retirement, inflation, the period before and after we are covered by Medicare & SS and known major expenses. With that in hand, we have begun to set up a 15 year bond ladder to cover the gap between any income we may have in each year and our anticipated expenses. Each year, one year's worth of bonds will mature as our income and we will purchase a new year at the back end from the rest of our funds. This bond ladder then becomes the "safe" portion of our portfolio and the rest is in more growth oriented investments. If a crisis hits, you then have 15 years to figure out a recovery strategy, longer than most market cycles and with the balance of the safe investments to help create a new strategy if it's really that bad.

The day I understood that plan was the first day I could see the path to a retirement where I could sleep at night and not worry about spending down to nothing before we reached the end of our life. It may not be the answer for everyone, but we are thrilled to have some confidence that we can retire when we want to and not be broke at the end of our life.
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Old 04-20-2015, 01:11 PM   #11
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I will retire in 2 months and my DW will retire in 14 months. I will be 62 when I retire and my DW will be 60 when she retires. I will have 2 pensions (2 careers) and my wife will have one. We also will have social security. Additionally we have IRA/401K nest-eggs.

With my financial adviser, I took a portion of my IRA and invested in an annuity, which is currently growing and I plan to start taking withdrawals when I am 65. It will guarantee a lifetime stream of income no matter how long I am lucky enough to live. Between the annuity, pensions, and social security we can live comfortably and still have non-annuity investments in the IRA for extra expenses.

Our biggest uncertainty will be what to do regarding health insurance until we are both on medicare. We have great coverage through my DW's job now, but that will end when she retires. At that time we can either purchase her insurance paying the full premiums or go through Obama Care. The issue with Obama Care is that there are no plans in NJ that have nationwide coverage networks so we are at risk when travelling as planned for 6-7 mos. of the year in our RV. We would only be covered for emergencies and would have to get back to NJ if there was a serious illness. At this point we are both healthy and don't need medical care. For budget planning I assumed paying for her plan as worst case, but if we remain healthy will probably risk going with an Obamacare plan.

Our big issue has been that we want to significantly increase our spending for the first 10 or so years of retirement while we are still healthy and active. We want to explore this amazing country of ours in our RV. My DW does not want to go full-time and wants to maintain a S&B home base.

I set up a annual budget, including the significant additional RV and travel expenses (fuel, campground costs, additional maintenance, entertainment/sight seeing expenses, etc.), determined the annual gap needed to be filled from my IRA non-annuity investments, and reviewed all with my financial planner. Made her nervous since they like to preserve principal and only withdraw around 4%. But with the annuity, I am protected for the long term and if needed we can live comfortably with pensions, social security, annuity. At some point we will settle down in a place and our expenses will go way down and will in fact have a surplus. She ran the numbers using her tools, factoring in inflation, expected returns, etc. and endorsed the plan. She understood our desire to enjoy life while we are healthy and we have agreed on a spending/income plan. Even with the aggressive spending, there is a projected cushion left for unknowns. We also have long-term care policies to protect us too.

I am not worried about how I will fill my time. I have worked since I was 14 and am ready to relax and enjoy life. RV Travel, golf, a little house work at S&B basecamp, and spending time with grandkids (first one due on October this year!!!) will keep me adequately busy. I also enjoy reading, hiking, etc.

5 husbands of coworkers have passed unexpectedly in the past year at my place of employment. All much younger than I. You never know when it will come or when you may become too sick to enjoy yourself. My wife is more conservative financially than I and keeps saying maybe she should work a few more years, but I point out that we have dreams to fulfill and I don't want the regret that we waited too long to pursue them.

Finally, I have told the kids to not expect any inheritance. If we stay healthy long enough we may spend it all! I paid for their college educations and weddings, so I have helped them get established without incurring any significant debt. They are on their own! As of now they are all doing well and I am confident they will adequately support themselves.

While I have the above plan, I still worry some that the pension funds that fund my pensions are not sound and the companies / government will screw me, that social security will get reduced because the government does not take actions to make it secure, medicare gets cut back, etc. I try not to dwell on those items and plan to enjoy my life! My fall back plan is to park the RV in my daughters back yard and hook into her electricity and sewer. I won't need any diesel fuel because I won't move. If I get hungry, I will invite myself into her house for dinner.

Bottom line - develop a plan, try to create some contingencies, and then go enjoy yourself. You have earned it!
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Old 04-20-2015, 01:12 PM   #12
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Quote:
Originally Posted by StephenW View Post
After working, saving and investing for a lifetime, how do I get comfortable with the mindset that we will have to start spending (drawing down) our retirement assets? It is just the opposite of what we have been doing for almost 40 years. Background: planning to retire in September when we turn 60 years old, no debt, no pension, but enough to retire comfortably on, including buying private healthcare ins. Social Security and Medicare will be a nice bonus when we get there.We went thru 4 RV'rs when the kids were young and loved it. Class A DP with a toad seems the way to go and we intend to keep our home. Reason for retiring at 60 is wife's osteoarthritis is increasingly affecting her mobility (three joint replacements already) and if we are lucky, she may have 5-10 active years left. Any comments or guidance from others that are doing it would be appreciated.
Stephen..
Well.. Let me tell you.. we are retired after a very difficult time.. I am an agent orange exposed vet who wasn't able to work full time for 10 years before actually "retiring". Plus my wife was laid off in 08 during the crash which also did a number on our 401k's..
But with all of my medical issues and financial pressures we still found a way to make it happen..
I have friends (I am 70) who have disastrous medical stuff come up and who now wish "I wish I had".
You have already said your wife has few "active" years left.. We never know how much time we have.. My best advice is "do it while you can" for your wife if nothing else..
We are not full timers but travel quite a bit.. Like 4 months this winter in Arizona..
We have had a great time.. Finances are important.. But as someone on the list said you have resources such as "Reverse Mortgage" which is viable as well..
Good luck with your retirements..
Ron..
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Old 04-20-2015, 01:13 PM   #13
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I'm retired and still don't have enough time to accomplish everything that needs to be done. It is not easy to switch gears from making money to spending the pile down when you retire. You may always worry about whether there will be enough to last you until you pass. In that case, you may not have saved enough. The likelihood is that the husband will pass before the wife does. If you doubt this, just visit an old-age home. Most of the residents are women. As far as inflation goes, the official government CPI was revised in 1993 to exclude food and energy. So, if you are seeing higher inflation than the CPI indicates, food and energy may be the reason.
I have not regretted studying investing the last several years. It has helped me and my wife to make it to retirement with less-than-required funds to start with. It's looking better now. Good luck!
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Old 04-20-2015, 01:16 PM   #14
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Quote:
Originally Posted by rhusak View Post
Stephen..
Well.. Let me tell you.. we are retired after a very difficult time.. I am an agent orange exposed vet who wasn't able to work full time for 10 years before actually "retiring". Plus my wife was laid off in 08 during the crash which also did a number on our 401k's..
But with all of my medical issues and financial pressures we still found a way to make it happen..
I have friends (I am 70) who have disastrous medical stuff come up and who now wish "I wish I had".
You have already said your wife has few "active" years left.. We never know how much time we have.. My best advice is "do it while you can" for your wife if nothing else..
We are not full timers but travel quite a bit.. Like 4 months this winter in Arizona..
We have had a great time.. Finances are important.. But as someone on the list said you have resources such as "Reverse Mortgage" which is viable as well..
Good luck with your retirements..
Ron..
+1 on "do it while you can"!
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