You brought up some great points, Bob. We're not near as tight with money as we could or probably should be. However, out biggest expense is charity which is around 1k a month. Without that 25-30k is much more doable. Property tax, insurance, maintenance, increase utilities work out to about the cost of rent.
Thanks for the example with selling and leveraging the money. We're definitely selling! The timing is questionable. On one hand, selling would make my retirement a little easier as we wouldn't have 250k tied up in our house with a low return. Once we both retire, we are planning on relocating. Subsequently I don't know if moving twice makes sense or if we should just wait until then. We're looking at apartment living. Even figuring an annual increase in rent, our home would probably pay for an apartment for the 30 years. Moving closer to one son will save travel expenses. My dh has mixed feelings about selling/timing but is all for it, if it will enable me to pull the plug sooner.
I've thought about LTC insurance, but I'm going to roll the dice on that one. My brother, with 5m, is my LTC insurance. Plus adult children would help out physically and otherwise.
No pension here. I just know when we quit that's it. We're too old to go back-especially my dh. During his last year at work, he's going to have 100% of his paycheck going to his 401k to max out. Once that's done, and he has Medicare he will go per diem. I am not going to co-mingle that money. I want to see how we do on just my income.
Course when both of us retired, we will go to one vehicle. I know that's not true MMM, but it's better than nothing. I would love to be in a place where we could walk to stores.
Excellent point about being able to pass on 401(k)s and not SS. Seeing it written puts it into perspective. Since I am 57 and my husband is 63, we don't have to worry about the withdrawal rule of 59 1/2.
We have a lot of expenses coming up this year and next. Once we get beyond those, I think it will help. One son is retiring from the military and want to be there for that. Another one will be commissioned as an officer and want to be there for that. The younger one is getting married next year. We have a trip to Europe next summer and another trip in the fall for a family reunion. The only possible negotiable expense is the family reunion. My husband has wanted to go back home to Germany for years and we've put it off for years. We will be traveling with our older son and his family.
I wondered about the calculator with inflation/investing the funds. A coworker is drawing Social Security now and investing the funds and continuing to work. In 2019, we would get approximately 25K a year combined. In 2021, that increases when my dh is 70. Supposedly his benefit would be 34k and mine 15k. 2019 is so close and we could definitely live off our investments until then!
I really, really appreciate your input. Your comment, and others, have helped me to realize we can do this and it can become a reality. Transitioning slowly will make it easier for me, but I'm so excited. My dh and I are looking forward to this next phase in our lives. I'm beginning to look forward to his retirement almost as much as he is!
That seems like a bargain.
If your pretty tight with your spending, like a lot of Mustachians, my assumption is that you will need very little income to live on. Maybe 20K if the house is paid off.
The reason I mention this is that last time I looked at the premiums (with tax breaks) for health insurance the cost was basically close to zero at 25K income.
This may be an important point for you if you have control of income (not a forced pension). You could essentially live off your 401Ks until 62 and then live off of SS when it kicks in while basically paying no taxes and no health insurance. Lifestyle plays an important role for most of us in making choices.
The 401K/IRA can be passed to grandkids, while SS cannot. So, in cases where you have significant assets my choice would be to take SS asap.
By the way, there are at least 3 ways to make tax free withdrawals from IRAs without tax penalties prior to age 59 1/2. You can google these. "Substantially equal withdrawals" comes to mind.
The other big consideration is long term care insurance. You might look at the recent thread on that. Without LTCI there is a significant probability you would eat up your assets.
Another consideration is your home. Most people don't consider selling and downsizing, but you might.
Here is some math - Sell a 500K home with taxes net 470K. Buy a 200K place with a low down and interest only loan at 4%. Your 470 will net 18K per year at 4%. Your mortgage would be 8K. Essentially, your asset would now be producing 10K per year. Using a 9% average return on the 470K your average annual net would be closer to 32K. (32K is a nice amount of money IMHO). This is a strategy for long term thinkers. (I'm not saying this is your situation. Although it is for many readers including MMM himself).
By the way, I don't think the SS calculator takes into account inflation and investment of the funds. So let's say you take 28K out of SS and just invest it. In 20 years it will be worth something like 200K. Do this each year and you're looking at 1.2 million that can generate 36k for you and your decedents indefinitely.
Just thinking out loud -- thanks for you post.
