Author Topic: I am afraid to retire...what am I afraid of? See specifics please  (Read 4326 times)

mollie1234

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Dear Mustacians.

I  am a 59 1/2 year old female, single with a $10 a hour job substitute teaching. I also own

Vanguard Wellington Fund: $124000 and change in cash account
Vanguard Weselley Fund: $144000 and change in IRA
CD: 25 month @ 2%: $50000
Bank Accnt: $17000 low interest
Bank Accnt: $8000 and change low interest
Series I Bond: $10000 low interest
Treasury Note: $5000 low interest

Roughly $385000

I pull in roughly $12000 a year in capital gains and dividends
I make about $7000 a year in taxable income
Last year I lived on $28000 and will easily live on $25000 this year and will do so going forward

I went through a divorce in 2013 where I fumbled around with the happily ever after blues and spent the extra $9000 on moving, buying some stuff for my new apartment and yes, clothing and jewelry.

I am back to almost normal (whatever that means) and my expenditures are such

Rent: $800
Electric: $100 (budgeted)
No water, sewer, trash charge
Internet (no cable): $48
Netflix ($7.99)
Cell: Verizon prepaid: $39
Food: $200 (I cook all my meals, brown bag and can't remember when I went out to eat at a food place)
Gas: $125
Car Maintenance: $50 (I drive a paid for 54000 mile V6 Toyota Highlander) runs like a top
Insurance: Car $55 (full coverage)
Insurance: Renters: $15 (with a rider for my dog)
Insurance: Health: $82 (gotta love Obamacare) cost includes generic scripts and I take four a day for two movement disorders (inherited) that are treatable but not curable...had them since a little girl
Entertainment: $20
Pets: $50 (I got the two cats and one dog in the settlement and I love them dearly)
Personal Care: $30 ($25 for DIY Hair Color)
Clothing: $10

Approximate total not including emergencies: $1631.99

Quite frankly, I have more than enough stuff and more than enough money to sustain a frugal but modestly comfortable life style. I would like to do some travel but I would not take from my savings to do so. I would work more to pull down the money for the trips.

I lived in CO for over 15 years and loved it. I now live in Indiana where I landed when married and have stayed so far since I just do not yet know what I plan to do with this new chapter in my life.

I have been reading the MMM blog now to obsession and already work within its tennents for quite some time except when I went bat shit crazy after my marriage ended. But I am OK now. Spending back to how I lived for most of my life.

Where did I get the money? A small inheritance, some saving and a very lucrative marriage....we were not married all that long but during that time, when he was working and pulling down a very serious income I had us live on less than 50% and amassed $500,000 within 6-7 years. We both brought to the marriage about $150000 each.

We are both immigrants, he from Brazil and I a first generation immigrant from Scotland and we both wanted the American Dream...and for us that was $1,000,000 cash or more. Sorry to say the marriage did not last but the money did. And I thank his sorry butt every day that we may not have made it but at least the money did and I will be forever grateful.

But the question becomes?

Can I retire now with a part time job doing something else and not making someone else a boatload of money and me not reaping any of the reward?  In other words, can I get out of the rat race and find a new life with the savings of $385000 with Social Security of $11000 a year at 62]?

Thank you for your knowledge, insight, insight and anything else to help me go from scared to bad ass.

Mollie







MDM

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Re: I am afraid to retire...what am I afraid of? See specifics please
« Reply #1 on: May 28, 2015, 10:44:58 AM »
Vanguard Wellington Fund: $124000 and change in cash account
Vanguard Weselley Fund: $144000 and change in IRA
CD: 25 month @ 2%: $50000
Bank Accnt: $17000 low interest
Bank Accnt: $8000 and change low interest
Series I Bond: $10000 low interest
Treasury Note: $5000 low interest

Roughly $385000
Mollie1234, welcome to the forum.  Quick question: those numbers add to $358K.  Is the $385000 a typo or is there more in an individual account?

Quote
Last year I lived on $28000 and will easily live on $25000 this year and will do so going forward

Can I retire now with a part time job doing something else and not making someone else a boatload of money and me not reaping any of the reward?  In other words, can I get out of the rat race and find a new life with the savings of $385000 with Social Security of $11000 a year at 62?
It's a close call.  4% of $385K is $15.4K.  Together with $11K from SS, that would cover your expenses nicely - once you get to 62.

Also, that 4% number (google "Trinity Study" for background) assumes a significant percentage (e.g., 70%) of your investments are in stocks, with the higher historical returns stocks provide.  It appears your investments are much more conservative so the returns will be lower.

Have you tried www.cfiresim.com or other time-dependent retirement planners?

mollie1234

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Re: I am afraid to retire...what am I afraid of? See specifics please
« Reply #2 on: May 28, 2015, 12:14:01 PM »
Yes, you are correct...I forgot the IRA Beneficiary from my deceased mother now at about $12500 and a Roth IRA at about $15000

So you think it is a close call. What do you think would be a better evaluation. With my unfortunate medical issues it can be difficult finding work that does not include very fast key boarding. My hands just don't work that fast anymore. Going forward I see only $10-$12 an hour, and part time at that.

Any suggestions?

Thank you,

Mollie

mollie1234

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Re: I am afraid to retire...what am I afraid of? See specifics please
« Reply #3 on: May 28, 2015, 12:34:30 PM »
Worst case senario is $10 an hour at 20 hours a week.

$800 a month

Around $9000 a year

Mollie

ZiziPB

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Re: I am afraid to retire...what am I afraid of? See specifics please
« Reply #4 on: May 28, 2015, 12:42:39 PM »
How long were you married?  Sounds like your ex was a high earner so you should make sure the collecting SS based on your record makes sense.  You may be better off collecting on his record (if possible).

MDM

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Re: I am afraid to retire...what am I afraid of? See specifics please
« Reply #5 on: May 28, 2015, 12:48:34 PM »
So you think it is a close call. What do you think would be a better evaluation.
Not sure what you mean by "better" - if the comments below don't answer, please clarify.

You might plug your own numbers into the spreadsheet downloadable from the case study sticky.  Change some things (e.g., income = $9K vs. $0K, SS = $11K vs. $0K, etc.) and see how the "time to FI" graph changes in response.  Also change the assumed investment returns and see the response.

It appears your net worth is currently declining.  That makes taking SS ASAP appealing - but if you can delay the start of SS you will get more each year thereafter.  Analyzing such time-dependent tradeoffs is what the more sophisticated retirement planners (e.g., see http://www.bogleheads.org/wiki/Retirement_calculators_and_spending) are for.

Gone Fishing

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Re: I am afraid to retire...what am I afraid of? See specifics please
« Reply #6 on: May 28, 2015, 12:57:37 PM »
Too close for me with your current expenses

What I would probably do:

Sell the Highlander and get a small sedan.  This will trim gas, maintainance, and insurance costs, plus yield some cash for investments.

Explore more creative housing options.  While $800/mo is not outrageous, if you could find a way to trim it to $600/mo it would free up an additional $2400/yr, adding almost 10% of your budget. 

Get in touch with the SS office and explore your benefits.  What would working an additional 3 years do to your monthly check?

Look into Republic wireless or similar.  Could save $20/mo or $240/yr

Go natural, $300/yr in hair color could buy a few nice weekend trips!

Sell some of the jewlery.  You won't get what you paid for it, but if you really want to retire, every dime helps.

Get ready to invest most of your cash with the next market correction.  You are going to need returns to get through the next 30+ years!     

mollie1234

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Re: I am afraid to retire...what am I afraid of? See specifics please
« Reply #7 on: May 28, 2015, 02:13:18 PM »
10 years is the standard cut off to get the ex's SS and I was not able to stay in the marriage...do not want to discuss the why and wherefores. If it were possible I would have stayed but it was not.

I agree about the cut in expense of $800. I am considering renting out a fully furnished with private bath to a roommate that would only be there for part of the time i.e. exchange student, visiting professor, flight attendant etc. I hesitate on that note just because I am single, female and I do not know if allowing a stranger into my home is a good idea. I have to research this option further.

I agree that waiting for SS for a few more years is a potential option but not if I am unable to find suitable work.

The 4% rule is intriguing, however, I understood that there was a spend down factor to this calculation. Principle would be spent down at a rate of about 1% a year....or I have been intrigued with the idea of using the RMD approach starting now instead of at 70 1/2.  Taking from the mortality table a percentage that makes what I have in Vanguard just about what I would be able to take with the 4% rule.

I know that the Toyota Highlander lands me with extra expense, however, I will be moving soon to a cheaper apartment (the $800 one with the two bed, two bath, no pet rent) in August. The area is a wee bit more bike friendly and I could begin using the bike for errands I usually have to use the car for. I already do the multiple errands in one shot on a work day so my expenses may or may not go down. But it is something to consider. My last car, a Toyota Deluxe small truck, lasted me 16 years. If I could get 16 years out of the Highlander it would be a moot point. The Toyota Deluxe would have lasted even longer but the friend that I sold it too gave it to her grandson when he turned sixteen and he immediately proceeded to drive it too fast, in rain, hydroplaned, and rolled it three times....he got out without a scratch but the truck was totaled. Oh, well, if the truck was to get smashed at least it saved a teenager's life. What a lesson!

I think that so much of this doable as it is but for waiting for Social Security. Then I would have part time work, SS, dividends, and a possible roommate. If I have to I could downsize further to a one bedroom. Really, I have three animals and I would just downsize to a one bed now but for the fact that the cats are housebound and their only "outside" time is the balcony. The one bedrooms do not have balconies. In a few years the cats will be so old they won't care anymore but right now it is a balance I am willing to pay for.  I have no family so they are what I have. I know some would think this is an expense that does not make sense, however, they give me company and attention. I think it is a small price to pay. I would foregoe travel if it was the animals or trips.

I think shaving the cell will be doable once I find a job and am not looking for a job.

Has anyone else lived on $25000. The MMM family does it on $27000. What do you think is the difference?

Thanks again!

Mollie

Gone Fishing

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Re: I am afraid to retire...what am I afraid of? See specifics please
« Reply #8 on: May 28, 2015, 02:26:19 PM »
Has anyone else lived on $25000. The MMM family does it on $27000. What do you think is the difference?

MMM has a paid off house ($9600 of your budget!) and very little vehicle usage (probably $2000 less than you).  One can do a lot of things and have a lot of fun with an additional $900+/mo. Your budget also has $5k unaccounted for. Any ideas of where it went? 

Might not be your thing, but you could also consider buying a duplex and renting out half of it to pay most/all of the payment or paying cash for it and using the rent as income. 

MandyM

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Re: I am afraid to retire...what am I afraid of? See specifics please
« Reply #9 on: May 28, 2015, 02:38:37 PM »

Has anyone else lived on $25000. The MMM family does it on $27000. What do you think is the difference?


I live on less than $25K (not including income taxes) as a single person with 3 cats and a dog. My mortgage payment is less than $600/month so even with my water/sewer/trash bill housing is still quite a bit cheaper for me. I also have a roommate that pays $350/month, which isn't accounted for in the $25K expenses. I would definitely recommend looking for a roommate, especially one that is an animal lover. In addition to paying me rent, my roommate cares for my animals while I am away. Take your time and find someone that you are comfortable with.

I pay a lot less in gas than you do, I have a small car.
My grocery bill is lower than yours, but I also eat out on occasion, so they probably even out.
I pay less than $13/month for my cell phone.

Other than those, our expenses are fairly similar.