Author Topic: Questioning My decisions..help a fellow retiree out!  (Read 16318 times)

soccerluvof4

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Questioning My decisions..help a fellow retiree out!
« on: October 21, 2015, 06:09:04 AM »
Ok to keep matters simple Lets say for calculations I have 2 Million saved not including my house which is paid for which is worth call it safely 275k. ( i have other funds but its all hidden for college /kids etc..so I want to use the 2Million as my number). I retired back in April and 2 months later found myself working a job for the health insurance as mine is around 2k with a family of 6. I resigned Monday as it just sucked and I really don't want to go back to work. Note they called, begged me to stay and I had them fooled I was the happiest guy on the planet because thats just how i roll.  Anyhow I am 51 , Married and have 4 kids in which 2 oldest again removed from the 2 Million there College is way more than paid for and some will roll down to the 2 youngest. I have no inheritance to look forward to and The 2 million might be a tad light.  I have run the numbers over and over and even at 2k a month for health insurance I can live / and at least till the 2 oldest are around can be fine on 80k a year with drawal or 4%.  Thinking about this in reverse using those numbers what age would /should this work? My other thought is maybe my wife or I trying to find a job with health insurance. I have check Afffordable Health Care and its less affordable.  So the question is...51 2 million 80k a year for a few years then  less..zero debt...what do you think.

nereo

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #1 on: October 21, 2015, 07:27:46 AM »
Ok to keep matters simple Lets say for calculations I have 2 Million saved not including my house which is paid for which is worth call it safely 275k. ( i have other funds but its all hidden for college /kids etc..so I want to use the 2Million as my number). I retired back in April and 2 months later found myself working a job for the health insurance as mine is around 2k with a family of 6. I resigned Monday as it just sucked and I really don't want to go back to work. Note they called, begged me to stay and I had them fooled I was the happiest guy on the planet because thats just how i roll.  Anyhow I am 51 , Married and have 4 kids in which 2 oldest again removed from the 2 Million there College is way more than paid for and some will roll down to the 2 youngest. I have no inheritance to look forward to and The 2 million might be a tad light.  I have run the numbers over and over and even at 2k a month for health insurance I can live / and at least till the 2 oldest are around can be fine on 80k a year with drawal or 4%.  Thinking about this in reverse using those numbers what age would /should this work? My other thought is maybe my wife or I trying to find a job with health insurance. I have check Afffordable Health Care and its less affordable.  So the question is...51 2 million 80k a year for a few years then  less..zero debt...what do you think.

Good morning

I'm having a bit of trouble following your post and its 'stream-of-consciousness' style.  However, I think the relevant facts are these:
1) you have $2MM savings + your home (worth $275k) + extensive college savings
2) your family health care for two adults and four children is $2000/month
3) your current expenses are $80k/year not including health care

Your question (i believe) is how to handle health care since your savings and annual expenses before health care exceed a 4% WR.  Please correct me if I got any of that wrong.

Synopsis: You have an impressive collection of savings, well done!  First, I am surprised that health-care costs are so high for you, as this is more than triple what many family plans cost.  Two questions there: 1) are you looking at high-deductible plans? and 2) are there extensive health issues here?  With your substantial assets a high-deductible plan is the way to go, since you would have no trouble paying a few thousand dollars for a deductible but want to avoid any catastrophic health-care costs that could wipe out your savings (e.g. ICU care, complex surgery with hospitalization).  If you provide a bit more information we might be able to help you find a health-care plan that is under $1k/month for your family.

Beyond the health-care question - "do you have enough to retire"?  Well... you are borderline.  Including your health-care into your $80k/year spending you need $96k/year.  That would require a 4.8% WR; a bit on the high side.  However, using history as our guide, you would probably be ok because your expenses could drop dramatically as your children leave the nest (what are their ages)?  You also (presumably) have SS to look forward to in 16 years.
Still, a portfolio is most likely to fail when it drops during the first few years of retirement.

So - how do ensure that you won't run out of money?
Basically for you in comes down to three strategies: i) reduce healthcare costs, ii) reduce your spending or iii) work enough to make up the difference.  You can do one, two, or all three of these things.
We've already covered healthcare costs, so let's move onto
ii) reduce spending.  You currently have no mortgage and spend $80k/year ($6.6k/month).  that's pretty spendy for someone with no mortgage.  If you post a case-study with spending amounts by category I'm sure we can fat to trim.  You could probably cut $2k of waste in your budget and wind up with almost the exact same quality of life.
iii) earned income.  You already mentioned finding a job that provides health-care, but there's no need to limit yourself to only jobs that provide health care.  You don't need a high-paying job; you only need a job that can pay your family's health-care costs.  For example, you could work 2-days a week at $32/hour and earn more than enough to pay for your current health-care plan.  You mentioned that your old job begged to take you back - would they be willing to let you work a severely reduced schedule?  There are many, many options - but all that's needed is for you and your partner to figure out how you can earned $2k combined per week.

Personally, my first step would be to re-evaluate that health-care bill. If $2k is the best that you can do then I would give a careful look at my budget and trim some obvious areas of fat - a family of 6 can live like absolute kings on "only" $5k/month with a paid off house.  Finally, I'd keep the idea of getting a job always on the table, not because it's completely necessary but because it adds an great level of resilience to your retirement strategy.  When you aren't forced to work you take only the jobs you want.

HOpefully you will post back with more details.  Cheers

radram

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #2 on: October 21, 2015, 07:34:23 AM »
I think most on this board will say... "hell yes you are done ... that is 3 times what I need".

In reality, since you told us little about your other expenses, the only one that can answer this is you.

To answer your question regarding how long the 4% withdrawal rate will "work", the rule was originally researched for all 25-30 year periods from 1929-1993, and the first failure occurred after 33 years with most portfolios surviving 50 years.

The study is way more meaningful then the simple 4% conclusion.  Because of today's rates and longer retirement time horizons, many no longer consider it a safe rate. Some of this was addressed in the original study, and countless studies since.  I recommend reading the original(http://www.retailinvestor.org/pdf/Bengen1.pdf ) to gain perspective about where 4% rule comes from, and what you can do with it.

With FIRE, you have time on your side.  If the first few years go to hell on a hand basket, there is so much you can do to correct (lower withdrawal rate, work some, spend less, travel less, change asset allocation  ...).  You have DECADES to fix what goes wrong.

 I also recommend you play more with your numbers.  I feel more empowered the more I do.  I love FIRECalc for that. http://www.firecalc.com/

You might want to try just removing insurance costs in calculations, just to take a different look. You would need to find your best calculation of that number, because rates will rise, but you will insure fewer people through time. If you say you will spend about $375,000 on health premiums from now until you are 65, run your numbers on $1,625,000 to see if you can FIRE now. 

My guess is you can be done with minor changes in spending, but will your peace of mind require One More Year?

Keep us posted, and good luck.

Radram




MandyM

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #3 on: October 21, 2015, 07:48:09 AM »

3) your current expenses are $80k/year not including health care


I actually took it as $80k included the health care costs, which would mean he's good to go. That would be 4% withdrawal for the first few years, then lower as the number of people in the home/on insurance reduces.

So the question is...51 2 million 80k a year for a few years then  less...

Out of curiosity - how much alcohol was involved with the original post?

soccerluvof4

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #4 on: October 21, 2015, 08:41:16 AM »
Haha! No Alcohol just a lack of sleep and alot on my mind....lol.

First thanks all for the responses.

The 80k DOES include the cost of Health Insurance so If i get it less than 2k a month then my expenses would be obviously less than 80k. I am just figuring as is now via Cobra.

The thing that cost me the most is my kids sports BUT One of my two HS already had received 100% full ride 4 year deal plus a stipen which is about a 200k scholarship to an out of State Highly regarded school and the second most likely will receive at least something, but again being conservative if not i have enough for a 4 year state school separate of the 2Million plus. In addition the sports costs will be cut in less than half over the next year (again my biggest expense but also a big payoff)
So the 4 kids college is all set to keep that simple.

Other than that after being around MMM for 2 years +/- I have shaved all my expenses immensely which is again why the 80k is a number I am looking to use for a bunch of what ifs.. and some of that too is covered by the tad bit more than the 2million I have aside. I am just looking to see what people feel based on my numbers so I can either say "ok you need some kinda job be it part time with health insurance" or should be good. This is perhaps my own mental ordeal retiring at 51 with 4 kids is all. I do not want to work anymore thats for damn sure.

Thanks.






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Re: Questioning My decisions..help a fellow retiree out!
« Reply #5 on: October 21, 2015, 09:02:35 AM »

The 80k DOES include the cost of Health Insurance so If i get it less than 2k a month then my expenses would be obviously less than 80k. I am just figuring as is now via Cobra.


My COBRA was outrageous.  I dumped it for Obamacare at the first opportunity.  I think leaving a job is a qualifying event so you can probably get ACA insurance immediately.  If you go with a Silver Plan and a 5 or 6k deductible, I bet you will find some savings.  You can research plans in your state via http://www.healthcare.gov

Can you post a budget?  I bet we can find a few hundred a month you won't miss.

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #6 on: October 21, 2015, 09:25:03 AM »
Are you sure you are looking at the post-subsidy AMA cost?  With a household of 6 the subsidies should be very generous.  Also remember when figuring your subsidy, that your spending does not equal your taxable income which is likely to be much less.  What do you think your taxable income will be once you quit working completely?

Have you played with this website?

http://kff.org/interactive/subsidy-calculator/

beltim

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #7 on: October 21, 2015, 09:35:10 AM »
I'm not sure what state the arctic Midwest is, but Michigan has the most expensive health care in the Midwest, so I used that to calculate that the most you should be expected to pay for ACA Silver coverage is $540 per month:
http://kff.org/interactive/subsidy-calculator/#state=mi&zip=48105&income-type=dollars&income=80000&employer-coverage=0&people=6&alternate-plan-family=individual&adult-count=2&adults[0][age]=50&adults[0][tobacco]=0&adults[1][age]=50&adults[1][tobacco]=0&child-count=3&child-tobacco=0

That's also assuming that all of your income is taxable, and none is coming from return of basis or tax-free income (e.g. Roth withdrawals)

nereo

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #8 on: October 21, 2015, 09:41:25 AM »
Haha! No Alcohol just a lack of sleep and alot on my mind....lol.

First thanks all for the responses.

The 80k DOES include the cost of Health Insurance so If i get it less than 2k a month then my expenses would be obviously less than 80k. I am just figuring as is now via Cobra.


If the $80k/year includes health insurance and you have college taken care of than I feel confident that your savings are more than enough.  Currently you have a 4% WR.  I expect your expenses will go down dramatically as your children leave the nest, and you have SS in 17 years.  So; you will likely have a 4% WR today, and then a 3.x% WR in just few years.

If your current healthcare is COBRA that's most likely not the best that you can do.  Get a few quotes for high-dedictible plans from private insurance comapanies in your area.  Like Beltim said, I'd expect you to be able to get health insurance for all of you for a fraction of what you are paying through COBRA.

Cheers

G-dog

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #9 on: October 21, 2015, 09:53:33 AM »
Agree with Nereo and others, given what is covered, you should be OK. Actually better than OK.

In my experience, COBRA is about the most expensive option for insurance. Take some time to confirm the cost for ACA with subsidies as mentioned above.

Also, not knowing your exact circumstances, but $89K/year sounds pretty luxurious, so you likely have some flexibility in spending if needed. I am assuming you are calculating based on the maximum likely spend to be conservative.


soccerluvof4

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #10 on: October 21, 2015, 11:45:29 AM »
Yes G-Dog that is what  I was calculating.

Thanks all for the info as well on the insurance options. I just want to make sure my family is covered and if I can get it down to 500-1000 a month then it really becomes a no brainer.  As for posting a budget and saving a couple hundred a month I am dirt cheap on groceries, redone all my insurances and made cuts where we are willing. Again the 80k is a high number but one i wanted to use to ease my mind. My costs will drop significantly and alot of the money that people would suggest to cut is whats taken care of my kids school so thats paid off. Again the reason 80 as opposed to maybe 60 or even 50k.

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #11 on: October 21, 2015, 01:48:59 PM »
We all pick a somewhat arbitrary round number to do quick scenarios, or even more complicated scenarios. We also then pick and chose wgphat we want to include and exclude. For example, I ignore the value of our house, future pension, and future social security. So I essentially do a fairly conservative estimate assuming that my stash is my only support, with returning to work or reducing expenses as my possible responses if my stash doesn't support my withdrawal rate.

soccerluvof4

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #12 on: October 22, 2015, 07:05:30 AM »
We all pick a somewhat arbitrary round number to do quick scenarios, or even more complicated scenarios. We also then pick and chose wgphat we want to include and exclude. For example, I ignore the value of our house, future pension, and future social security. So I essentially do a fairly conservative estimate assuming that my stash is my only support, with returning to work or reducing expenses as my possible responses if my stash doesn't support my withdrawal rate.


Totally agree!..

Cycling Stache

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #13 on: October 22, 2015, 07:19:13 AM »
How has nobody mentioned social security?  It's like a forgotten factor when people calculate the amount needed and safe withdrawal rates.  MMM didn't include it because he was 30 and needed his stash to last until 65 or so before social security even kicked in.

OP is 51, and I'm betting that if he's saved $2 million, he's probably kicked plenty into social security.  OP can pull it from the social security website, but I would guess he's looking at $3-4k per month in social security at 65 or 67 (depending on what his "full" retirement age is, and including his wife).

That's conservatively $35-45k per year starting in 14 or 16 years.  While they might tweak social security, they're not going to wipe it out in 15 years.

OP, check your social security benefit statements for you and your wife on their website.  My guess is that once you figure out real insurance costs, plus social security, you probably have WAY more than you'll need.
« Last Edit: October 22, 2015, 07:28:25 AM by Cycling Stache »

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #14 on: October 22, 2015, 07:48:23 AM »
SS is certainly a source of money, but as you say for most early retirees its far enough (and uncertain enough) away to assume its value is zero, with the expectation that it will be worth something when we get there.

As to what its worth.. well that depends of course, in my own case I only emigrated to the US 18 years ago but I have a liquid NW of close to $2M (if I count the $400k I have been offered to buy out my UK company pension).

My last SS statement indicated I would get about $1300 a month if I contributed zero from now on.

It is worth checking into.

My suspicion is that when the OP really looks at the numbers and the kids are gone, maybe move to a lower cost of living state etc, their expenses will come way down.

As an example my Wife and I spent a comfortable $28k last year and we expect our HC to cost no more than about $5k.. probably nearer $2k. remember that if you carefully manage your income (if you live off of after tax savings you income can be ZERO.. assuming you haven't made any capital gains, which of course you will have).

A couple will also have $zero fed tax to pay if the income is below about $20k.

Lots of tunes you can play, but it takes a while to figure them all out.

nereo

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #15 on: October 22, 2015, 07:53:31 AM »
How has nobody mentioned social security?  It's like a forgotten factor when people calculate the amount needed and safe withdrawal rates.

Actually it was mentioned.  OP can use fireCalc to estimate how utilizing various WR would have faired including his SS payments in ~16 years.  At 51 he's on the cusp of when SS starts improving his odds, from ~85% to the mid-90s depending on his exact benefits.  It's useful but nearly as useful as halving that healthcare cost (which results in essentially 100% success even before factoring in SS benefits).

EscapeVelocity2020

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #16 on: October 22, 2015, 08:15:10 AM »
My guess is that you'll be fine long term, but have your most financially stressful years right ahead of you.  Sounds like college is taken care of, but that can be a big wildcard for most of us until the kids are all through and established on their own.  If you get through that OK (that coupled with the possibility that the market might hit a bear), then you are home free!  Like you said, expenses will go way down and you are that much closer to SS. 

Just trying to put it in perspective, that you have probably over-saved but won't really know it until 5 - 10 years from now :)

Oh yeah, and I agree that you gotta do something about those outrageous healthcare premiums.  It's always a balance between being locked in to pre-spend for more coverage than you use vs. underspending and being caught with a high deductible.  Only you can determine that right balance given health history and current situation, but you are also in a good position to self-insure which is a valuable asset.

soccerluvof4

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #17 on: October 22, 2015, 10:11:22 AM »
All great points and yea.. I bought the house thinking be long term retirement house because of the set-up and taxes and all I would probably pay the same in this area for a condo. Having said that depending on where the kids end up i really want to retire in NC someday so again trying to look at worse case scenario. The more I talk to you guys and the more i play with the numbers I too feel I will be fine But I retired once and got nervous with the HC costs with a big family and just hated what i was doing. My wife and I agreed no matter what barring some "you just gotta do it" we are going to ride the winter out as we have alot of travel already booked and planned. I can re-evaluate and if need be find something in spring if I still feel the way i do/did. And i have about a 250k buffer on top of the 2M as i mentioned it was a +/- so cover for expenses into new house, trips etc..Bottom line I want the 2M barring a market collapse to be the number and anything else i have will be my challenge to retain separate of my 2M growing or declining.  My number #1 priortiy though will be the HC costs and I will share what i fined out. I just resigned Monday and with prepaying to move I havent had alot of time. I also dont like to think of the money above the 2M till my current house closes as thats a big part of the the additional cash.

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #18 on: October 22, 2015, 10:54:03 AM »
... And i have about a 250k buffer on top of the 2M as i mentioned it was a +/- so ...
Wow.  Ok, so you more than a 3 year emergency fund on top of a 4% withdrawal rate that does NOT include SS in 16 years and a likely reduction in spending in the next few years from reduced health-costs and kids leaving the nest. 

You are golden my friend.  Enjoy your retirement, and keep us posted on what you choose to do with your life.

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #19 on: October 22, 2015, 04:08:21 PM »
Hehe.. This thought process reminds me of the morning about a week after I FIRED.

I said to my still working Wife.. "Yes Hon, well now that I am not earning YOU are going to have to cough up another $400 to 500 a month for the taxes I won't be paying"... She just about choked!

What was the calculation I had just done?.. well I took the total amount of tax we paid on our combined 6 figure income and prorated it down to her salary.

I was WAAAY off.. In fact we would pay a lot less tax based on just the income we made from our rentals plus her salary.

The point is, when you first quit you really have no idea about these things, because you have never lived on such an amount. Its a lot easier than you imagine, but going from say $150k down to $0.. There is no way to know how that works..:)

Read my blog below if you want to get an idea of the gyrations I went through.

You'll be fine.

soccerluvof4

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #20 on: October 23, 2015, 04:21:08 AM »

Below are the numbers right of SS Website for me....so is this concerning based on the last statement? Based on earning a 117k a year? Retiring that wont happen. Does my wife get SS too or is it just one of us. I thought it was just one of us whoever gets the most?



At full retirement age (67):

 
$2,753 a month

At age 70:

 
$3,426 a month

At early retirement age (62):

 
$1,913 a month

Your estimates are based on the assumption that you will earn $117,000 a year from now until retirement.


DoubleDown

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #21 on: October 23, 2015, 10:07:29 AM »
Don't worry about the disclaimer from SSA saying "based on the assumption that you will earn $117,000 a year from now until retirement." Even if you quit working now and earn/contribute $0 from here on, your benefits will be very close to those estimates. You have already contributed, by far, the lion's share to Social Security for accruing benefits. In fact, you are now only accruing very small increases to your projected payments based on Social Security's progressive nature (it's complicated, but you are now getting back only pennies for all the dollars you contribute).

For comparison, your numbers and mine are fairly close. I'm a bit younger than you (48) , so your impact to stopping working now will be even less. I went through the detailed calculation of my actual benefit to figure out just how much impact that disclaimer would have, and here's the difference:

Estimated payment at full retirement age (67) and continuing to earn: $2235
Actual payment at full retirement age (67) with zero earnings from now on (i.e., ignoring the disclaimer): $2173

As you can see, the difference is negligible ($62/month out of $2235, so about 3% or less??). Definitely not worth continuing to work another 19 years for that! I could go through the other figures for early retirement and full retirement ages, but the result is the same: The difference between continuing to earn and stopping all earnings is negligible to the future SS payout.

Cycling Stache

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #22 on: October 23, 2015, 10:14:12 AM »

Below are the numbers right of SS Website for me....so is this concerning based on the last statement? Based on earning a 117k a year? Retiring that wont happen. Does my wife get SS too or is it just one of us. I thought it was just one of us whoever gets the most?

At full retirement age (67):
 
$2,753 a month

At age 70:
 
$3,426 a month

At early retirement age (62):
 
$1,913 a month

Your estimates are based on the assumption that you will earn $117,000 a year from now until retirement.

Yes, you won't get that full amount if you stop working now.  Social security is based on a formula that seems complicated, but really isn't, once you plug in your numbers.  What's important is that it's based on the sum of 35 years of working, then divide by 35 (then by 12 to get monthly income), so any years that you don't have income will be 0 years, thus bringing down the average.  BUT--it is also done on a sliding scale, so after a certain point, you only get 15% extra for each additional year, which doesn't increase your payout that much.  So, for me, if I work to 45 (seems increasingly unlikely), which includes approximately 25 years of income, most of which is at the social security ceiling, I will receive $2,040 per month at age 67.  If I work 6 more years to age 51 at the max social security limit (I think I estimated $117k), the pay out amount is $2,319 per month at age 67.

So, working 6 more years from 45 to 51 at maximum social security wages will net me an extra $280 per month, or $3,350 per year, starting at 67.   Not chump change, but it's not going to motivate me to work 6 more years.

To calculate yours, add up all your social security annual earnings, divide by 35, then divide by 12 to get your average monthly income.  If your average monthly income is over $4,624, the calculation is (.9)($767) + (.32)($4,624 - $767) + (.15)($AVERAGE MONTHLY INCOME - $4,624).  If it's less than $4,624, then it's (.9)($767) + (.32)(AVERAGE MONTHLY INCOME - $767).  You should double check that, but that's the formula I have in my notes when I looked at this last year.

The key point is that once you get your average monthly income over $4,624, you move into the 15% bracket, which doesn't give you much bang for the buck when it comes to hard working years versus zero years.  It's something, but not a huge difference.

For your spouse, if she works, I believe she gets her amount based on her own calculations, with possibly some cap.  She would also get benefits if you passed away.  I'm not sure of those exact numbers, so check your statement and/or call SSA.

I point all this out because it was surprising to me how little social security actual increases after you hit a certain point, even with numerous zero years.  You've probably hit that point.  And while of course it's always possible for them to change or eliminate social security, I do not share the view here that you should treat it as zero.  Social security is a major program that millions of poeple depend on; whatever changes they make will most likely occur gradually.  So I think you should figure out your number if you don't earn another dollar, and factor that money into your analysis.

I haven't done the firecalc simulators or worried about every possible contigency, but with your social security factored in--and cheaper insurance!--you seem to be in excellent shape.

Good luck!
« Last Edit: October 23, 2015, 10:20:52 AM by Cycling Stache »

soccerluvof4

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #23 on: October 24, 2015, 06:02:55 AM »
Wow thanks Double Down and Cycling Stache! I dont have all my years income to check back but for 25 of those years plus I made 150k or more and half of those over 250k and by quite alot,  so I should be fine i would think. Hence alot of the stupidity till especially running across MMM or I wouldn't need to be thinking much about all of this. I will say I really got walloped though in real-estate trying to do the right thing but that was a bad investment enough on that.  Anyhow, I appreciate every ones input I have learned a lot and again barring something i don't know or like i said an offer i just cant refuse  I think I am done working this time for good. Thats the reason I am downsizing again for the second time in 3 years.

I do have one other concern and that is again with the Health Insurance. I have been putting off a double Knee replacement as my doctors told me to go as long as i can because they only last 20 years. Well i am 3 years in on that and get injections every year to 2 years. In thinking about all this getting new health insurance this becomes a concern and I totally forgot about this earlier but there throbbing because of all the moving I am doing. This was another reason why I took that position back in April. Frustrating.

 

Cycling Stache

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #24 on: October 25, 2015, 10:20:50 AM »
Wow thanks Double Down and Cycling Stache! I dont have all my years income to check back but for 25 of those years plus I made 150k or more and half of those over 250k and by quite alot,  so I should be fine i would think.

You can get your social security statement online.  That will have all your past years' income.  It's capped each year, though, so the limit will be about $95,000 - $115,000 per year (it increases gradually).  So $250k income years will still be capped at whatever the limit was that year.  The statement shows the capped amounts where you hit it.

Good luck, and especially with the health issues.  There are tons of posts on the health care stuff.  Having functional knees is definitely a plus!  Financially, though, you sound like you're in good shape.

SwordGuy

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #25 on: October 25, 2015, 12:54:22 PM »
With the proviso that nothing I say holds true if you've got terrible healthcare issues and their associated costs:

If you can't make ends meet on $80k a year you are doing something horribly wrong.

If you can't make ends meet on $80k a year with no mortgage or rent to pay you are doing something horribly stupid.

Median family income is $60.  Millions of families live wonderful lives on that amount of money and they have to pay a mortgage, too.

I bet there is a LOT of waste in your budget. 

Post a proper case study and we'll help you find it.


soccerluvof4

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #26 on: October 26, 2015, 04:27:06 AM »
^ if you read my posts you would realize that I said i could live quite comfortably on 80k a year and it was a highly conservative number that I wanted to use.

nereo

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #27 on: October 26, 2015, 06:21:30 AM »

 Does my wife get SS too or is it just one of us. I thought it was just one of us whoever gets the most?

Cycling Stach is correct - if both of you worked, both of you will receive SS payments.  Your wife can determine her estimated payments by going online here.
Assuming that your wife has any sort of working history your SS income will likely be ≥$4k once you both hit retirement age.  That's a huge safety net on top of your current 4% WR (plus a 3 year EF) should something horrible happen.  FireCalc shows no failures (100% success).

soccerluvof4

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #28 on: October 26, 2015, 07:15:59 AM »
Good to know Nereo!!! thats great news!

Frugal-Investor

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #29 on: October 30, 2015, 07:56:17 AM »
Two quick thoughts:
(1) what a great, thoughtful and on-target set of insights from a bunch of mmm folks. You are an impressive bunch!
(2) The initial post gave me the impression that the issue was not the plan itself (aside from health insurance high cost), but rather confidence level in the plan, since retiring early is an act of faith in one's own planning/ action over past few decades.

If that's the core issue, perhaps thinking about work as a continuum would be valuable since it offers a contingency option. Perhaps many of us were brought up to think about work as binary -- as in, you are on a career track, working full time (should I add: "for the man") or not. What if "work" is shades of grey ranging from:
   0 = will aggressively turn down any option that could pull in a few bucks...www.freecycle.org gets my extra stuff because even Craig's list feels like work,
   5 = may occasionally take part in labor market on terms that tilt to my needs, especially taking advantage of skills that I exercise for free,
  9, 10 = relentless, entrenched career track.

Maybe this idea is an echo of some risk management planning I did (while residing on the #10 end of the continuum that was invisible for me at the time). What's the area of potential concern? What's a tactic that mitigates the risk?

soccerluvof4

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #30 on: November 02, 2015, 03:25:49 PM »
^ those are good points and I am sure thats part of it. In fact i looked a business today today buy BUT the more days that pass the less likely i am to do anything at least in the near future.

Also on that note you are a 100% correct with Health Insurance being a big part of it. Today i did sign the papers on Cobra with Dental that was 1100$ a month so a lot less than i thought for a family of 6 and worse case valid till April of 2017.  I am going to get this move behind me and see what other course of action i can take to reduce the cost of Health Insurance.

While I further and further have no plans of going back to work I did agree to just General a basement so maybe that will be a path i take.

Dee18

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #31 on: November 02, 2015, 05:41:23 PM »
I'm pretty sure your wife has the choice of taking her own SS or getting 50% of yours as her benefit...yes, that's in addition to yours. So given your estimate above the two of you together would get at least $5000/ month. And there are annual cost of living increases.

soccerluvof4

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #32 on: November 18, 2015, 06:37:53 AM »
5k a month would be WONDERFUL!! 2 weeks into my move i see farther and farther away from ever thinking of going back to work. My numbers will be in that 2.2-2.3M range when all is settled and done with house paid, no car payments and 2 of the 4 kids college paid in full. I will probably always prowl since that's my nature and if someone is willing to pay me a lot for nothing maybe I will reconsider but I have a whole lot of remodeling to do on the new house to try to keep from thinking about going back to work!

lostformars

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #33 on: December 03, 2015, 01:21:31 PM »
To calculate yours, add up all your social security annual earnings, divide by 35, then divide by 12 to get your average monthly income.  If your average monthly income is over $4,624, the calculation is (.9)($767) + (.32)($4,624 - $767) + (.15)($AVERAGE MONTHLY INCOME - $4,624).  If it's less than $4,624, then it's (.9)($767) + (.32)(AVERAGE MONTHLY INCOME - $767).  You should double check that, but that's the formula I have in my notes when I looked at this last year.

I knew that SS used the highest earning 35 years but was not aware of the 3 brackets used (.9, .32, .15) to determine the benefit. I was testing in the SS online calculator (https://www.ssa.gov/planners/retire/AnypiaApplet.html) and noticed debug statements in the JavaScript. If you enable the console in your browser, run "do_debug = true;" and then hit the calculate button you get a popup window with lots of interesting details about how the benefit is calculated. When I did this I found that it was using $826 and $4,980 as the bracket cutoffs (not the $767, $4,624 that you show). This is the first I have seen this calculation. These values must have changed. The percentages (9, 32, 15) are the same.


markbike528CBX

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #34 on: December 08, 2015, 09:16:16 AM »
per https://www.ssa.gov/pubs/EN-05-10070.pdf

the 826 and 4980  values are current.

Also note that the prior years are indexed.   
Adding up your nominal (current year) income would reduce your SS.

MDM

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #35 on: December 08, 2015, 02:20:51 PM »
I was testing in the SS online calculator (https://www.ssa.gov/planners/retire/AnypiaApplet.html) and noticed debug statements in the JavaScript. If you enable the console in your browser, run "do_debug = true;" and then hit the calculate button you get a popup window with lots of interesting details about how the benefit is calculated. When I did this I found that it was using $826 and $4,980 as the bracket cutoffs (not the $767, $4,624 that you show). This is the first I have seen this calculation. These values must have changed. The percentages (9, 32, 15) are the same.
Thanks - I'll have to try that. :)

The "bend point" values do change each year, depending on the Average Wage Index.  See the SocialSecurity tab in the case study spreadsheet if you like gory details.

Cycling Stache

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #36 on: December 14, 2015, 06:12:35 PM »
per https://www.ssa.gov/pubs/EN-05-10070.pdf

the 826 and 4980  values are current.

Also note that the prior years are indexed.   
Adding up your nominal (current year) income would reduce your SS.

Thanks for the update and correction.  It makes sense that the figures would be indexed.

soccerluvof4

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #37 on: December 17, 2015, 11:25:49 AM »
so to simplify if possible; If you maxed out for 25 years, retired and for 15 years payed nothing in how would that affect you or wouldn't it? Since they figure it on 35 years and your not working 10 of those years.

Or say someone age  25-50 maxes out every year as an individual and then retires...seem thing just laid out what i wrote above.

Another Reader

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #38 on: December 17, 2015, 01:18:20 PM »
It's a useful exercise to download the SS worksheet that allows you to enter the income subject to FICA every year you have worked and then multiply it by the National Average Wage Index.  Once all the amounts are indexed, select the 35 highest years, using zero for any years in which no income subject to FICA was earned.  The sum of those indexed amounts is the "pot" of money upon which your Primary Insurance Amount (annuity at Full Retirement Age) is based.  Divide the pot by 35 and by 12, and that is the indexed monthly income that is being "replaced" by the SS annuity.  Take 90 percent of the first $826, 32 percent of the next bracket, and 15 percent of the remainder.  That is what your benefit would be today if you were at Full Retirement Age (FRA).

The earnings will continue to be indexed until you turn 60, whether or not your continue to work.  I was surprised at how little additional earnings would have increased my PIA.  I was shocked at the indexed amounts for my early years of work.  The index factors adjusted those earnings well above what those jobs pay today.

n your shoes, I would do the math for both you and your wife.  Although some of the claiming strategies were recently taken off the table, you may want to have a look at some of the software that calculates the optimal claiming strategies for a married couple with two working spouses.  If something were to happen to one of you while one or more kids were under 18, there would be additional income for them. 

soccerluvof4

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #39 on: December 17, 2015, 02:54:39 PM »
^ Thanks! that makes sense especially with the kids!!

save_save_save

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #40 on: December 18, 2015, 01:43:44 PM »
I do have one other concern and that is again with the Health Insurance. I have been putting off a double Knee replacement as my doctors told me to go as long as i can because they only last 20 years. Well i am 3 years in on that and get injections every year to 2 years. In thinking about all this getting new health insurance this becomes a concern and I totally forgot about this earlier but there throbbing because of all the moving I am doing. This was another reason why I took that position back in April. Frustrating.

Have you considered Medical tourism for your knee replacements?   My wife will eventually need hers replaced and it looks like we could save thousands.

soccerluvof4

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Re: Questioning My decisions..help a fellow retiree out!
« Reply #41 on: December 19, 2015, 10:33:36 AM »
^ I have never heard of it to be honest. I will google and see what i can find out...thanks!