Great retirement book?

[Melisande]

Can anyone recommend a great retirement book?

I am not concerned about having enough money. But I  would like some guidance as to withdrawal and tax strategies (without paying a fortune for a financial advisor).

I am also concerned about going on the health care market for the first time. Our heath insurance through my husband's employer has been excellent and I am concerned I will not find anything nearly as good (particularly since I have a lot of potential health problems -- cancer in remission, for example).

Thanks!

[reeshau]

Re: health care, that's something you can research directly.  You can go to your State's marketplace or Healthcare.gov, shop among plans, and include things like your current doctors and prescriptions, to look through coverage.

Having been on ACA for 4 years, even in Texas, I'd say the two biggest pains are: narrowness of in-network docs, and lack of coverage outside my metro.  The former meant we had to switch providers for 2023, as we felt we couldn't make the old plan's network work.  (Despite having four hospitals in our city, we have to drive another 10 miles past them to the nearest HCA hospital.  Signing up a local hospital was promised, but not delivered)  Doing so meant we had to switch every doc but our pediatrician, but we are OK now.  The latter simply means buying travel insurance when travellling within the US.  We are used to doing so when traveling outside the US.

Re: the book.  Are you retiring early?  "On time?"  I find the early retirement phase (I retired at 48) distinctly different from a traditional, IRA-funded retirement, with plusses and minuses as I execute the plan for this phase, and plan for the next.

[Melisande]

I retired about 11 years ago at 48, but my husband, who is older than me, is still working (he is a professor and loves his job). He is finally planning on retiring next year at 67. So, it will be a traditional retirement. But I have turned to fellow mustachians for advice because I trust you (and am also sick of wading through sponsored crap online and unhelpful responses on Reddit).

So, again, I am looking for withdrawal and budgeting strategies, mainly the former. But, incredibly I find, we have gotten this far in life and doing well financially (over 4 millions net worth) without ever using a budget.

As far the health care, how much is it costing you? We pay over $20,000/year currently for our health insurance, but my husband's university is either matching that or contributing substantially. I am fearing either having to pay $40,000/year for health insurance or else having to take on a lot more financial risk. My sister has something through the market place. It is a complicated plan, but I know she has a deductible (we have none), then has to pay 20% of costs. But she just had a fairly minor outpatient procedure which amounted to $43,000 in a statement she received. She said that she may not have to pay 20% of that, that she will probably get some adjusted bill. But still, I can't imagine living with these kind of financial unknowns. $8600 is nothing to sneeze at, particularly given it may be for just one minor operation.

I was diagnosed with a cancer of unknown origin almost 4.5 years ago. I had chemo and radiation and am now doing great with "No evidence of Disease" as they say and no lasting side effects from treatment. However, I know that if my cancer ever recurs, I will need to go on immunotherapy and that is incredibly expensive - about $24,000/month for years full price. If we even had to pay a fraction of that, it would be huge. This is what I am concerned about.

Our current insurance was so great that I went through lots of testing, plus chemo, plus radiation and wind up paying less than $700 out of pockets ... for over 100 medical visits. Almost everything was 100% covered through our insurance. I am just concerned that I will NOT be getting a deal like that again.

[joedad189]

Sorry for the medical issues - hope all continues going well

Regarding withdrawal strategies, what types of accounts do you have - is it all traditional 401k or a mix.

From what i was reading - and i am not an expert - its best to start with taxable account withdrawals and to do tradition to roth conversions up to what every tax bracket limit you are comfortable with. Then do withdrawals from traditional - while still doing roth conversions. This should minimize your tax burden now and in the future. but again not an expert and i need to do more confirmatory research my self.

[reeshau]

Our ACA plan for a family of 3 is about $750 per month with subsidies.  (Many people pay much less)  We don't have any medical issues that significantly impact our lives, but we do spend regularly.  So, we chose a plan with a $3,200 family deductible.  ($1,600 individual)  There are $0 deductible plans available, of course at a higher monthly premium.
I was worried when we moved to Texas in 2020 that, since the State did not support the ACA, choices would be sparse.  There is no perfect plan, and there are some bad plans.  (Not just bad for us, but seem like bad deals nobody should take)  But it has definitely been doable, with some forethought.  While you have serious medical needs, you do have one good thing: you know what they are.  As I said, you can select your immunotherapy and use it as a search criteria for the ACA plans available to you.

You likely won't get everything you want in a plan, but you can prioritize the things you want most.

In terms of withdrawal, I agree with @joe189man .  I am 52, and withdrawing from my taxable account only--and greatly enjoying the 0% long-term capital gains tax rate!  I do taxes early, in November each year, and balance my ACA subsidy with the gains from my withdrawals during the year.  I usually end up with a nonrefundable credit, due to the child tax credit.  I absorb this with a Roth conversion, and may do more in the 12% income tax bracket depending on our cash situation.  I don't yet have a clear projection of where we will be regarding RMD's, but we seem to be trucking more or less to plan, with the taxable account sustaining us until 59 1/2, and still having flexibility after that with taxable, trad IRA, and Roths to potentially draw from.

One more tool in the toolbox:  my employer switched us to an HDHP many years ago.  We were pretty good with our FSA, and the first couple of years treated our HSA much the same.  As our circumstances improved and I thought more about early retirement, I stopped that and invested it.  Our HSA sits at about $70k.  I view this also as a type of health insurance, in that if we were hit with a big event and a big bill, I will pay for it out of the HSA, instead of withdrawing more out of taxable, and throwing off our tax/subsidy balance.  If the HSA survives until 65 and Medicare, then we will draw it down then.

I don't know of any book on withdrawal strategy to this level of detail.  There are numerous blogs that do, but they will have a slant of "this is what I did," rather than "research shows this is what most people should do."  One place to start is https://earlyretirementnow.com/  ERN goes into excruciating detail, so it might be overwhelming.  But some of us find such thoroughness fascinating.

[Melisande]

Sorry for the medical issues - hope all continues going well

Regarding withdrawal strategies, what types of accounts do you have - is it all traditional 401k or a mix.

From what i was reading - and i am not an expert - its best to start with taxable account withdrawals and to do tradition to roth conversions up to what every tax bracket limit you are comfortable with. Then do withdrawals from traditional - while still doing roth conversions. This should minimize your tax burden now and in the future. but again not an expert and i need to do more confirmatory research my self.

We are/were academics, so not 401k, but 403(b) and 457(b). The largest chunk is in my husband's TIAA --- a little over $3,000,000.

There is a huge mish mash of investments in the TIAA account, including some annuities and one of the target retirement date funds (which I didn't think was such a great thing since there is so much cost involved the fund's management, but it is what it is). OK, here is the break down given by TIAA on the first page of the statement:

Asset class:

 *guaranteed: 4.99%
*Equities 84.66%
*Real Estate  .23%
*Fixed Income .78%
*Money Market 2.32%
*Multi-asset *7.02%




I think there is also something like $80,000 in a Voya account he has. I can't find any statements now and of course can't get on-line. I know it was about $55,000 five years ago. And with the contributions and the growth in stocks, it is probably up to around $80,000 now.

Plus we both have IRA (both Roth and traditional) and brokerage accounts in Vanguard --- about $550,000 total between us.

I have a small TIAA account with about $20,000.

Then, we have some insurance with cash value of around $80,000, plus about $150,000 in the bank in cash (I know this is way too much, but at least we are getting a pretty good interest rate on most of it. Plus the house is all paid off and valued at around $615,000 on Zillow.

So, the idea would be to withdraw from the taxable accounts first? Why does this minimize the tax burden?

Also, how frequently do people usually withdraw? One a year? Once a month? Once every two weeks? It would make more financial sense to withdraw more frequently, but having done a grand total of one withdrawal in my life, I know it is a huge pain in the ass. Well, at least it was for me. How frequently do you withdraw?