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Follower ○○○

Update after 4 years in early retirement

I retired in 2016 at the age of 52 and I turn 57 this month so I looked over my spreadsheet and history.  After selling my main residence, getting the renters out of my rental property, doing probably $12k in repairs because of them including new appliances (they even took the washer and dryer), cleaners, total paint inside, new carpet, outside cleanup, new sod, etc., etc., I had $617k at the end 0f 2016.  I have no income other than dividends from bond funds in taxable brokerage.

Over the last 4 years I have taken a week-long vacation out of the country, replaced the main electrical panel, replaced the entire kitchen from the flooring up, had sewer work done which including taking out part of a patio, replacing old iron pipe, installing a clean-out, and re-pouring cement, and various other home projects (80 year old house).  I withdraw about $2k per month for living expenses, sometimes more, sometimes less.  All told in the last 4 years and 4 months I've withdrawn $136k, which comes out to an average of $2600 per month.

As of today I have $623k left, which is $30k below my all-time high in January this year.  Only 2.5 years until I reach 59.5 and can tap my tIRA unrestricted.  I have been taking 72t withdrawals from IRA of $15.5 yearly because I didn't want to solely rely on my taxable brokerage and possibly deplete it because of unexpected expenses.  I have two more required withdrawals to make but have more than enough in taxable for the next few years anyway.  I plan on taking SS at age 62 which will be $1835 per month so my withdrawals will go down drastically.  My mortgage is under $600 per month, including taxes and insurance, my car is paid off and I have no other debt.

My portfolio allocation is 60% stock (50% US and 10% Foreign), 30% bonds, and 10% cash.  I rarely make any moves as I have my allocation set to what I want with few mutual funds like S&P500 Index, Total Market Bonds, Total Market Stocks, International Index, and High Yield and Intermediate bond in my taxable

So, here's to being retired, living a simple life, and never having to work again without being a millionaire.  I didn't sacrifice much in terms of lifestyle as I'm basically a homebody anyway.  I keep a running three years of withdrawals in CDs in my tIRA, one maturing each year, so I am never forced to sell at a bad time to raise cash and I can sleep at night not worrying about what the market does day-to-day.

47 Replies
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Frequent Contributor

Re: Update after 4 years in early retirement

Congratulations, Pam.

Nicely done.

Bob

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Frequent Contributor

Re: Update after 4 years in early retirement

 

Congratulations PamInCali!

We have talked before...no?  On the old forums.  I seem to recall you and your situation.

Keep up the good work...you will get to that age 62 Social Security.  That $1835 coming every 30 days is going to feel like: Wow!

R48

 

 

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Follower ○○○

Re: Update after 4 years in early retirement

Yes, I was on the old forums.  I credit MStar and all the people here for helping me get to retirement in the first place.  I knew almost nothing about investing and a friend told me about MStar.  I signed up, paid subscription, and read and read and read articles and the forums.

I know that $1835 is going to be WOW.  That's more than I withdraw some months.

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Participant ○○

Re: Update after 4 years in early retirement

Hi Pam. I recall your embarkment into the wonders of retirement. Goo d to hear it's working.  Congrats.

 

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Frequent Contributor

Re: Update after 4 years in early retirement

Good4you, Pam.

You did not mention much on health insurance, I assumed that you are well-covered in that area.

You must have done some trade-offs on the timing to claim social security; most take social security early as well.

And great that you stay the course on your asset allocation and diversification, even in this economical environment.

Stay safe and joyful!

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Participant ○○

Re: Update after 4 years in early retirement


@51hh wrote:

Good4you, Pam.

You did not mention much on health insurance, I assumed that you are well-covered in that area.

 

Hi Pam,

I was also curious -  how do you handle Health Insurance?  Hopefully you don't go without.   Its the main expense that hangs over our hopes for early retirement (for both me and the wife).


 

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Participant ○

Re: Update after 4 years in early retirement

As you probably know, your social security income would be about $2460 at full retirement age and a little less than $3247 at 70, both in your 62 dollars.   And these will be inflation indexed at payment and thereafter.    And you will pay low tax on this income.   There is no such annuity in the market.    With all this liquidity supplied by Fed, future inflation is also something to consider.    IF your portfolio balance at 62 is substantial, at least consider deferring SS one year at a time until you cannot do it any more.   You could live to nineties or longer.
Of course every situation is different and for some, taking SS at 62 would be optimal.   However, most in US take their SS at 62 and many of them are just yielding to temptations.

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Follower ○○○

Re: Update after 4 years in early retirement

I have ACA in California, a Silver Kaiser plan.  I pay $52 per month.  It is based on my income of $15.5 + dividends of around $5k.

If I wait to take SS at age 67 it would be $2595 per month.  At age 70 it would be $3218.  I've done the break even calculator and if I take it at age 67 I would break even at age 81, age 82 if I take it at age 70.  I've just decided on this for now.  Between the ages of 62 and 67, 5 years, the benefit received would be $110k.  If I wait until age 70, the benefit received between 62 and 70 would be $176k.  Waiting means not only NOT receiving the benefit but to continue to draw down my nest egg in the meantime.  Of course, everything is subject to change depending on where I'm at at age 62 but, I would likely take it.

The only change I did this year was to move $50k to Fidelity Total Bond.  At the beginning of the year I was a little high in stocks so I was already looking at reallocating.  When the market recovered I was again a little high on stocks so...

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Frequent Contributor

Re: Update after 4 years in early retirement


@PamInCali wrote:

I have ACA in California, a Silver Kaiser plan.  I pay $52 per month.  It is based on my income of $15.5 + dividends of around $5k.

If I wait to take SS at age 67 it would be $2595 per month.  At age 70 it would be $3218.  I've done the break even calculator and if I take it at age 67 I would break even at age 81, age 82 if I take it at age 70.  I've just decided on this for now.  Between the ages of 62 and 67, 5 years, the benefit received would be $110k.  If I wait until age 70, the benefit received between 62 and 70 would be $176k.  Waiting means not only NOT receiving the benefit but to continue to draw down my nest egg in the meantime.  Of course, everything is subject to change depending on where I'm at at age 62 but, I would likely take it.

The only change I did this year was to move $50k to Fidelity Total Bond.  At the beginning of the year I was a little high in stocks so I was already looking at reallocating.  When the market recovered I was again a little high on stocks so...


Pam...I endorse your plan on taking social Security at age 62 (long story why)...especially for early retirees.  I think we discussed this before, and it fits your situation quite well, IMO.

Also, be aware you can tap your Trad IRA, if needed, before age 60, WITHOUT PENALTY, if you withdraw "substantially equal annual amounts" per an IRS formula.  This can be a fallback if needed, or withdraw a small amount annually if you desire.  You need to withdraw the same amount each year, until age 59.5...then you can stop if desired.

R48

 

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Follower ○○○

Re: Update after 4 years in early retirement

R48, I do believe that age 62 is best for me.  I don't want to continue drawing down my money while waiting for someday because sometimes, that someday doesn't come.  I will also have more disposable income to do more things while I am not too old.  Can leave my nest egg to my children too, can't do that with SS.

Yes, I am doing the Substantially Equal Periodic Payments (SEPP), aka 72t.  I went through the calculator at 72tnet and figured out the type of withdrawal and amount of money I can take out.  Form 5329 is used when filing taxes.

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Explorer ○

Re: Update after 4 years in early retirement

We retire early this year at 62 and 60. Our company  retiree  health insurance  plus LTC costs about 2300 monthly  with high deductible plan. My husband decide to take SS with reduce benefit 1900/month .  I will take mine at 62 about 2100/month. We both have chronic medical condition, so I am scare to switch insurance even though Obamacare maybe much cheaper. Health insurance eat up big chunk of our pension. Our combine pension is about 5300/month, so SS money can help us not to touch our 401K . We do not have any debt and have a daughter  who is still at college but her 529 should cover all her need plus she works part-time.  I really enjoy reading people retire life is or how they get there.

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Contributor ○○○

Re: Update after 4 years in early retirement

You have great discipline. A great investing tool.

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Frequent Contributor

Re: Update after 4 years in early retirement


@oreobonbon wrote:

We retire early this year at 62 and 60. Our company  retiree  health insurance  plus LTC costs about 2300 monthly  with high deductible plan. My husband decide to take SS with reduce benefit 1900/month .  I will take mine at 62 about 2100/month. We both have chronic medical condition, so I am scare to switch insurance even though Obamacare maybe much cheaper. Health insurance eat up big chunk of our pension. Our combine pension is about 5300/month, so SS money can help us not to touch our 401K . We do not have any debt and have a daughter  who is still at college but her 529 should cover all her need plus she works part-time.  I really enjoy reading people retire life is or how they get there.


Both the social security (when to take it) and health insurance are personal decision since each person has a different situation. 

To claim social security at FRA or 70, with all the financial advantages, simply does not apply to most people (factors include non-working spouse, health conditions, job security, inflation, health of the social security system).  

Your staged retirement plan works out well timewise: (1) both retire this year with husband's social security income, (2) supplement household income with your social security income after two years, (3) your husband gets Medicare benefits after another year (reduction from current health plan), and (4) you gets Medicare after another two years.  

Suggest that you keep an allocation for equity (say 30-40%) in your 401K so that you set up a financial cushion during your retirement.    

 

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Explorer ○○○

Re: Update after 4 years in early retirement

Congrats! You had a game plan, executed it, and the discipline to review it periodically and tweak it if necessary based on the circumstances. The secret to an enjoyable life. Well done.

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Frequent Contributor

Re: Update after 4 years in early retirement

Kudzu,

I'm going to add to your comment about the "secret" to an enjoyable retirement life with Pam's words--

"So, here's to being retired, living a simple life, and never having to work again without being a millionaire."

Far too many retirement articles and books and financial companies fail to emphasize (probably deliberately since they need to sell the sizzle) what Pam has stated in just one thoughtful sentence.

Bob

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Follower ○○○

Re: Update after 4 years in early retirement

Thanks, Bob.

I did get a lot of flack about retiring with "so little" money and yes, here on MStar too.  I had been gaming out the scenarios for a decade beforehand and knew my expenses, needs, and wants.  I didn't need a million, as many people said.  I didn't need to have $4k per month in income ($1m @ 4%). 

What I needed was to get away from my sometimes very stressful job.  There were times when I physically felt like I was going to vomit, even moved my desk trash can closer during a harrowing weekend of upgrading critical voice systems at an insurance company.  I bet you can imagine how it would have gone if there was a failure and an insurance company didn't have phones, call center, etc. on Monday morning.  That kind of stress can kill and it was just getting worse with new owners, layoffs, then the final straw was being told that they were letting go some desktop (PC and laptops) people and the only other person who worked with me on voice systems so I would be doing that work too.  I had it all planned to retire at 55 but, that was it.  I was done.  I volunteered to take the severance package and made it work.  The job wasn't worth my life.

I am very happy to putter around my house, yardwork, sewing, whatever I want to do.

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Frequent Contributor

Re: Update after 4 years in early retirement

Nothing is worth one's health (both in mental and physical conditions), especially a stressful job.  Thus the time to retire is sometimes not by planning, but by a collective of factors around one; carefully weighed and contributed.  

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Explorer ○

Re: Update after 4 years in early retirement

I agree with 51hh. I have debated whether we both should stay at work for another 2 years till my daughter graduate from college. But our jobs are very stressful and health issue, this virus crisis confirms we make a good choice.  You don't have to be millionaire to retire if you have a game plan. 


@51hh wrote:

Nothing is worth one's health (both in mental and physical conditions), especially a stressful job.  Thus the time to retire is sometimes not by planning, but by a collective of factors around one; carefully weighed and contributed.  


 

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Contributor ○

Re: Update after 4 years in early retirement

 

Private health insurance is very expensive, nearly $15K (for a single person) if you add up the high deductible and premiums.  

 

 

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