# Nearing retirement



## slowpoke19 (Dec 6, 2017)

Hi everybody, I'm new here and I hope this is the right place for this question.

My wife is 60, I'm almost 60. We are both planning on retirement at 62. We each contribute to our employers 403b and thrift savings plans. I contribute to both the Roth and traditional contributions. Upon retirement we will have a combined amount of $225,000.

We have three CDs that total $100,000 that will mature soon. Our home is paid for and we have less than $1000.00 debt on a car loan. We will enter retirement debt free.

When we retire should we tap into our retirement accounts first, or use our personal savings for living expenses? Should we start drawing our SS right away?

Retirement is about two years out but we want a plan in place beforehand.

We welcome all suggestions, and thank you all very much.


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## jujube (Dec 6, 2017)

Welcome, slowpoke!  I don't have much advice to hand out about retirement finances but there are several here on the board who have lots of info.


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## mathjak107 (Dec 7, 2017)

this is a very complex question. it requires knowing your income situation ,tax situation  and social security situation . give us more details and we can help .


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## mathjak107 (Dec 7, 2017)

the reason i say it is very complex is because so much in retirement is linked to taxable income .

everything from getting your social security taxed , what you pay for medicare premiums , any aca subsidies while waiting for medicare , utilizing the zero capital gains brackets for dividend income , etc all matter .

uncle same gives us a gift from the tax gods as well . just using the standard deduction and exemptions you can draw up to 24k out of your retirement money tax free as a couple  if you are delaying social security so your income stays lower .

generally  you will find simple answers to complex questions are going to be the wrong answers


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## retiredtraveler (Dec 7, 2017)

I agree with mathjak that it's not possible to give out much advice unless we really delved into your personal finances, which is not going to happen. You definitely have a nice start in that you will go into retirement debt free. But as mathjak stated (indirectly), you really have to work the numbers and see what your tax ramifications are for every scenario, then determine how to start drawing the money.
   I must say, in general, I really would discourage you from taking out SS early. I assume (?) you know the large difference between taking it out at 62 versus 66? It's roughly 25% less. 
   I applaud you for posting this. The studies show that there are few people able to retire with a 'reasonable' amount of savings at all, and fewer still, that do the planning. Are you savvy enough with taxes that you could work out some scenarios? If not, it might be worth your while to spend some money on a tax consultant who should be able to advise you on future tax liability. You appear to have enough assets to make it worthwhile to pay for some good advice.


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## mathjak107 (Dec 7, 2017)

even taking ss early  or delaying has ramifications .

breaking even or what if i die are the least of the concerns .

the real deal is do you want to be more dependent on interest rates ,markets and inflation or more dependent on longevity ?  or a balance of both . i took it at 65 .

also how do spousal benefits play in to the equation . for every year i delayed we also gave up 4k in spousal benefits , spent invested money down  so those are two factors as well besides the checks given up . what about survivor benefits ?

then there are the effects of rmd's combined with a bigger social security check when combined .

nothing works in isolation . somehow everything is linked and  delaying to long in some cases may not be the best way .

but each situation is going to be based on your own total situation .


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## HipGnosis (Dec 8, 2017)

I could give some generic info (and that's all I could do as you don't give many details like monthly expenses, home equity, willingness to downsize your home..).
For specific (and very thorough) information I recommend you join the MMM (mr money mustache) forum and do a case study per https://forum.mrmoneymustache.com/case-studies/how-to-write-a-'case-study'-topic/


The site is founded on living on less to save more which compound upon ea other to get you to financial independence and retire early (which they like to call 'FIRE'), but there are people there that revel in showing you the math and options to your question.   And they will ask questions you didn't think of (but should).


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## OneEyedDiva (Dec 13, 2017)

WELCOME Slowpoke19. I'm not sure if you mean your $100,000 in CDs is in addition to that $225,000. I retired at 50 and couldn't wait to take my SS at 62. Because of the projected 23% reduction in SS payments, albeit 17 years from now, I have reversed my opinion about taking it early. Another reason...once you turn 65, Medicare premiums are automatically deducted from your Social Security. Keeping those things in mind here's what I suggest. 
1. Get an estimate ASAP of how much you'll be receiving each month from your 403b plan.  Do the same for SS. If you aren't already getting your estimates, create an account at https://www.ssa.gov/
    Now is a good time to make sure your earning history is correct.

2. Try living off that amount now or as close to that amount as possible. I did this by having the the maximum deduction allowed taken out for my deferred compensation plan starting two years before I retired. Although I still got more than my monthly pension income, it was less than I'd been previously living on. It made the transition easier to adjust to.

3. Use the money you save by reducing your spending for additional investments.

4.. Be realistic about how much you expect to spend in retirement and how long your retirement years may last. Write the numbers down or do some online calculating. It's crucial to find a calculator that considers most of the factors that will go into planning such as your 403b deductions, social security income, inflation, taxes, dual incomes and requirements for 2 and projected growth on your investments. Too many of calculators fall short. Of course those numbers will have to be tweaked as retirement nears.

5. Read everything you can about making wise retirement decisions including the best method(s) for taking your distributions. There is a plethora of retirement articles online by reliable sources. Here's an interesting one I found on AARP about managing your money in the 60's age range.  https://www.aarp.org/money/investing/info-08-2013/take-charge-of-your-money-at-60.html
Happy Planning!


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## Lethe200 (Dec 14, 2017)

As everyone has stated, there's a lot to be worked out re your potential scenarios. I want to add that I think it's generally recommended to take from taxable accounts first, to enable your non-taxed accts to compound as long as possible. 

If I'm wrong about that, anyone is free to correct me, thanks.


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## mathjak107 (Dec 14, 2017)

Lethe200 said:


> As everyone has stated, there's a lot to be worked out re your potential scenarios. I want to add that I think it's generally recommended to take from taxable accounts first, to enable your non-taxed accts to compound as long as possible.
> 
> If I'm wrong about that, anyone is free to correct me, thanks.




it depends on the situation .

think about the fact the tax gods give us a special bonus . just using the standard deductions and exemptions for a couple  you can draw 22k out of your ira;'s tax free znd about 40k at about 4.50% . if your taxable income is low enough  because you are delaying ss , living off roth income , and utilizing the zero capital gains bracket  this is a gift .

you can spend down 320k in  retirement money  with less than 5% tax .  

you would never want to  pee that away by not utilizing it and delaying spending it  .


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## Knight (Dec 14, 2017)

$325,000.00 which may grow a little by the time your are age 62 translates to about $1100.00 a month if you each live 25 years retired. $325,000.00 divided by 25 equals $13,000.00 a year.  No mention of investments that can reduce the draw down. Soc. Sec. an iffy amount with lower possible, there is concern that Soc. Sec. will be cut by 23%. Health an issue you can't plan for in your senior years, you can do your best to be healthy but there are no guarantees. 


Lets suppose after deductions taking Soc. Sec. at 62 your combined soc. sec. amounts to $3000.00, could be more but taking it early does reduce the amount.  Add the $1100.00 Can you live well on $41,000.00 a year to pay for living expenses, & all taxes reduce what you have left to enjoy your last years ? Factor in cost of living increases and then ask any friends that are getting a Soc. Sec. check what they think about the increases over the last 4 years. $325,000.00 might seem like a lot but with no investments it shrinks pretty fast.


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## mathjak107 (Dec 15, 2017)

25 years is  to short .good planning always figures about 30 years in retirement  ,that provides a worst case scenario fudge factor .

how they invest that money matters . they cannot draw 4% if they go fixed income only .  in order to draw 4% you need at least 40% equities .

so that allocation they use is critical to how long that money lasts . the best they can do without equities is about 3%-3-1/4% inflation adjusted draws. that is quite a bit less .


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## Knight (Dec 15, 2017)

Using an arbitrary life span to illustrate how the $325,000.00 along with depending on an arbitrary Soc. Sec amount was one step or the kind of exercise my wife & I did. There is so much more to planning for a retirement that each person needs to do BEFORE being as close to retirement as slowpoke19 says he is. 

I didn't read where there were investments only the total of $325,000.00. That total may rise a little over the next two years, his time frame for both retirements. Mathjak we are on the same page  with understanding without investment with a return to exceed inflation the allocation they use is will be extremely critical to how long that money lasts.

I wish them luck and hope they are healthy and don't have any unforeseen major expenses to rapidly drain their nest egg.


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## mathjak107 (Dec 15, 2017)

unforeseen expenses and retirement seem to be joined at the hip


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## mathjak107 (Dec 15, 2017)

Knight said:


> Using an arbitrary life span to illustrate how the $325,000.00 along with depending on an arbitrary Soc. Sec amount was one step or the kind of exercise my wife & I did. There is so much more to planning for a retirement that each person needs to do BEFORE being as close to retirement as slowpoke19 says he is.
> 
> I didn't read where there were investments only the total of $325,000.00. That total may rise a little over the next two years, his time frame for both retirements. Mathjak we are on the same page  with understanding without investment with a return to exceed inflation the allocation they use is will be extremely critical to how long that money lasts.
> 
> I wish them luck and hope they are healthy and don't have any unforeseen major expenses to rapidly drain their nest egg.



planning usually goes for 30 year time frames in retirement unless you retire young .

now , most of us won't live 30 years so when you couple like expectancy statistics with portfolio success rate statistics you get an added increase in success .

throw in the fact that as we age we are really less effected by  inflation despite what we think .

as we age we tend to not do as much as we did or buy all the things we did and so what we no longer spend on helps defray costs in what does go up


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## OneEyedDiva (Dec 28, 2017)

Knight said:


> $325,000.00 which may grow a little by the time your are age 62 translates to about $1100.00 a month if you each live 25 years retired. $325,000.00 divided by 25 equals $13,000.00 a year.  No mention of investments that can reduce the draw down. Soc. Sec. an iffy amount with lower possible, there is concern that Soc. Sec. will be cut by 23%. Health an issue you can't plan for in your senior years, you can do your best to be healthy but there are no guarantees.
> 
> 
> Lets suppose after deductions taking Soc. Sec. at 62 your combined soc. sec. amounts to $3000.00, could be more but taking it early does reduce the amount.  Add the $1100.00 Can you live well on $41,000.00 a year to pay for living expenses, & all taxes reduce what you have left to enjoy your last years ? Factor in cost of living increases and then ask any friends that are getting a Soc. Sec. check what they think about the increases over the last 4 years. $325,000.00 might seem like a lot but with no investments it shrinks pretty fast.


What cost of living increases? Are you talking about Social Security COLAs?  If so, those get eaten up by increased Medicare payments. It happened to my mom and it happened to me. I got a $24 a month COLA. Big deal. Well, they increased my Medicare premium by $24.  Others I know have been blessed to net an entire dollar or maybe two with their COLAs!


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## mathjak107 (Dec 28, 2017)

the only ones who got to keep the full increase are those like myself who recently started collecting and recently went on medicare . we were paying the higher  rates day 1 . everyone else who was collecting did not get the increase everyone else did the last 2 years because there was no cola so under hold harmless you cannot have medical increased .

consider yourself lucky if you got 2 bucks . that means you saved a whole lot than you got increased the last 2 years .


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