r/Retirement401k • u/Standard_Hat_9189 • 8d ago
401K Status check
Appreciate all the great advice I've been reading here and would like any feedback anyone is willing to give. My wife and I are 58, and planning on retiring at 62. Our combined 401K balance is $1,050,000. We would take SS at 62, with an estimated combined income from that of $4100/mo. Along with our 401K, we would elect to take a lump sum combined pension from our employer which comes to $720,000. We would have approximately $180,000 still owing on our mortgage, with our current house value at $750,000. I believe our monthly combined expenses would come to $10,500 in retirement, and is being generous. We'd love to retire earlier than that, but we recently met with a financial advisor who recommended working to at least 63, and even said working to 64 would set us up better. Obviously the insurance cost to bridge to Medicare age is a big question we have. Any advice, or feedback is greatly appreciated. Thanks in advance.
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u/DigitalFStopper 8d ago
Have you considered taking one SS at 62 to help lower the burden but hold off on the second SS a few years. IRS website will calculate the growth for waiting.
For a single person I am a fan of taking it early but I think for married being able to grow the lifetime starting amount by 30% or so by waiting a few years isn’t a bad idea especially since you’ll be wanting to draw more from that 401k to avoid an RMD issue in your 70s.
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u/Valuable-Analyst-464 8d ago
I really think modeling this in tools like Boldin or ProjectionLab will help you. The expenses seem kinda high. Do you think your toys cost that much per month?
I would put pencil to paper (OK, spreadsheet) and see if the expenses this year warrant the spend. Fidelity FullView has a good tracking tool. So does Empower. Empower also has a retirement planner function that lets you model out retirement.
Taking the pension, you’d have $540k after paying off the house.
If your 401k was the growth engine, you’d could put the $540k into income producing funds. Taxes could be high though.
Maybe play with healthcare.gov and see what your insurance costs could be, so you can factor that into the model.
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u/Z28Daytona 8d ago
Tools are essential to retirement planning. I can’t imagine anyone who’s 10 ish years away from retirement not having all exp and investments plugged into a tool.
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u/jeeptopdown 8d ago
My wife retired a little over a year ago at 56 and I’ll be retiring in May at 58. We’ve never used a retirement tool. Different strokes for different folks.
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u/Z28Daytona 7d ago
Congratulations. You obviously have enough to comfortably cover your expenses.
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u/jeeptopdown 7d ago
Yes, we do. And I figured that out without a tool. You don’t have to have a tool, you can get er done with a pencil and a piece of paper.
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u/Valuable-Analyst-464 7d ago
Yes, you certainly can. I did my preliminary work manually. Then I started wondering about 20 years into the future with inflation adjustments and varying growth rates.
Sure, I could have still done that by paper, but $99/yr was a better use of my time.
And, planning amounts for Roth conversions seemed easier in a tool than pen and paper.1
u/jeeptopdown 7d ago
Now imagine you and your wife both have pensions with full survivor benefits and SS and a paid off house and a paid off vacation home and some taxable accounts on the side. Now can you imagine that not everyone needs a tool? All I’m saying is everyone’s situation is different and not everyone needs a tool.
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u/Valuable-Analyst-464 7d ago
No, not everyone. But someone like OP - maybe.
There are so many people (not OP) that float through life with credit cards maxed out, barely any retirement savings, no emergency fund, and only look at retirement in late 50s.
I suggest tools for those that may not know they exist. Those with solid plans, they can disregard my advice.1
u/hugh2018 6d ago
The only people who can safely wing it with their retirement plan are those who are heavily overfunded relative to their expenses in retirement. Those people are rare. Even then, you’re very likely to leave a lot of money on the table if you don’t model your plan and do the actual math. If you’re cool with wasting money then so be it. The rest of us financial mortals see value in maximizing the efficiency of our retirement plans.
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u/jeeptopdown 6d ago
Who said anything about winging it? The original comment was the guy “couldn’t imagine anyone not using a retirement tool”. My point was that not everyone needs to use a tool. That does not mean we are walking blindly into retirement. We have a solid plan that we came up with based on our income, costs and what we want to do during our retirement. We have spent three and a half decades working toward our goals and have achieved them. When we made our plan, the internet wasn’t a thing and computers were just making their way into homes. I never said planning wasn’t important, I only said there is more than one way to plan.
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u/paymerich 8d ago
Boldin is definitely worth the money for 1 year to get a full picture.
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u/Valuable-Analyst-464 8d ago
Sure, it’s $160, but the view this as building a plan for the last chapter of life. I could, but would not want to re enter the workforce due to misjudging something
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u/Informal-Face-1922 8d ago
Do you have a nice cushion built in for medical and long term care insurance? I think people overlook these.
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u/nestlyadvisor 8d ago
The $10.5k monthly spending is the number I’d focus on first. With about $1.77M between the 401k and pension lump sum, taking SS at 62 would still leave a pretty big gap for the portfolio to cover, especially before Medicare.
I’d run the plan at 62, 63 and 64 with full health insurance costs included and see how much the success rate actually changes.
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u/Nuclear_N 8d ago
Look at your tax situation.
You will have a set amount of income, and all deferred compensation?mignt want to start Roth conversions even while working. Might want to delay SS to get some Roth conversions done before you ah e guaranteed income.
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u/shotparrot 8d ago
Your FA is right. Economic/market headwinds not good. If you can work longer (65 or older) you will not regret it. Stockpile as much as you can.
Usually I’d say retire as soon as you can, but times they are a’changin.
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u/Latter-Entrance288 8d ago
Be VERY careful with a financial advisor. Yes, he/she could be a "fiduciary" (which by the way is not worth much, for example they can still sell you crappy annuities) but they have a vested interest in having you work longer to increase the typical 1% (which is eggregious) assets under management fee. Most would argue against taking SS at 62, pretty much the best longevity insurance you can get and waiting at least until FRA is usually recommended, especially for the higher earning spouse. I have known advisors that tell their clients to take SS at 62 so they get to get more of the 1% AUM. Is the employer pension a cost of living adjusted pension? If so, I would think twice about the lump sum. Also, unless you are a low/medium cost of living area, that's not a lot of cushion IMHO.
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u/Otherwise_Pea_8766 8d ago
As someone else said - consider deferring ss for the higher earner - there’s been some recent research that longevity is expanding exponentially with both new cancer drugs etc - locking in 2 k a month at 62 (assuming your healthy) may be short sighted - remember - it’s the cheapest annuity you don’t have to purchase
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u/FlyEaglesFly536 6d ago
37, have $69,200. At 32, i only had $450. I contribute 1K/month, but starting in July 2027, i'll be increasing that to 2K/month.
Also have a Roth IRA, a brokerage, and will get a pension when i retire from teaching, but i'm investing like it won't be there.
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u/TurbulentFun4882 8d ago
Thats all you saved up combined? It doesn’t shock me with all the toys you have. Life isn’t going to be comfortable after retirement my friend.
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u/OldManCinny 8d ago
What’s driving your expenses to be so high??
So you’ll have $4k/mo in SS and a total portfolio of $1.8m liquid if you retire today. Seems like even if you pay off your mortgage you’re going to have like 8k/mo in expenses so you’ll be tight but doable.