I don't think I can retire any time soon, please weigh in

[JoeP]

Been a while since I posted here, but the recent situations have me coming back.

DW is about 6 years my senior and is closing in on her retirement which is going to be later this year. For about another year after that, we'll be fine on my salary, which will cover all the bills and health/dental insurances.

The years after that are going to be the challenge, which is why I'm circling back to this group to check my thinking.

• 2027: DW on pension, I think it is only $900/mo. I'll have to keep working to make ends meet and have insurance.
• 2028: DW on pension + SS + 401k + medicare.

It is 2028 I'm questioning. DW's income during that year will BARELY let us squeak by if hers is the only income. Plus I'll have to get ObamaCare or the like for me, which will put us in the red. Forget about any vacations or major expenses.

For you people who've retired early and didn't work, where are you getting the cash to cover expenses until you can take out SS? Not counting those lucky enough to get a pension/income from employers. We don't have 100k in cash sitting around for this.

Part of me is saying to stop all my 401k contributions now, and divert it all to cash that can be tapped into during those years. Our net worth is quite good, but most of it is tied up in houses and retirement funds we can't/shouldn't tap until 65+.

Thanks.

[EasyMoney00]

Not really enough info to give much advice. You may want to lay out your finances.

Why does your wife have to retire now? If you continue to work, does your employer not provide health insurance? When you say "houses," are these rentals, a vacation house? IF you have a roth, you can tap that really easy, the funds you contributed at least.

[JoeP]

Not really enough info to give much advice. You may want to lay out your finances.

Why does your wife have to retire now? If you continue to work, does your employer not provide health insurance? When you say "houses," are these rentals, a vacation house? IF you have a roth, you can tap that really easy, the funds you contributed at least.

Here are a few points that may be relevant.

• DW does not "have" to retire at the end of this year, but she wants to because she's been working 44 years in health care and is spent.
• We're both currently on DW's health insurance, but will convert over to my employer's starting 1/1/26 to cover us both until she can get on medicare. I'll remain on my employer's health care.
• Houses: primary is paid off, prop tax is about $8k/yr, value around $440k. Other is a vacation property a little south, paid for, about $120k value, $4k prop taxes.
• Have a Roth that has maybe 60k in it. Thanks for pointing this out, I can take from it next year.

[EasyMoney00]

Im having a difficult time trying to follow what you wrote:

The years after that are going to be the challenge, which is why I'm circling back to this group to check my thinking.

• 2027: DW on pension, I think it is only $900/mo. I'll have to keep working to make ends meet and have insurance.
• 2028: DW on pension + SS + 401k + medicare.

It is 2028 I'm questioning. DW's income during that year will BARELY let us squeak by if hers is the only income.

Do you plan on retiring before 2028? Is that the reason why there will only be your wifes income (pension, social security, 401k?)

I assume you went over all of your expenses to come to this conclusion? How old are you? Will you be 62 in 2028? You could pull social security at that point if so. Sorry for all the questions, but for me or anyone else to help you out, its important to know as much as possible with your situation.

Also, this forum is an ok starting point, but if you want solid advice, you should post on early-retirement.org, or even bogleheads. Early retirement is a little culty, but the knowledge there could fill a warehouse. Here, unless its politics, you're only going to get crumbs.

Also, to your original question about where to get cash from. There are only so many places to look. Roth like I said. Do you love your vacation property? Im guessing you would not want to sell, which I dont blame you. 401k to roth conversions, but you have to wait 5 years to touch any conversion so thats out of the question. Do you have a 401k? Not knowing your age, you can sometimes start to pull from 401ks at age 55...or pull from it at any point and eat the penalty (which I would not recommend.)

[disneysteve]

For you people who've retired early and didn't work, where are you getting the cash to cover expenses until you can take out SS?

I didn't retire until we had enough money to cover everything. I don't plan to file for SS until I'm 70 and at least 65 for my wife since once on Medicare we won't have to worry about our AGI for ACA coverage. I'm 60 and she's 61 currently to put that in context and I retired in 2024 at 59.

Have you factored in any changes to your spending after you each retire? For example, does your wife have any expenses that will go away after she leaves work like uniforms, equipment, licenses, continuing education, etc? Same for you.

You mention not tapping retirement funds until 65+. Why is that? You can access them at 59-1/2, and as mentioned, you can withdraw Roth contributions (not earnings) at any time.

Have you run your numbers through a good retirement calculator? FireCalc is a good one but there are others. Do you know exactly how much you will each get from SS based on when you claim benefits?

Do either of you plan to do any work for pay in retirement? Any side gigs that you have now that you will continue or ramp up? Any hobbies or skills that you would like to monetize?

You mentioned "forget about any vacations" but you also have a paid for vacation home so it seems that at least for a year or so, you could just make going there your vacations. Any consideration to renting out the vacation property even on a limited basis when you aren't using it? That extra income could be transformative to your budget.

A more thorough answer really needs more detailed info including ages, expenses, and portfolio breakdown. I agree with EasyMoney that early-retirement.org is a great resource. They will ask lots of detailed questions so be prepared, but they'll make you think about things you didn't ever consider. They helped me a lot as I was planning my exit from work. I joined about 3 years before I called it quits and asked tons of questions.

[kork13]

If you retire after age 55, you can start withdrawing from your 401k basically without limitation. As mentioned, Roth IRA contributions can be withdrawn at any time. If truly needed, you could trap your retirement account with a 72t plan ("substantially equal partial payments"). But all of that depends on having enough in your retirement accounts to support you, and it's just a matter of tapping those accounts.

Have you looked at how the SS spousal benefit works? I'm not familiar, but I think under certain circumstances, it allows you to draw SS (personally, in addition to your wife's SS payments) under your wife's account, since she will be retired for a few years before you.

I'll be retiring long before the age to withdraw from retirement accounts, and part of my plans do involve building up a sizeable taxable investments account to cover expenses as needed before the retirement accounts become accessible.

[LivingAlmostLarge]

You won't get crumbs here but way more thoughtful and nicer responses and questions. People here I think are just as deep as ER or bogelheads with more sincerity I think.

That said lay it out and we'll help you. Both er and bogelheads will demand it in depth so you might as well start here.

What are your expenses? Annually and monthly? What is your incomes and what is your projected income and savings?

Basically you need to fund your spending to 67 and if you have only 401k money you can tap that age 59.5. it appears you are 58? And dw is 64?

Do you have kids? What do you want to do with your portfolio? Leave nothing behind? Inheritance?

People here do want to retire earlier than the norm.

[myrdale]

Part of me is saying to stop all my 401k contributions now, and divert it all to cash that can be tapped into during those years. Our net worth is quite good, but most of it is tied up in houses and retirement funds we can't/shouldn't tap until 65+.

With the little amount of information you provided, I absolutely would not stop contributing to the 401(k). And if possible I'd work towards maxing a Roth IRA out as well.

You mention that most of your net worth is tied up in "houses" plural. Is that (2) or is that (20)? If we're talking about (3) or more you might consider selling one and using that cash as a reserve to carry you through.

[JoeP]

We're going to have to budget things out with high precision. Problem is, we have a wedding we're paying for, so the past year's worth of expenses has been skewed quite a bit.

The way I see it, we'll have to budget for categories like mandatory expenses (taxes, insurances, utilities, food, gasoline, clothing, pet care, EF buffer) and other things we want to do such as trips and the rare going out for dinner. Annualize that and then divide by 12 to get monthly expenses. Figure 5% increase YoY.

Then look at what we can take out when and see if we have coverage. I started doing this but didn't have a good baseline, so I'll try to filter out the wedding items and see where we land.

One thing I'm looking forward to this year is shedding DD from our health insurance, car insurance, and cell plan. She'll be on her own for those expenses (plus student loan), and can decide for herself if a paying for a "certain call phone brand" is really a wise choice.

[riverwed070707]

Sounds like a stressful retirement plan. Can you move into the vaca home and sell the primary so you can live on those proceeds to cover the gap? If not, agree with DS on renting it when you're not using it...$4k taxes on a $120k house is insane - why not recoup some of that?

To answer your question on how I plan to cover the gap from retirement to 401k withdraws: rental income (approx $42k/yr), hard money lending (approx $30k/yr), and maybe some gig work if we're still feeling crunched + we plan to retire out of the country to a place with reasonable healthcare costs. I'm 39, DH is 42. Retiring in 2 years.