Retirement

Engineering Potpourri Hobbies
#1

Every man is, or hopes to be, an Idler.

By Samuel Johnson. That quote has stuck with me over the years. After I retire, I hope to read all 103 essays of The Idler.

First, I struggled a little with where to put this topic of Retirement. Finally, I reasoned since > 80% of the effort I put into researching, reading, planning, calculating, budgeting, documenting, etc. for retirement happened on the weekends, holidays, and vacations, I’d put it in Hobbies. If it gains traction, maybe we can make it a sub-Category.

For the average person (that’s me!) there must be about a hundred moving parts one has to navigate to retire with the same life style than during their accumulation phase. That complexity has held me back from starting this topic. As I am getting near the end of planning my retirement, I have wanted to start this conversation for a while. I am hoping to share with others and I expect to learn something too. One’s retirement is a huge, long-term, complex, and deeply personal endeavor/project.

I visit a couple retirement and financial planning websites. On one, there is a sharp person who sums up the difficulty with planning and executing a good retirement with his signature line of, “Numbers is hard”. So very true! One’s numbers indicate if, and when, they win the retirement race.

Speaking of numbers, I am 63 years old, so is my dear wife (DW). I started working at 15-1/2, have always held a job except when in college, and I plan to retire at 65. DW has been a SAHM since 2010. She holds an AS in Executive Secretary. We had 1 kid and adopted 4 more. They are ages 21 to 34 now. The baby is the last one in University. He probably has 2 more years. He and I, mainly me, are cash flowing the cost as he goes. This is one of the many reasons my plan is to retire at 65. I want the kids to get an education, if they want it, and be debt-free.

I have not decided my last day at work yet, but the 35,000 feet view of my plan is:

  1. At 65, I start my pension and Medicare
  2. At 65, DW starts her pension and Medicare
  3. At 66.5, DW starts Social Security (SS) on her record
  4. At 70, I start my SS
  5. At 70, DW starts her SS spousal benefit adder

Wow! The execution phase sure looks simple, given all the time and effort I have put into the accumulation phase to be sure I do not screw it up! Do not be fooled though, the details of the hundred moving parts that went into and have yet to be executed have not even been touched on yet. I am hoping to discuss these hundred moving parts with some knowledgeable people on SimpliEngineering, who are on a similar journey and/or who have already won the game.

What say you? Interested?

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#2

Great discussion topic. If it does become a subcategory, there are plenty of discussions within the overall retirement topic to fuel plenty of dialogues.

Personally, I’ve been interested in retirement planning since I started my first job out of college :smile:
I’ve most likely got about 30 years until I’m at that point. According to my current 401k servicer, I’m well on track, assuming SS remains similar to what it is today, to meet my goals.

My wife has zero interest other than she knows she has to do something so she makes contributions to her IRA after I urged her to open one. We are very different people when it comes to the process, but our goals are the same, which makes this work for us. She is hands off to an extreme, and I am hands on to an extreme. So she handles her accounts by setting and forgetting, where I look at it almost every day.

I’m currently “managing” 3 retirement accounts. I put that in quotes because I’m really only actively managing 1 of them.

I keep one 401k account through a previous employer, so no longer contributed to, invested in whichever the most aggressive Vanguard Target Date Fund is. I plan to back it down eventually, but while I’ve got decades to go, I’m erring on the side of aggressiveness. (I didn’t roll this account over into my current 401k because fee structure is much more favorable from the original servicer)

The 401k I’m currently contributing to is split between a mixed bag of low fee Vanguard and Fidelity funds pretty well diversified and I’m leaving as set and forgotten about for now.

My ROTH IRA is the account that I very actively manage. This is the place where I get my gambling fix and it keeps me away from casinos. Because of this reason, this account is very minimally funded compared to my main retirement accounts. I really enjoy speculating on stocks and actively managing this account though and I’ve done kind of remarkably well, which makes me think I know what I’m doing. I made a few early mistakes that set me back for a few years, but those have been erased by some very good and timely moves. The beginning of this year was a huge opportunity for me with prices plunging like they did. I’m currently averaging about 16.6% gains per year over the past 10 years.

So if things continue as they are now, I’ll be ready to retire by 65, or maybe sooner if I can keep that 16.6%/yr rate of return going :crazy_face:

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#3

Sounds great! Be aggressive as you can tolerate when young. Once it gets big enough, you’d hate to lose 40-60% of it in a bear market, adjust your asset allocation (AA) so you can sleep at night.

Then, my wife has negative interest. She’s happy if I do all the heavy lifting and NEVER bring it up. When I say anything about it, her eyes immediately glaze over and she turns off. She wants an instruction manual before I kick the bucket. She didn’t even realise she had a pension. I tracked that down pretending I was she. It’s a good thing for her I enjoy doing this.

I rolled my UCC 401k and later my Dow 401k into a traditional IRA (tIRA). My Arkema 401k has a traditional and a Roth component. I think I have too much tax deferred savings, so I’m sourcing the Roth for flexibility reasons. It’s not the financially smartest thing to do, but have you heard of the SS Tax Torpedo? Once I retire, I’ll be converting tIRA funds to Roth IRA funds to the top of the 12% tax bracket. If I don’t, when RMDs kick in at 72 I’ll be in the 22% bracket. So, I need some cash to pay taxes on the conversions.

I manage the two sides of my Arkema 401k, a tIRA, and a Roth IRA.

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#4

I’m basically planning as if SS won’t be a thing for me. I don’t actually doubt that it will still be around when I’m ready to retire. I just want to be prepared to live without it and count it as a windfall if I do get it. I separate my savings into differing tax strategies (pretax, deferred vs. after-tax, tax free withdrawable) for the flexibility of having options on where to pull from strategically in retirement depending on the situation.

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#5

You are young, so that’s understandable.

I could survive on two legs of my “three-legged stool” (company pension, my savings, and SS). All 3 legs will be more fun though! I have kept SS included in my numbers, because I really think it will be there for me in 2 years. I know some people model SS with a 25% haircut occurring about 2035.

I mainly use Fidelity’s Retirement model and FIRE Calc to model my numbers. What do others use?

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#6

My advice is to find a financial planner. We looked at 3, one was just following the playbook, one was actively interested, and the most expensive was also just following the playbook. Guess which we went with! Mind you, as somebody pointed out, all of these guys take about 1% of the capital in the account per year, so on average they get about 25% of your retirement savings. Hmm.

I’ve been in a position to retire since I was about 45, but life got in the way, happily, now I’m 60 and my wife has actually retired but I’m still working. I’m hanging out for a retrenchment package from work which would be a nice boost, almost 2 years pay by now, but I’d say the chances are low.

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#7

I won’t bother to tell you my age, but Latexman is the same age as my son. I have a little in the bank, thanks to the careful saving of my wife, who passed away three years ago. I use a financial planner and so far, it seems to be working fairly well, though not quite so well as SuperSalad Investments Ltd.

Having a lot of money has never been my goal and I don’t have any particular urge to maintain a fancy lifestyle. I live on a golf course, used to golf, but gave it up a few years ago due to various aches and pains. I still enjoy watching the golfers go by in the summer time and cross country skiers in the winter.

My neighbours are very friendly. We had a fairly large dump of snow a week or so ago. Sean, the guy across the street saw me struggling to shovel the driveway and before I knew it, he came over and stayed with me until the snow was all gone. The young girl next door comes over to help whenever she sees me working in the yard…nice neighbours.

You really don’t need much money after retirement, particularly during this pandemic. I find that the Canada Pension Plan and Old Age Security benefits are just about enough for my needs without delving too deep into my savings.

Life is good.

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#8

Thanks BA, I hope life is as good for me and DW as it has been for you. God bless you!

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#9

If I ever feel the need for a FA, it’ll be a fiduciary who contracts by the job or by the hour. I hope I never need continuous service such that I have to pay ~ 1% of assets under management (AUM). There may come a time down the road where I may need a FA, not yet though.

#10

I hope so too, Latexman. All the best to you and DW.

#11

Interesting topic to me. I plan for mine carefully, too. I have a couple of decades yet to go, but my own DW and I are pretty much on track for a secure retirement AND education paid for my son; as much as he wants.

Since I’m in Canada, there’s no point going into certain specifics: the definitions won’t line up. I do use a financial adviser, and I actually switched about 5 years ago as my previous one was “phoning it in” more than I could tolerate and packing my investments into just one institution (eggs in one basket).

I do pay a fee for my FA’s service, but I’ll also note that she looks at my taxes, not just my investments. I prefer to do my own taxes, but last year she noticed a way boost my tax return by 2500 bucks! Debt paid in my opinion. On top of that, performance of my investments has improved by more than 1% since I switched.

#12

As reported over in the Simpli Book Club, two months ago, I started giving each of my five kids a copy of The Coffee House Investor by Bill Schultheis. So far, I’ve given it to three of them; two more to go. I guess I need to visit those two!

By the way, that book also has an excellent recipe for pumpkin pie in it.

#13

Of my hundred moving parts, I consider the best feature of my retirement plan during the early decumulation phase, my pension. A retirement is dynamic, as is just about everything. I think I have a good pension, but like most private, non-government pensions; it does not have a cost of living allowance (COLA). Once I pull the trigger, my pension remains fixed until DW and I reach the end of our planning period, which is retirement speak for . . . death, the long sleep, feeding the worms, etc.

I consider myself lucky to have a full pension. When I graduated from University and went to work in 1979, Union Carbide Corporation (UCC) had a pension. Most mega-Corps did in those days. In 1988, I settled into UCC’s latex business unit (BU), and I am still in it today, but it has changed owners twice. In 2001, Dow Chemical purchased UCC. Dow had a pension too. The rules of the acquisition were whichever pension UCC or Dow that gave the former UCC employee the highest payout that is the formula to use. Ha! For me right now and at 65, that is the Dow formula. Yep, lucky! Then in 2010, Arkema bought the North America (U.S.) part of the Dow latex business unit, because Dow was buying Rohm & Haas and the FTC required the sale of our BU, because Dow would have had a monopoly in several U.S. latex markets. Frankly, those of us in the latex mafia knew this was going to happen the day Dow announced they were buying Rohm & Haas in 2009. Again luckily, the day Arkema officially bought us, I was over 50 years old (52.625 years old) and I had over 30 years of service (30.7 years) with Dow (and UCC). This meant I qualified for a full Dow pension and for Dow retiree medical, but more on retiree medical later. Therefore, I am a Dow Chemical/UCC retiree. I am deferring my pension until I am 65 because the pension payout goes up 8% every year until then! Wow, an 8% return and very little risk. That was a no-brainer to me. After 65, the rate declines to 6% per year.

Dow Chemical is doing very well financially, and they fund the pension well. The pension fund is over 90% funded the last time I checked. In addition, the Pension Benefit Guaranty Corporation (PBGC) guarantees the pension. Again, I feel lucky.

So, my plan right now is to take the 100% Joint & Survivor annuity at age 65. My DW will probably out live me. Both her parents are still with us; mine passed 3 and 4 years ago. She’ll lose her SS when I pass, but she’ll get mine because it’s bigger, and she’ll take a big tax hit because she may have to file as a single, if she doesn’t remarry. Lots of moving parts!

Any one else get lucky and snag a full or partial pension?

#14

SECURE Act 2.0 coming maybe.

https://finance.yahoo.com/news/washi…150553724.html

Highlights (from article):

  • Automatic enrollment in retirement plans at work.

  • Raise RMD age to 75.

  • Improvements to Retirement Saver’s credit.

  • National database for employees to find left behind retirement plans from switching jobs.

Overall I like it a lot.

#15

Against much resistance/inertia the Australian government made it easy to find my lost super. I tried to do it manually before the recent changes and I was supposed to rock up to a police station to get my identity confirmed etc etc, that is they made it as hard as possible. With the new system I ticked two boxes online and it was done.

#16

Crikey, Greg! What does that mean in North American English? :rofl: What’s your “super”?

#17

Is this it?
AustralianSuper is the largest Australian superannuation and pension fund, with approximately one in every ten Australian workers as members

#18

Super=superannuation. By law all Australian employers have to pay 9.5% of my pay into a super fund. They used to get the choice of fund (nothing to see here) but we can now select our own. It’s quite a good system, but has the rather enormous flaw that 9.5% isn’t really enough to get people completely off the state pension, so a lot of people buy big capital items when they retire and then take the full state pension.

#19

Thanks. Started in 1919, made compulsory in 1986, modernised in 1991. Wow, sounds better than our 401k.

As of 30 June 2018, Australians have AU$2.7 trillion in superannuation assets, making Australia the 4th largest holder of pension fund assets in the world. As of 30 June 2019, the balance is AU$2.9 trillion.

A permanent, portable pension. Nice!

#20

Have SS + VA Disability + small investments + ability to do small jobs. Should be ok for now, but things will change with time - planning for that.