Jake 48
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Post by Jake 48 on Feb 8, 2019 18:53:25 GMT -5
Hello, Thinking about retiring in 3 years, want to start moving some stuff around now. I've amassed around 600K in retirement saving, majority of it in P&G stock (450K), rest in S&P 500 index fund and Fidelity Growth fund. Looking to diversify and provide a income stream. I'll have 2 pensions, 6K yr and 51K yr. something from SS, don't know what yet since I have a municipal pension and it does get offset. House is paid for, will probably sell and downsize, so still no mortgage. I have no expenses except for a car payment and maintenance / improvements on the house. 2018= 112K gross, 60K in my emergency fund This is just me, have not even figured DW yet, but she has close to the same saved and for 2018 = 150K Just looking for opinions and to educate myself on what to expect when talking with a financial planner.
Thank you for any comments, good, bad or indifferent
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moon/Laura
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Post by moon/Laura on Feb 8, 2019 21:27:23 GMT -5
Hi Jake. I am going to move this to YM, since the "How do I..." board is more for questions about how to do things like quote or post pics. You'll get better responses on YM.
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Lizard Queen
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Post by Lizard Queen on Feb 8, 2019 21:37:50 GMT -5
What are your living expenses, and what do you want to do in retirement?
Also, on the pensions. How well are they funded? Can you, and would you want to, cash either of them out?
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tskeeter
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Post by tskeeter on Feb 8, 2019 21:57:53 GMT -5
One of the things you can expect is for the financial planner to suggest you reduce your P&G investment. At this point, P&G is about 38% of you and your DW’s combined retirement savings. Conventional wisdom is that a single stock should not be more than 10% of your portfolio.
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buystoys
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Post by buystoys on Feb 9, 2019 8:14:26 GMT -5
You can try crunching your numbers in FIREcalc or i-Orp. You can play around with different scenarios and get some good information.
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Deleted
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Post by Deleted on Feb 9, 2019 8:39:06 GMT -5
I agree on reducing the investment in P&G. What will you do for health insurance? That was the biggest unhappy surprise after I retired at age 61; started out at $440/month and was up to $900/month the last year before I was eligible for Medicare, with a crappier network. And what do you want your retirement to look like? Mine includes a couple of international trips every year and funding the grandkids' 529 plans. Many people are perfectly happy to stay home, make day or weekend trips, and enjoy the public library and free concerts. Don't underestimate the cost of downsizing- realtor costs and the moving company, of course, but we spent far more than I expected fixing what needed to be done in the house we were selling (including a plugged-up drain in the basement at the last minute that required $3,000 and a jackhammer to fix) and fixing up the house we bought, even though both were in very good condition other than the 20-year old HVAC system in the new place, all of which ended up needing to be replaced within a year after we moved in. A month after we moved in we found we needed to have the backflow valve in our sprinkler system inspected. It failed. $2,000 for a new one. I hadn't even heard of a backflow valve before. Enclosing the deck into a 3-season room in the old place cost $8,000 in 2004. Turning the screened-in back porch in the new place into a 3-season room cost $26,000 in 2015. I don't think it was any bigger and this time there was a roof in place- had no idea the same company would charge that much more. I don't regret retiring early and I LOVE this house- there were just a few shocks along the way!
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Lizard Queen
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Post by Lizard Queen on Feb 9, 2019 8:53:15 GMT -5
One of the things you can expect is for the financial planner to suggest you reduce your P&G investment. At this point, P&G is about 38% of you and your DW’s combined retirement savings. Conventional wisdom is that a single stock should not be more than 10% of your portfolio. I don't disagree with lowering the P&G, but I'm confused by your 38%, just because I'm confused by how Jake lists all the saving. Plus, he's got what likely is a $1M pension benefit.
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Deleted
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Post by Deleted on Feb 9, 2019 9:35:36 GMT -5
One of the things you can expect is for the financial planner to suggest you reduce your P&G investment. At this point, P&G is about 38% of you and your DW’s combined retirement savings. Conventional wisdom is that a single stock should not be more than 10% of your portfolio. I don't disagree with lowering the P&G, but I'm confused by your 38%, just because I'm confused by how Jake lists all the saving. Plus, he's got what likely is a $1M pension benefit. 450K/1.2M (his and wife's savings) = 38%
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Lizard Queen
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Post by Lizard Queen on Feb 9, 2019 9:38:21 GMT -5
I don't disagree with lowering the P&G, but I'm confused by your 38%, just because I'm confused by how Jake lists all the saving. Plus, he's got what likely is a $1M pension benefit. 450K/1.2M (his and wife's savings) = 38% Thank you. Is the 112k just the value of the house? And he also mentions his wife with $150k for 2018. Is that her income? I'm so confuzzled...
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Deleted
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Post by Deleted on Feb 9, 2019 9:41:55 GMT -5
450K/1.2M (his and wife's savings) = 38% Thank you. Is the 112k just the value of the house? And he also mentions his wife with $150k for 2018. Is that her income? I'm so confuzzled... His income in 2018 was 112K, wife's 150K. House value is unknown, but paid off and he's going to sell and downsize.
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Lizard Queen
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Post by Lizard Queen on Feb 9, 2019 9:50:43 GMT -5
Thank you. Is the 112k just the value of the house? And he also mentions his wife with $150k for 2018. Is that her income? I'm so confuzzled... His income in 2018 was 112K, wife's 150K. House value is unknown, but paid off and he's going to sell and downsize. Oh! Thanks. Now get back to work so you can get caught up. (I saw what you wrote on the other thread.)
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Tiny
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Post by Tiny on Feb 9, 2019 11:12:11 GMT -5
I'm about 5 years from "partial retirement" as in I walk away from my high stress/big pay day job. Even so, I'd recommend being very familiar with your household's expenses (and not just on a monthly basis - on a yearly and maybe 3 years or further out). I have goals and plans - so I see and need to be cognizant of upcoming expenses both with my house (roof is 20yo),rental properties, and personal life - I can't just plan with a 4 week horizon. I have found having good base knowledge of my monthly/yearly expenses and an eye (guesstimate) on the future expenses to be very helpful. It makes many decisions alot easier and less stressful (and gives alot of flexibility ) I suspect a good financial planner will ask you for this kind of information - and if you have solid reliable numbers they will be better able to help you. (FWIW: the not having a mortgage is nice - but I don't think it's that critical a thing to have if you have a lot of retirement income. A place to live is ALWAYS an expense - sometimes a big one even if you don't have a mortgage. Sometimes the PI part of the mortgage payment isn't all that significant in the big picture. In the big picture it's potentially all the other kinds of debt you can incur that might be a problem. )
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tskeeter
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Post by tskeeter on Feb 9, 2019 13:00:49 GMT -5
One of the things you can expect is for the financial planner to suggest you reduce your P&G investment. At this point, P&G is about 38% of you and your DW’s combined retirement savings. Conventional wisdom is that a single stock should not be more than 10% of your portfolio. I don't disagree with lowering the P&G, but I'm confused by your 38%, just because I'm confused by how Jake lists all the saving. Plus, he's got what likely is a $1M pension benefit. The OP said that he and his wife each have about $600K in retirement savings. And that his retirement savings included $450K in P&G stock. Divided the $450K by $1.2 mil. I didn’t try to estimate a net present value for the OP’s pensions because you don’t know how many years to do the calculation for. Regardless of the value of pensions, the P&G holding is large enough that if the value were to drop by half, it would likely affect the OP’s retirement.
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TheHaitian
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Post by TheHaitian on Feb 9, 2019 13:16:05 GMT -5
First I would advise to get with your wife and add up her numbers, you just said you know she has just as much invested but not exactly how much and in what...
This way the financial planner can get a complete picture of “all” your investments and advise accordingly.
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Tiny
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Post by Tiny on Feb 9, 2019 14:33:54 GMT -5
You might want to think about what order to take all your incomes in - especially if you aren't at the "retirement" age for the income.
You probably also want to consider what income will be available to your wife should you meet an untimely demise (hopefully while doing something fun and exciting). Same would go for her income streams if the situation is reversed. You may need to review the rules for any and all Pensions (and SS) so you can answer the planners questions about this unfortunate scenario.
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cronewitch
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Post by cronewitch on Feb 9, 2019 22:45:28 GMT -5
Consider if you need a stream of income from savings. I draw off some taxable dividends but mostly tap the money for major expenses. This year I might take some for gifts and taxes so only 3-4 draws a year. At 70 my RMD covers all my taxes and extra spending and I will take some extra or taxable for gifts. I just sell shares instead of setting up auto withdrawals. You might need monthly income or not depending on your spend patterns.
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sesfw
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Post by sesfw on Feb 10, 2019 14:33:15 GMT -5
I know you are thinking about the funding for retirement ….. but you also need to think of what you will use your TIME for. Not having a set routine can be a huge shock to your wellbeing. After about a year I was looking for things to do besides sitting in front of a computer. I found part time jobs, volunteer work …… caught up on hobbies. I've been retired since 2003 and was going out of my mind until my present part time job fell into my lap late 2014. We bought a 'day-of-week' clock, otherwise every day blended together. Hobbies, travel, home repair all come to an end sometime ………. then what? Good luck in finding your answers ……… and please don't become a kitchen pest to your wife …..
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NastyWoman
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Post by NastyWoman on Feb 10, 2019 16:58:58 GMT -5
I don't disagree with lowering the P&G, but I'm confused by your 38%, just because I'm confused by how Jake lists all the saving. Plus, he's got what likely is a $1M pension benefit. The OP said that he and his wife each have about $600K in retirement savings. And that his retirement savings included $450K in P&G stock. Divided the $450K by $1.2 mil. I didn’t try to estimate a net present value for the OP’s pensions because you don’t know how many years to do the calculation for. Regardless of the value of pensions, the P&G holding is large enough that if the value were to drop by half, it would likely affect the OP’s retirement. I hope that we are all misinterpreting the post as to who earns what. If they really earn 112k and 150k respectively, those are really puny balaces and their spending must be quite high. Those pensions are not going to cover their spending by a long shot
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TheHaitian
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Post by TheHaitian on Feb 10, 2019 18:39:19 GMT -5
The OP said that he and his wife each have about $600K in retirement savings. And that his retirement savings included $450K in P&G stock. Divided the $450K by $1.2 mil. I didn’t try to estimate a net present value for the OP’s pensions because you don’t know how many years to do the calculation for. Regardless of the value of pensions, the P&G holding is large enough that if the value were to drop by half, it would likely affect the OP’s retirement. I hope that we are all misinterpreting the post as to who earns what. If they really earn 112k and 150k respectively, those are really puny balaces and their spending must be quite high. Those pensions are not going to cover their spending by a long shot But it also depends on how long they have been earning those amounts... Aka my cousin and his wife (both MD’s) finished their residencies and fellowships within 2 years of each other and now are both attending If he goes on a board and post his salary vs savings (and without adding how long hey have been earning such salary) everyone will come to the same conclusion : they have puny balances vs their income. But they both just started less than 6 months ago at their respective a positions.
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NastyWoman
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Post by NastyWoman on Feb 10, 2019 19:20:44 GMT -5
I hope that we are all misinterpreting the post as to who earns what. If they really earn 112k and 150k respectively, those are really puny balaces and their spending must be quite high. Those pensions are not going to cover their spending by a long shot But it also depends on how long they have been earning those amounts... Aka my cousin and his wife (both MD’s) finished their residencies and fellowships within 2 years of each other and now are both attending If he goes on a board and post his salary vs savings (and without adding how long hey have been earning such salary) everyone will come to the same conclusion : they have puny balances vs their income. But they both just started less than 6 months ago at their respective a positions. True that. However, .comnsidering that he is thinking about retiring in 3 years I don"t believe that Jake and his wife are in the early stages of their respective careers
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TheHaitian
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Post by TheHaitian on Feb 10, 2019 19:29:45 GMT -5
But it also depends on how long they have been earning those amounts... Aka my cousin and his wife (both MD’s) finished their residencies and fellowships within 2 years of each other and now are both attending If he goes on a board and post his salary vs savings (and without adding how long hey have been earning such salary) everyone will come to the same conclusion : they have puny balances vs their income. But they both just started less than 6 months ago at their respective a positions. True that. However, .comnsidering that he is thinking about retiring in 3 years I don"t believe that Jake and his wife are in the early stages of their respective careers Or maybe recently got big promotions in the late stages of their careers.
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TheHaitian
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Post by TheHaitian on Feb 10, 2019 23:53:29 GMT -5
Also remember he only listed the amounts he had saved for retirement and he believes his wife has saved similar amounts but did not list it.
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djAdvocate
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Post by djAdvocate on Feb 11, 2019 11:38:43 GMT -5
sounds like you are set up pretty good with the pensions. I would probably advise to stay off the investments (though I share the view that you should reduce your holdings in PG by about 75%, and probably put the proceeds into income producing investments), and maybe even tuck some of that income away. you can probably expect 15-20k from SS, + MC. so, you are going to end up in the $6k/month range for your retirement without touching your investments, which is really good. congrats. it sounds like you did more than a few things right.
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Tiny
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Post by Tiny on Feb 11, 2019 11:52:44 GMT -5
Jake48: If there are cost of living increases and/or healthcare benefits with those pension benefits you will want to consider that in your long term plans.
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justme
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Post by justme on Feb 11, 2019 12:03:31 GMT -5
I'd definitely make sure to take a good look at your spending and your expected spending. Going down to a $57k pension from a salary of $112k is quite - even if you are putting the max amount in retirement so your take home is less than that. And I'm assuming you don't have a large sum in a taxable account/savings that would make living on $57k easier (meaning you save a large portion of the $112K). Especially if your has a similar or smaller pension coming to her.
FWIW My dad has a city pension and his SS is a pittance - though he did claim it early under the thought that another $100/year wouldn't change much. I think it's under $5k/year once the offset for the pension is accounted for.
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Bluerobin
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Post by Bluerobin on Feb 12, 2019 17:07:59 GMT -5
Jake, I retired at 57. Put all other retirement funds into a Roth. Yes, I paid the tax. Now it accumulates tax free.
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saveinla
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Post by saveinla on Feb 12, 2019 18:21:01 GMT -5
I'd definitely make sure to take a good look at your spending and your expected spending. Going down to a $57k pension from a salary of $112k is quite - even if you are putting the max amount in retirement so your take home is less than that. And I'm assuming you don't have a large sum in a taxable account/savings that would make living on $57k easier (meaning you save a large portion of the $112K). Especially if your has a similar or smaller pension coming to her. FWIW My dad has a city pension and his SS is a pittance - though he did claim it early under the thought that another $100/year wouldn't change much. I think it's under $5k/year once the offset for the pension is accounted for. I think if you max the 401k (24500 last year) on a 112K income, the most you would take home is around 60K. 57K is not too far off and most people will be able to handle.
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justme
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Post by justme on Feb 12, 2019 18:43:13 GMT -5
I'd definitely make sure to take a good look at your spending and your expected spending. Going down to a $57k pension from a salary of $112k is quite - even if you are putting the max amount in retirement so your take home is less than that. And I'm assuming you don't have a large sum in a taxable account/savings that would make living on $57k easier (meaning you save a large portion of the $112K). Especially if your has a similar or smaller pension coming to her. FWIW My dad has a city pension and his SS is a pittance - though he did claim it early under the thought that another $100/year wouldn't change much. I think it's under $5k/year once the offset for the pension is accounted for. I think if you max the 401k (24500 last year) on a 112K income, the most you would take home is around 60K. 57K is not too far off and most people will be able to handle. Ah, that's good then. I just did a very back of the napkin but really in my head guess and thought it'd be more than that.
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NastyWoman
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Post by NastyWoman on Feb 12, 2019 19:07:20 GMT -5
I think if you max the 401k (24500 last year) on a 112K income, the most you would take home is around 60K. 57K is not too far off and most people will be able to handle.Ah, that's good then. I just did a very back of the napkin but really in my head guess and thought it'd be more than that. But isn't the $60k after tax and the $57k before?
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hsclassic
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Post by hsclassic on Feb 13, 2019 14:55:35 GMT -5
Jake48, I understand what everyone has told you about the P&G stock and, in theory, I would agree.
However, like yourself, I have a similar amount of P&G stock that I've held for about 30 years and disagree with the other posters about reducing your investment in P&G. Why?
Although it is a significant portion of my after-tax savings, it is not the only savings I have (retirement and after-tax). P&G throws off a significant dividend amount every year and that dividend plays an important part of our retirement income stream. From my own experience with P&G and other after-tax investments, you won't do much better than P&G in building a consistent income stream. Certainly put new investment money into other options (we use a variety of mutual funds for that purpose) to diversify, but I am very, very glad I never reduced my P&G holdings.
Just my $.02.
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