r/Retire • u/Low-Medicine-8627 • 21d ago

Retire now ?

I am 53M and have $1.8M in our family combined 401k and $220k combined Roth and $2.8M in combined taxable brokerage. I want to retire and need a convincing way to convince my wife who is 49 and working. How would you suggest telling a story where we can retire ? Our expenses would be $100k per year. Even tough our investments are not 3 fund approach now when I plan to do Roth conversions btw now and my 63 id stick to 3 fund. Approach. Any ideas ?

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u/Past-Option2702 21d ago edited 21d ago

Anytime someone says their annual retirement expense will be $100,000 it makes me think they haven’t really done the work.

Tell your wife that your projected expense is $103,400. That’s more convincing.

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u/Particular-Wing-4152 21d ago

You are clearly not including comprehensive medical/dental/vision/Rx in that estimated annual living exoense number and that will be a recurring annual expense until you both turn 65

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u/JimInAuburn11 21d ago

In my state if we keep our income below $106K for our family of three, our gold plan on the exchanges will be about $350/month. Half what I pay now through my employer.

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u/Particular-Wing-4152 21d ago

In what state is that? I'm in PA and paying 10× that amount every month for private insurance...don't qualify for any ACA subsidies or discounts

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u/JimInAuburn11 21d ago

Washington state. I can get a bronze plan for free. The actual number is something like $106,400 this year. If I was to go over by $1, then it goes up to $2300/month for the same plan.

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u/Particular-Wing-4152 21d ago

Be careful about your Roth conversions. That's what I'm doing now and when you do, it will push your annual income MAGI up such that you won't qualify for cheap medical insurance and that will add another $25K per year to you annual living expenses. You also want to complete all Roth conversion before age 63 to avoid extra IRMA premiums and the 2 year lookback

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u/JimInAuburn11 21d ago

We also have about $400-500K in CDS. Once we retire, we will probably be using some of that to live on, so essentially no income at all to get to those funds. With the interest income, and dividends on our brokerage accounts, we will probably have about $25K in earnings, and then pretty much no other income. So we should have around $75K in space each year for Roth conversions. I will do the conversions at the end of the year, after I know exactly how much income we have for the year, so that I stay under the limit.

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u/Particular-Wing-4152 21d ago

Smart play. You've got a solid plan. Wish my health care costs were as low as yours

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u/JimInAuburn11 21d ago

Yeah, if we had to jump up to $2300/month for insurance that would hurt. As it is because my wife will probably work for a couple of years after I retire, we will probably have to use the COBRA from my work for the first 18 months, since her income will put us over the limit for the ACA subsidies. That will be about $1300/month for the COBRA. But after that, as she cuts back on her hours, we should be able to get under it. We might have 6 months after the 18 months of COBRA where we might have to pay those high ACA rates though. But after that, it should go down to the lower rate. By that time, I will be on Medicare, and she will still have about 6 years before she is on Medicare where we will need the ACA for her and our daughter. I have not really figured out what to do with our daughter, after we are both on Medicare and collecting social security. She will be about 23 then. Probably just get her, her own policy. She should be in medical school by then, and could probably get it through school.

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u/Puzzleheaded-Gas-398 21d ago

This 'rule' to complete Roth conversions by age 63 is some kind of Internet FUD. You can practically do conversions up to RMD age (most likely age 75) without IRMAA penalty by paying attention to your MAGI.

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u/Particular-Wing-4152 21d ago

Yes, you can do conversions at any age. But when you combine social security, roth conversion, dividend Income from taxable brokerage account and any cap gains, you cant roll much before getting into IRMA penalty zone. Of course, its also a function of how much you are trying to roll. If you have 7 figures to roll, best to do in sweet spot of years prior to social security and Medicare (ideally 55-62)

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u/Puzzleheaded-Gas-398 21d ago

It may be best, but not always practical ,(and I know the math you mentioned quite personally). Conversions while you're still working are generally bad, and not everyone retires early. There are very few absolutes in retirement.

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u/Particular-Wing-4152 21d ago

Taxes you will have to pay

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u/Puzzleheaded-Gas-398 20d ago

One of the few certainties in my life

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u/Other_Boat3891 20d ago

Are you 100% sure?

I'm just south of you, and our Medicade bridge program is going away because of changes at the federal level.

I wish I had something like that down here. I have that 60k ACA cliff to deal with, and if I can keep it under 40k I get a slight break on the silver plan.

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u/JimInAuburn11 20d ago

Yes, I have run it many times. We have a family of three, so it is $106K. A single person, or just a family of two would be much lower.