[USER]

My husband and I are both turning 60 this year. He is planning to retire at age 62.

I have been retired for 5 years.Our house is paid off and we do not have any debt. We drive 2 old but reliable cars. We live in HCOL.

We budget 80k for our yearly expenses in retirement including the cost of our health insurance until Medicare kicks in at 65.

We have 2.2M in 401k and 2M in Tesla stock (he works for Tesla) and 38K in emergency funds. Our social security at age 62 is 48K or 60k at 65.

We know that there is uncertainty in Social Security in the future and have considered the inpact of this to our retirement.

I want my husband to enjoy life without being tied to work and us to be financially stable.

I think he can afford to retire but would like to consider your opinion.

Thanking you in advance for your input.

[Maribeth]

He should retire instantly and cash in that Tesla stock ASAP, while it’s still riding high. You both will feel pretty bad if whatshisname tanks Tesla like he did Twitter….and he’s heading that direction.

(Speaking as someone who watched Xerox dive from $70 down to $3 while working there.

Yeah, those options were worthless LOL.) Seriously, you are at risk of sequence of returns issues, especially with so much in that one single stock. Market is near all time highs.

Get out and diversify into safer holdings. (I’m assuming that your husband can’t sell that stock until he leaves the company.

If that’s not the case, then sure, he should work as long as he feels like. But 2.2M is wayyyyy too much in one stock, especially one as volatile as that one.)

Also, you guys should take the opportunity to open Roth accounts and start smurfing money from traditional IRAs into Roths, to help manage RMDs.

The window before you start Social Security is a good time for that.

[Robert]

Hmmm….. I’m a huge proponent of dying with much more money then you need as opposed to living a threadbare retirement during your last years of retirement and hoping you don’t run out of money before you run out of month.

While that certainly seems unlikely in your case; I’m wondering if you’re taking into account some of the following factors: as a woman, your life expectancy is 88 years of age with a very good chance she’ll be living into your 90s.

Your husband’s life expectancy is 79 years of age with very good chance he’ll be living into his 80s.

Granted, you’ve got 4.4 million socked away; but as I have often said here before; Mr. Life is unpredictable gentleman.

One thing you have not mentioned is whether or not the two of you have long-term care insurance; assuming the two of you are insurable, that it’s something I would check into; especially since statistically you will outlive your husband.

The other thing I’m a little concerned about is how much of your (excluding your house) net worth seems to be tied up in Tesla stock; I think any competent financial advisor (not that I have a high opinion of them in the first place) would indicate that’s too many eggs in one particular basket.

I think most people would advise to sell at least half of it; and put it in something safe and reasonably predictable.

Also, we don’t know how the 2.2 million in your 401(k) is invested; we don’t know if it’s in the S&P 500 or something safe and predictable or mixture of the two.

Yes, the S&P 500 has had a fantastic return since 2010; but the future direction of the stock market, especially the short term is unpredictable; and I wonder how much exposure the two of you have there.

Also, I would urge both you and your husband to delay taking Social Security as long as possible as the full retirement age for both of you is age 67 (unless I’m mistaken) and the maximum payout comes at age 70. Also; I’m not sure you’ve considered the impact of income taxes; yes, you have a huge amount in your 401(k); but when it comes out, it will be taxed at both the federal (and if you have state taxes) at the state level as well.

At some point, you’re old but reliable cars will need to be replaced; maybe you will not need two cars perhaps one will suffice if both of you are retired; but that’s something to keep in mind as well.

I would run your numbers in your situation by some good tax CPAs; to get a better idea of what your tax exposure is going to be in retirement.

If it were me, I would hold off on having your husband retire until he is 65 or so (unless he dislikes his job), as that lowers the amount of money that you two will eventually need to pull from your savings. But that’s just me.

[Luciano]

Your living on 80k currently and that 4.4m can do much better. Do you should be good.

[Author]

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