Retiring earlier than planned due to health issues

[disneysteve]

We have been working on a budget this entire year since he decided to retire early. We do a lot of frivolous spending that will be cut out during our lean months between retirement and social security collecting. From what I can figure, we will be fine with about $50,000/year.

$50,000/year is $4,166/month. Let's call it $4,200.

Pension is $3,900, so you're only short $300/month.

Are you already taking money from the IRAs?

With that 400K, you can very easily generate the $3,600/yr shortfall taking very little risk in the process. You only need an after-tax return of 0.9%. The LifeStrategy Income fund I mentioned earlier has a 30-day yield of 1.53% (plus it will grow over time). There are places you could earn more, but they would also involve higher risk which it sounds like you want to avoid.

You could also go the annuity route, like corn18 mentioned, but it kind of seems unnecessary as your gap is small and temporary.

In 2 years, your income jumps by $20,400 if he takes SS. That takes you to $67,200.
A year later it jumps by an additional $10,200 to $77,400 if you take SS. You'll be set at that point, and that's without touching the IRAs.

I would suggest you consider another option. With the 400K, you really could delay taking SS rather than starting at 62. Your benefit goes up about 8% for every year you wait. If you put that 400K to work for you, you could wait another year or two or more and then be in even better shape when you do start your SS. Just something to think about. At the very least, one of you could delay your benefits and let them increase.

I think you're in really good shape overall.

[disneysteve]

There's also a really simple additional option.

You could just use some of your 400K to pay the shortfall in your budget. If you spend $300/month for 2 years, that's $7,200. You'll still have $392,800 remaining.

[Xmascarolmarie]

There's also a really simple additional option.

You could just use some of your 400K to pay the shortfall in your budget. If you spend $300/month for 2 years, that's $7,200. You'll still have $392,800 remaining.

Thank you so much! I am currently moving chunks of the $400,000 into the Vanguard account you mentioned. I want to make things simple so I am closing some of the high interest savings accounts and moving them to Vanguard since their interest rates are down so low now. I know we will be fine so I feel good making these moves.
Have a great weekend!

[disneysteve]

Thank you so much! I am currently moving chunks of the $400,000 into the Vanguard account you mentioned. I want to make things simple so I am closing some of the high interest savings accounts and moving them to Vanguard since their interest rates are down so low now. I know we will be fine so I feel good making these moves.
Have a great weekend!

Sounds good. Just make sure you set up that account to pay out the income to you rather than reinvesting it. That way you'll get a check (probably quarterly but I'm not positive). Once your husband starts his SS, you can switch to reinvesting so that that account can continue to grow.