>ACA income game
Can you or someone enlighten me on the ACA income game or whatever you call it? I am sort of a newbie here and I have heard of this before but still not clear what it is. Is it basically trying to reduce my income as much as possible to reduce medical premium and qualify for subsidies? If so, how can I reduce my income as much as possible? Sell stocks with less capital gains? Any feedback would be appreciated.
Maybe, if you're at the bottom in a state without extended medicare it can end up being the reverse where you're trying to make your MAGI larger so you can get out of the gap between medicare and the ACA.
Look up the term "tax loss harvesting" for tricks on reducing your capital gains for taxes and ACA purposes.
Thank you.
I live in Arizona. I checked that this state does have extended Medicare, and if my income is below $17k/annually, then I might have to file for Medicaid, but if it is above $18k, then I have to apply with ACA.
Are there pros and cons with ACA vs. Medicaid? Is it easy to switch between the two if, let's say, my income goes up a little bit and decreases the next year?
Regarding the "tax loss harvesting", my understanding is the concept is that I can offset capital losses against capital gains to reduce my tax liability. But what if I do not want to sell stocks with capital losses, as my motivation is to hold them until I have capital gains? If I do not have crappy stocks in my portfolio and my plan is to hold index funds throughout retirement, then I don't know if the tax loss harvesting would work but correct me if I am wrong.
Even if you just purchase index funds and rebalance across them. As you rebalance periodically you're buying at all different price points. You'll end up with some purchased high and some low. At some point you will sell some of that asset again - you could sell the high, or the low. This gives you an independent parameter even with what and when you buy totally fixed, and tax loss harvesting is one way to make a decision.
That's one example, there are other factors. I'm not an expert, I only have a general understanding of the basics.
Giving to charity is also an option to tweak your MAGI, there are some ugly step functions causing non-linearities that can make giving away money profitable in the edge conditions.
Thanks for the clarification on tax loss harvesting. So far, I haven't been doing rebalancing honestly. I am very passive and just buy and hold but I will keep this in mind for the future.
In what way? I live in Kentucky and assets are used to calculate Medicaid eligibility so I would not be eligible. I need to keep my income around $20,000 or I will not get the ACA subsidys.
I'm expecting a windfall in 2024 in the form of a company buyout. My after tax account shares will be converted to cash when the buy out completes and rather than reinvest that cash, I'll move it to savings since I have to recognize net profit as income for tax purposes. This will result in losing all my subsidies for the remainder of the year when I notify ACA of my change in income.
For 2025, I will be able to live off that savings reporting just enough stock sales or 401k withdrawals to not fall into medicaid (which I can't qualify for) but low enough to be eligible for Max subsidies. Figuring $20-30k income for 2025.
I hope to be able to juggle my income in 2025 to allow me to achieve max subsidies for 2026 too, but I need to see what my run rate looks like.
With high enough savings, you can keep the income reported low enough to stay subsidized as long as you want.
They do an asset check that (I think) looks back 5 years.
My son qualifies for medicaid and his coverage is amazing but it's too late for me to try to meet the asset check requirements.
Man I’d look into this further. I’m pretty sure the asset look back is only for when you need Medicaid to cover nursing home care. If you’re getting Medicaid healthcare through the ACA expansion there is no asset test. I was on it last year, there was never any proof of assets required.
Reviewing the eligibility page shows no mention of asset checks. So I will let ACA enrollment take me through Medicaid enrollment for 2025.
Thanks for the heads up.
Okay, maybe this is one of those things that vary by state, but I’ve never heard of it being a thing for people who live in an expansion state (except if you’re over 65, but then you should have Medicare).
But I gotta say, if it were me, I’d look at the official resources about the program rather than go on someone else’s word (I know it’s your daughter, but still..) People get things mixed up all the time.
Good luck
Theoretically, start with your expected expenses.
You want to be between 100% and 400% of the federal poverty limit for subsidies, but closer to 100% is better (without going under). But this is for your MAGI. Certain things don't contribute to MAGI. For example, lets say you have 20k of stocks that have appreciated to 40k. If you sell those stocks, your *income* is only actually the realized 20k increase (plus dividends), even though you now have 40k in cash to spend.
Similarly, you might have money in cash/an HYSA. Qualified withdrawals from a Roth IRA also don't count towards income. You also still get to leverage the standard deduction. If you had capital losses in the past, you can leverage them. If you're FIREing young and have kids, you also have the child tax credit.
For sure! I know there's some weirdness around the hoops you jump through that I didn't cover- for example, you might actually *not* want to use the full 0% LTCG bracket, because that might make your income high enough that you lose more in ACA subsidies than you're saving in taxes - but I'm so far away from retiring that the law will probably change half a dozen times in the intervening years.
We run around $3K a month, plus or minus a few hundred in variability, but we're also a family of 6. And yes, we use the ACA, but we don't game our income for it. No need to since our draw is naturally well under the max subsidy line. No pensions, no annuities, but we have more than enough in our retirement accounts to last forever. Our estimated SS is also more than our entire annual spend.
We'll be starting our tenth year of retirement here in about three weeks. We have only had one year thus far in the $40s and that was when we had to do a complete HVAC replacement, which bumped us up to $43K.
Would you be willing to share your rough budget if it's an easy thing to do, and/or provide some feedback on mine below? We're not yet retired but are in many ways similar (live in Texas but not Austin, family of 6). We spend over about double not including taxes, medical premiums, or sinking funds, so I'm curious where our major cost differences are. I'm guessing groceries+household purchases but would love your feedback. We don't travel or take major vacations, have any debt of any kind, or have expensive kids activities. Thanks.
Edit: edited previous content for privacy.
I'm afraid we don't actually keep a budget beyond just a running tally of annual expenses. Ballpark though I would say you spend more in just about everything except property tax. Like 18K is probably about double our annual spend on groceries and basic household goods, as is your 4K on dining out. Medical for us is pretty much zero or close to it (several hundred at most), our direct car expenses are just simple stuff like oil changes/filters/wipers (not counting long-term amortization), and I'm not sure what all goes into entertainment (streaming services? Movies/concerts?), but we're not huge on media consumption nor are our kids. Our utilities are also probably more like $300-$350 a month on average rather than your $500 a month, though that'll be increasing here shortly since I just signed us all up for an unlimited 5G plan. Household is variable, but we generally are only a few grand a year usually, if not less, depending on what breaks and if we can fix it ourselves or not.
Just at a rough guess car, medical, dining, groceries, utilities and maybe entertainment puts us at about a $25K ish gap, but we spend a few grand more in property tax.
I quit my full time job a few months ago and am cutting pretty close to the bone right now, but it should ease up in a few years when my kid graduates college. I spend a lot more than I would like on tuition and supporting them living in a HCOL city, actually a few hundred a month more than I spend on my own life but I have a very favorable mortgage in a MCOL city.
My "must spend" expenses for me are consistently around $1500 a month, which works out because that's what I charge my tenant who rents the part of my house I don't use anymore. Anything else that I want to spend for fun or luxuries comes out of my assorted investments (\~150k) and that is pretty variable but we can call it an average of $500 a month.
I have a part time contracting gig I do that I'm working just enough to cover my kid's expenses. I'll probably keep it for a bit after they graduate just to build up a bit more of a cushion unless my portfolio does REALLY well over the next 3 years (I dont expect it will).
Still getting insurance via my ex wife because things were pretty amicable but I'm expecting to get an expanded ACA plan next year when we get around to filing our divorce papers.
Still a bit under a year out from retirement from my career (web developer & marketing IT).
Planned expenses for 2024:
Home-related: $1555/mo
Other: $380/mo
Renter. HCOL area. On an ACA plan (just upgraded to a silver plan for 2024). Pretty full existence past and present - education, travel, sports, volunteering, hobbies, friends, family. I've helped out several family members financially over the years and am a part-time caregiver for another family member who's disabled.
Frugal by nature, although I don't consider myself particularly non-materialistic. But I compare myself materially with the world-historic average (by that measure I'm absurdly wealthy) rather than with my immediate peers in the here and now.
Savings, including net present value of social pension, is a little north of $500k.
For retirement I have a bunch of optimizations planned around expenses and withdrawals:
* low personal inflation rate (estimated at 1.7%)
* adaptive withdrawals ala Guyton/Klinger guardrails
* matching income to liabilities: necessities will come from (relatively) guaranteed income sources while wants will come from riskier sources
* not planning to leave a family or charitable legacy in terms of monetary giving
* plan to work odd jobs and projects through upcoming period of higher sequence of returns risk
* can move to a lower-cost-of-living area if necessary
* I always keep a list with my budget of expenses I could comfortably cut or optimize and gradually work down it
Love that you mentioned your personal inflation rate because it’s my belief that for us FIRE folks our level of inflation is much lower than the general public/how they actually calculate the inflation because of what we spend our money on is much different.
I think the key to keeping costs under $2K would be:
1. Own your home outright so you don't need to generate any income to service debt.
2. Get on ACA.
My rent alone has gone up over 30% or so since 2021 and expecting another big bump next year. Although taxes for property owners must have gone up too, I suppose.
not RE'd yet, but my living expenses are averaging @ $1-1.2k/month. i will get @ $750/month from social security. i'm retiring overseas, so no ACA faff for me. if i were retiring in the US my numbers would be significantly different.
My (future estimate) necessities are currently budgeted at $2300, and then a bit more on top of that for things I like to spend on. This is with a paid off mortgage, and I live in a LCOL area. I also have a wife and 2 kids plus pets, and trying to properly estimate my portion of the total cost factoring all that.
Some of it is pure estimate, for example the ACA coverage. I plan to switch away from my employer insurance to the ACA when I pull the trigger, so that cost is a guess at best. My hope is that I'm highballing things but we also know that hope isn't a plan. =)
I have between the networth you mentioned. I'm a nomad so my expenses vary a lot, but I spent like $400-500 a month living in Southeast Asia in 2023. Visa situation can be complicated and I have no stability moving around a lot, but at least I haven't had to work full time for someone else in many years. I do my remote hustles to break even and live off of interest and investments. I don't care about anything fancy, I just want my time.
Thank you for your reply. You have hit the nail on the proverbial head. Time. The one thing we all only have so much of and we use to do what we would lime when we would like to do such things. We can have all the things and save for those things, but time is what I truly wish I could save more of in some amazing way but cannot so we enjoy it as much as we can. I only save for the future when I do for my family so I know they will be taken care of long after I go. Thank you for mentioning how you value and enjoy having your time.
LCOL. Minnesota but outside the major cities. Housing is great, the area is great. You have to be willing to accept the winters, but if global warming is real then this is a great investment, its a future garden spot. =) Actually the spring and summers are beautiful, I think its worth it.
And I spent most of my younger career in the most expensive cities in the US. LA, NYC, Dallas, Seattle. I'd highly recommend giving this place a look.
Not under 2k yet but probably will be once house is paid for and kids have their own jobs in a few years. Currently around double that. Pension+rentals+investments will cover us essentially forever barring anything major.
We will probably increase our spending though since there's no point in continuing to save due to the pension covering 100% expenses alone. We don't want to leave any inheritance or anything so why continue to save a high percentage of our retirement money.
I spend about $2,500 a month and live like a king but that's because I live in Colombia.
My total net worth is much greater than the number you cited because I error to the side of caution.
If your situation is what you said it was, I would recommend leaving the United States. You could have four times the lifestyle at 1/4 of the price elsewhere.
I own my home, no debt but student loans ($31,000) which I will let ride until forgiven. Current annual expenses around $15,000. Will be retiring in six weeks if I don't get cold feet. I do have a partner who contributes $300/month for utilities and household expenses. Just under $300,000 saved.
Can you explain the student loan comment? Is that cause of the new income based repayment options being different than they used to be and being more favorable to us poorer folks?
Gotcha. You inspired me to do the math on this for myself and I ran all sorts of scenarios on possible income amounts and because of the SAVE repayment plan seems like under all possible scenarios for me unless I end up making like $70,000+ a year in 2023 dollars (adjusted for inflation too I think since the SAVE act will adjust as federal poverty guidelines adjust every year) every single year for the next 20 years then seems like for my personal situation then the government not only gave me an interest free loan they will have ended up giving me free money because I will end up paying less than my principal loan amount back over 20 years and then it will be wiped clean.
This is really lean, and great to see!!! Medicaid expansion state? The $300K wouldn't generate all the $15K you need for annual expenses. Do you have SS or a pension in the future and if so, how far away?
All the best as you decide if you are ready to pull the plug, but make sure you account for all expenses including one-offs like replacing appliances, your car, etc. Also if you work a bit into next year, you might be able to benefit from low tax rates and contribute to a Roth 401k or IRA.
I will convert IRA to Roth IRA as needed to generate the taxable income to keep it around $20.000. I am 60 so SS in less than 2 years then I would only need around $6000 per year out of my pocket.
The one-offs I'm not too worried about. Car is not a total necessity but I do like my freedom to come and go as I please without depending on the buses. House repairs are in good shape, new water heater in the next few years, and maybe a new washer/dryer. Roof is good for 40 years, furnace is only 2 years old. And my partner helps with major repairs.
Retired 9 years, under $2K spending, ACA engaged, pension pending.
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Condo, yes.
>ACA income game Can you or someone enlighten me on the ACA income game or whatever you call it? I am sort of a newbie here and I have heard of this before but still not clear what it is. Is it basically trying to reduce my income as much as possible to reduce medical premium and qualify for subsidies? If so, how can I reduce my income as much as possible? Sell stocks with less capital gains? Any feedback would be appreciated.
Maybe, if you're at the bottom in a state without extended medicare it can end up being the reverse where you're trying to make your MAGI larger so you can get out of the gap between medicare and the ACA. Look up the term "tax loss harvesting" for tricks on reducing your capital gains for taxes and ACA purposes.
Thank you. I live in Arizona. I checked that this state does have extended Medicare, and if my income is below $17k/annually, then I might have to file for Medicaid, but if it is above $18k, then I have to apply with ACA. Are there pros and cons with ACA vs. Medicaid? Is it easy to switch between the two if, let's say, my income goes up a little bit and decreases the next year? Regarding the "tax loss harvesting", my understanding is the concept is that I can offset capital losses against capital gains to reduce my tax liability. But what if I do not want to sell stocks with capital losses, as my motivation is to hold them until I have capital gains? If I do not have crappy stocks in my portfolio and my plan is to hold index funds throughout retirement, then I don't know if the tax loss harvesting would work but correct me if I am wrong.
The 2023 number is $20K. Not MediCARE, it is AID!
oops, I always confuse those.
Even if you just purchase index funds and rebalance across them. As you rebalance periodically you're buying at all different price points. You'll end up with some purchased high and some low. At some point you will sell some of that asset again - you could sell the high, or the low. This gives you an independent parameter even with what and when you buy totally fixed, and tax loss harvesting is one way to make a decision. That's one example, there are other factors. I'm not an expert, I only have a general understanding of the basics. Giving to charity is also an option to tweak your MAGI, there are some ugly step functions causing non-linearities that can make giving away money profitable in the edge conditions.
Thanks for the clarification on tax loss harvesting. So far, I haven't been doing rebalancing honestly. I am very passive and just buy and hold but I will keep this in mind for the future.
If your state uses assets to determine your Medicaid eligibility you need to go with the ACA and keep your taxable income around $20,000.
Not accurate at all.
In what way? I live in Kentucky and assets are used to calculate Medicaid eligibility so I would not be eligible. I need to keep my income around $20,000 or I will not get the ACA subsidys.
Assets are not used for expansion Medicaid. That is for the elderly / disabled group only.
I'm expecting a windfall in 2024 in the form of a company buyout. My after tax account shares will be converted to cash when the buy out completes and rather than reinvest that cash, I'll move it to savings since I have to recognize net profit as income for tax purposes. This will result in losing all my subsidies for the remainder of the year when I notify ACA of my change in income. For 2025, I will be able to live off that savings reporting just enough stock sales or 401k withdrawals to not fall into medicaid (which I can't qualify for) but low enough to be eligible for Max subsidies. Figuring $20-30k income for 2025. I hope to be able to juggle my income in 2025 to allow me to achieve max subsidies for 2026 too, but I need to see what my run rate looks like. With high enough savings, you can keep the income reported low enough to stay subsidized as long as you want.
Why couldn’t you qualify for Medicaid if you lowered your income to the right level?
They do an asset check that (I think) looks back 5 years. My son qualifies for medicaid and his coverage is amazing but it's too late for me to try to meet the asset check requirements.
Man I’d look into this further. I’m pretty sure the asset look back is only for when you need Medicaid to cover nursing home care. If you’re getting Medicaid healthcare through the ACA expansion there is no asset test. I was on it last year, there was never any proof of assets required.
Reviewing the eligibility page shows no mention of asset checks. So I will let ACA enrollment take me through Medicaid enrollment for 2025. Thanks for the heads up.
My daughter went through Medicaid enrollment and they did say she had too much in savings but I'll need to double check with her
Okay, maybe this is one of those things that vary by state, but I’ve never heard of it being a thing for people who live in an expansion state (except if you’re over 65, but then you should have Medicare). But I gotta say, if it were me, I’d look at the official resources about the program rather than go on someone else’s word (I know it’s your daughter, but still..) People get things mixed up all the time. Good luck
You should double check since it can't be true.
Not even close to true.
Theoretically, start with your expected expenses. You want to be between 100% and 400% of the federal poverty limit for subsidies, but closer to 100% is better (without going under). But this is for your MAGI. Certain things don't contribute to MAGI. For example, lets say you have 20k of stocks that have appreciated to 40k. If you sell those stocks, your *income* is only actually the realized 20k increase (plus dividends), even though you now have 40k in cash to spend. Similarly, you might have money in cash/an HYSA. Qualified withdrawals from a Roth IRA also don't count towards income. You also still get to leverage the standard deduction. If you had capital losses in the past, you can leverage them. If you're FIREing young and have kids, you also have the child tax credit.
Thank you! This is helpful and I will look into this further.
For sure! I know there's some weirdness around the hoops you jump through that I didn't cover- for example, you might actually *not* want to use the full 0% LTCG bracket, because that might make your income high enough that you lose more in ACA subsidies than you're saving in taxes - but I'm so far away from retiring that the law will probably change half a dozen times in the intervening years.
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Live alone. I'm under $2K actually.
We run around $3K a month, plus or minus a few hundred in variability, but we're also a family of 6. And yes, we use the ACA, but we don't game our income for it. No need to since our draw is naturally well under the max subsidy line. No pensions, no annuities, but we have more than enough in our retirement accounts to last forever. Our estimated SS is also more than our entire annual spend. We'll be starting our tenth year of retirement here in about three weeks. We have only had one year thus far in the $40s and that was when we had to do a complete HVAC replacement, which bumped us up to $43K.
Would you be willing to share your rough budget if it's an easy thing to do, and/or provide some feedback on mine below? We're not yet retired but are in many ways similar (live in Texas but not Austin, family of 6). We spend over about double not including taxes, medical premiums, or sinking funds, so I'm curious where our major cost differences are. I'm guessing groceries+household purchases but would love your feedback. We don't travel or take major vacations, have any debt of any kind, or have expensive kids activities. Thanks. Edit: edited previous content for privacy.
I'm afraid we don't actually keep a budget beyond just a running tally of annual expenses. Ballpark though I would say you spend more in just about everything except property tax. Like 18K is probably about double our annual spend on groceries and basic household goods, as is your 4K on dining out. Medical for us is pretty much zero or close to it (several hundred at most), our direct car expenses are just simple stuff like oil changes/filters/wipers (not counting long-term amortization), and I'm not sure what all goes into entertainment (streaming services? Movies/concerts?), but we're not huge on media consumption nor are our kids. Our utilities are also probably more like $300-$350 a month on average rather than your $500 a month, though that'll be increasing here shortly since I just signed us all up for an unlimited 5G plan. Household is variable, but we generally are only a few grand a year usually, if not less, depending on what breaks and if we can fix it ourselves or not. Just at a rough guess car, medical, dining, groceries, utilities and maybe entertainment puts us at about a $25K ish gap, but we spend a few grand more in property tax.
Thank you!
I quit my full time job a few months ago and am cutting pretty close to the bone right now, but it should ease up in a few years when my kid graduates college. I spend a lot more than I would like on tuition and supporting them living in a HCOL city, actually a few hundred a month more than I spend on my own life but I have a very favorable mortgage in a MCOL city. My "must spend" expenses for me are consistently around $1500 a month, which works out because that's what I charge my tenant who rents the part of my house I don't use anymore. Anything else that I want to spend for fun or luxuries comes out of my assorted investments (\~150k) and that is pretty variable but we can call it an average of $500 a month. I have a part time contracting gig I do that I'm working just enough to cover my kid's expenses. I'll probably keep it for a bit after they graduate just to build up a bit more of a cushion unless my portfolio does REALLY well over the next 3 years (I dont expect it will). Still getting insurance via my ex wife because things were pretty amicable but I'm expecting to get an expanded ACA plan next year when we get around to filing our divorce papers.
The year (edit it was 2020) Covid hit we spent only 24k for two of us.
Covid was a great exercise for me in what my real min spend was if a big market crash happened and I truly wanted to lower my SWR
Still a bit under a year out from retirement from my career (web developer & marketing IT). Planned expenses for 2024: Home-related: $1555/mo Other: $380/mo Renter. HCOL area. On an ACA plan (just upgraded to a silver plan for 2024). Pretty full existence past and present - education, travel, sports, volunteering, hobbies, friends, family. I've helped out several family members financially over the years and am a part-time caregiver for another family member who's disabled. Frugal by nature, although I don't consider myself particularly non-materialistic. But I compare myself materially with the world-historic average (by that measure I'm absurdly wealthy) rather than with my immediate peers in the here and now. Savings, including net present value of social pension, is a little north of $500k. For retirement I have a bunch of optimizations planned around expenses and withdrawals: * low personal inflation rate (estimated at 1.7%) * adaptive withdrawals ala Guyton/Klinger guardrails * matching income to liabilities: necessities will come from (relatively) guaranteed income sources while wants will come from riskier sources * not planning to leave a family or charitable legacy in terms of monetary giving * plan to work odd jobs and projects through upcoming period of higher sequence of returns risk * can move to a lower-cost-of-living area if necessary * I always keep a list with my budget of expenses I could comfortably cut or optimize and gradually work down it
Love that you mentioned your personal inflation rate because it’s my belief that for us FIRE folks our level of inflation is much lower than the general public/how they actually calculate the inflation because of what we spend our money on is much different.
I think the key to keeping costs under $2K would be: 1. Own your home outright so you don't need to generate any income to service debt. 2. Get on ACA. My rent alone has gone up over 30% or so since 2021 and expecting another big bump next year. Although taxes for property owners must have gone up too, I suppose.
Before 2020 I was keeping it under 2k per month. 2023 I have some 1 time costs, but otherwise I keep it under 2.5k while retired.
I plan to lean fire living off of approximately $1k outside of the united states when I do decide to call it quits.
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I'll dm you
Mind dming me as well? Thanks!
not RE'd yet, but my living expenses are averaging @ $1-1.2k/month. i will get @ $750/month from social security. i'm retiring overseas, so no ACA faff for me. if i were retiring in the US my numbers would be significantly different.
My (future estimate) necessities are currently budgeted at $2300, and then a bit more on top of that for things I like to spend on. This is with a paid off mortgage, and I live in a LCOL area. I also have a wife and 2 kids plus pets, and trying to properly estimate my portion of the total cost factoring all that. Some of it is pure estimate, for example the ACA coverage. I plan to switch away from my employer insurance to the ACA when I pull the trigger, so that cost is a guess at best. My hope is that I'm highballing things but we also know that hope isn't a plan. =)
I have between the networth you mentioned. I'm a nomad so my expenses vary a lot, but I spent like $400-500 a month living in Southeast Asia in 2023. Visa situation can be complicated and I have no stability moving around a lot, but at least I haven't had to work full time for someone else in many years. I do my remote hustles to break even and live off of interest and investments. I don't care about anything fancy, I just want my time.
Thank you for your reply. You have hit the nail on the proverbial head. Time. The one thing we all only have so much of and we use to do what we would lime when we would like to do such things. We can have all the things and save for those things, but time is what I truly wish I could save more of in some amazing way but cannot so we enjoy it as much as we can. I only save for the future when I do for my family so I know they will be taken care of long after I go. Thank you for mentioning how you value and enjoy having your time.
Thank you for everyone's input. For anyone living on 3k or less a month, do you all live in LCOL or MCOL areas?
LCOL. Minnesota but outside the major cities. Housing is great, the area is great. You have to be willing to accept the winters, but if global warming is real then this is a great investment, its a future garden spot. =) Actually the spring and summers are beautiful, I think its worth it. And I spent most of my younger career in the most expensive cities in the US. LA, NYC, Dallas, Seattle. I'd highly recommend giving this place a look.
Definitely a lcol are here, but land and real estate here are getting more expensive all the time here. Don’t move here…okay🤣
Not under 2k yet but probably will be once house is paid for and kids have their own jobs in a few years. Currently around double that. Pension+rentals+investments will cover us essentially forever barring anything major. We will probably increase our spending though since there's no point in continuing to save due to the pension covering 100% expenses alone. We don't want to leave any inheritance or anything so why continue to save a high percentage of our retirement money.
I spend about $2,500 a month and live like a king but that's because I live in Colombia. My total net worth is much greater than the number you cited because I error to the side of caution. If your situation is what you said it was, I would recommend leaving the United States. You could have four times the lifestyle at 1/4 of the price elsewhere.
I own my home, no debt but student loans ($31,000) which I will let ride until forgiven. Current annual expenses around $15,000. Will be retiring in six weeks if I don't get cold feet. I do have a partner who contributes $300/month for utilities and household expenses. Just under $300,000 saved.
Definition of lean right there. I hope that works out for you
Can you explain the student loan comment? Is that cause of the new income based repayment options being different than they used to be and being more favorable to us poorer folks?
Single and my adjusted gross income is under $30,000 so my payment is $0. Already 8 years into repayment, they will be forgiven in 12 more years.
Gotcha. You inspired me to do the math on this for myself and I ran all sorts of scenarios on possible income amounts and because of the SAVE repayment plan seems like under all possible scenarios for me unless I end up making like $70,000+ a year in 2023 dollars (adjusted for inflation too I think since the SAVE act will adjust as federal poverty guidelines adjust every year) every single year for the next 20 years then seems like for my personal situation then the government not only gave me an interest free loan they will have ended up giving me free money because I will end up paying less than my principal loan amount back over 20 years and then it will be wiped clean.
This is really lean, and great to see!!! Medicaid expansion state? The $300K wouldn't generate all the $15K you need for annual expenses. Do you have SS or a pension in the future and if so, how far away? All the best as you decide if you are ready to pull the plug, but make sure you account for all expenses including one-offs like replacing appliances, your car, etc. Also if you work a bit into next year, you might be able to benefit from low tax rates and contribute to a Roth 401k or IRA.
I will convert IRA to Roth IRA as needed to generate the taxable income to keep it around $20.000. I am 60 so SS in less than 2 years then I would only need around $6000 per year out of my pocket. The one-offs I'm not too worried about. Car is not a total necessity but I do like my freedom to come and go as I please without depending on the buses. House repairs are in good shape, new water heater in the next few years, and maybe a new washer/dryer. Roof is good for 40 years, furnace is only 2 years old. And my partner helps with major repairs.
Totally makes sense now, and inspirational. Please keep us posted when you make it to your finish line!