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Can I retire at 60 years old?

I’m 59.5 years old. I have $300K in a traditional IRA and $1.2 million in 401k’s. I would like to retire but my wife does not work. I have pre-existing conditions and will need to secure health care until I reach 65. My wife is 2.5 years older than me.

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February 2018

Congratulations on building such a nice nest egg through your working career!

With history as our guide, we know that a moderately invested portfolio has a safe withdrawal rate of around 4% (the “4% Rule”).  Put simply, a retiree could withdraw 4% from his or her portfolio in the first year of retirement - then increase the withdrawal for inflation each subsequent year - and have the portfolio last at least 30 years.  (Of course, past performance doesn’t guaranty future results, so it’s best to review your portfolio annually.)

With this as a guide, your $1.5 million portfolio should be able to provide withdrawals of $60,000 in year one of retirement, with that amount increased annually for inflation. 

You don’t mention your annual spending needs, so I don’t know if this is sufficient.  Also, you don’t mention if you (or your wife) have any pension income, or if you (and/or your wife) qualify for Social Security.  Obviously, these would increase the funds available to you each year, once you meet the age requirements.

Regarding health insurance coverage, you have a few options:

1.      The ACA exchange – Policies purchased through the ACA exchanges cannot exclude you due to pre-existing conditions (premiums can be higher if you are a smoker).  Further, depending on your income, you may qualify for a premium subsidy.  Visit www.healthcare.gov when you near retirement to see which plans are available in your area.

2.      Some employers offer retiree health insurance.

3.      You may qualify for COBRA coverage from your last employer, but it typically lasts for up to 18 months and it can be quite expensive.  It’s certainly worth checking into, though.

4.      If you are a Christian, you may want to consider a Christian medical sharing ministry.  While they are not technically being insurance, they operate in a similar manner under the Biblical principal of Christians sharing each others burdens.  My family has been a member of such a ministry for several years and has had great success with it!  If you’re interested, you can find out more here for the ministry in which we participate.

5.      Some part-time jobs offer health insurance coverage.  While it may not be your first choice, it is an option to consider for a few years.

The good news is you will be only five years away from being eligible for Medicare, and your wife will be eligible in only a couple of years.

Best of luck in retirement and please let me know if you have any follow up questions!

February 2018
February 2018
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February 2018