Hey Dick, I think the simplicity of this plan is exactly what makes it so easy to pull off.
First, regarding health insurance: since my 50-week severance package includes health coverage, we are set for a full year at our current rates. After that, I plan on taking the six additional months of COBRA. That gets us to 18 months total and takes us almost to age 59. From there, I will jump on an ACA plan. I know I can't really game the system to get a lower premium because I want to prioritize Roth conversions. I can’t have my cake, eat it, and expect to lose weight too!
Since Roth conversions trump ACA premium savings in the long run, we will just buy an ACA plan that covers nothing beyond catastrophic incidents. That means we might be on the hook for up to roughly $14,000 per year in max out-of-pocket expenses. That adds up to about $100,000 over six years, which I already have set aside in the cash bucket. My employer kicks in about $400 per month toward a health plan in retirement, so I figure I can get coverage for about $1,200 per month after that credit. My wife is an RN, and if we work part-time, we can easily earn enough to cover most of that.
As for the annuity question, it is just not for me. When I compare the rates of return to the guaranteed income, the math never works in my favor. I am comfortable with market risk because of how we are set up. Having a zero mortgage and a decent cash bucket is my primary way of mitigating risk. When Social Security kicks in at age 65, that will be our "annuity."
The biggest risk I see is health coverage. If things get really tight, one of us can always go back to work, though we hope it won't come to that. We have about eight years of expenses socked away entirely separate from retirement funds. It feels like I made my own annuity and kept my money too. I guess I can eat cake and not gain weight after all!
Hi Richard, yes, I get that, but to purposefully lower returns to minimize taxes is interesting as a strategy, I am not questioning is it right or wrong but the rationalization that this is the decision to go with. If it was purely hey, I want to reduce risk, then yes, that totally fits. It was just so unique and to be honest my brain thinks the same way so I was trying to see if there was more to it, than meets the eye.
Hey Ed, first off, huge congrats to you both on everything you’ve achieved! It’s an awesome milestone, and I’m sure the best is still ahead.
I did have a quick question about your strategy of "curbing growth" in your traditional accounts by parking your bonds there, while going 100% stocks in the Roths. I totally get that it's a tax-mitigation move, but I’m curious, have you ever actually crunched the numbers on the cost of those higher taxes and potential IRMAA surcharges versus the raw growth you're potentially leaving on the table?
Lately, I’ve been leaning toward the "RMDs be damned" philosophy. My thinking is: let me chase the gains now and I’ll deal with the tax bill later. It’s not about being reckless or taking undue risk; it's just that, from what I’ve seen, the math often suggests that having more total money even if a bigger chunk goes to the IRS still leaves you with a larger net pile in the end.
It sometimes feels like the logic is, "I'd rather be paid less just to stay in a lower tax bracket," which feels a bit counterintuitive, right? I’m just trying to figure out the best "sleep at night" optimization.
What are your thoughts? I’m definitely not saying your plan is wrong just some food for thought as I navigate this. One thing I am learning is that : managing retirement is almost as much work as the career that got us here!
We are still employed fulltime, fortunately or maybe not so fortunately. We have been pondering this as we do plan on early retirement starting somewhere around age 57-58 which is two years from now. We have zero pensions, and only our investments. Currently the plan is a cash bucket coupled with PT work to bridge us to around age 64, (Roth Conversion window) then we plan on claiming Social Security and couple that with dividends should cover our basic expenses for the year. Then we plan on withdrawing a quarterly amount to refill the cash bucket for any spending over what Social Security and dividends will cover. We likely should have more in the cash bucket than we will spend so if there is a market downturn that is concerning we can stop withdrawals. No annuities, no fancy insurance products, just keeping things simple. On a separate note, I have just enrolled for a Masters In Financial Planning program which will allow me to sit for the CFP exams in a couple of years. I look forward to being more active as I dig into the content. I promise, i am not a snob and will not be looking down my nose wondering tsk tsk :-).
I've only attended one of these so I could personally hear the sales pitch. It was mostly fear mongering in a bid to sell annuities. I need to make this more about the free meal and withhold judgment on the quality of the materials. Anyone with the ability to use a BAll financial calculator will know the product are typically subpar for most.
Congratulations Chris. My daughter our youngest is about to embark on this very journey. She 17. She has 3/4 tuition scholarship coupled with a 529 plan. Those will cover books, tuition and a meal plan. She has her debit card to her account that we have been putting $100 per month into. We will likely add another $100 to that per month. She plans on working some when she gets settled. She has a car but she not taking it to school the first year. We will adjust as needed. We are not going to overthink this as there is nothing on fire and low risk to our financial situation. She's the third and last of my brood, so we have been there before although her two older brothers stayed home and commuted to school with their cars.
Hi James, totally get it. In our case we are the same age and almost have too much saved for retirement. We won't know how to spend it, just not in our DNA. That's what makes.each individual's circumstance unique.
Sounds like a through plan. Congratulations! And he's lucky to get that phased retirement from work. Know there is also the physical toll of the remodeling, things won't always go to plan. Just enjoy the moment and it will be well. Best wishes.
Comments
Hey Dick, I think the simplicity of this plan is exactly what makes it so easy to pull off. First, regarding health insurance: since my 50-week severance package includes health coverage, we are set for a full year at our current rates. After that, I plan on taking the six additional months of COBRA. That gets us to 18 months total and takes us almost to age 59. From there, I will jump on an ACA plan. I know I can't really game the system to get a lower premium because I want to prioritize Roth conversions. I can’t have my cake, eat it, and expect to lose weight too! Since Roth conversions trump ACA premium savings in the long run, we will just buy an ACA plan that covers nothing beyond catastrophic incidents. That means we might be on the hook for up to roughly $14,000 per year in max out-of-pocket expenses. That adds up to about $100,000 over six years, which I already have set aside in the cash bucket. My employer kicks in about $400 per month toward a health plan in retirement, so I figure I can get coverage for about $1,200 per month after that credit. My wife is an RN, and if we work part-time, we can easily earn enough to cover most of that. As for the annuity question, it is just not for me. When I compare the rates of return to the guaranteed income, the math never works in my favor. I am comfortable with market risk because of how we are set up. Having a zero mortgage and a decent cash bucket is my primary way of mitigating risk. When Social Security kicks in at age 65, that will be our "annuity." The biggest risk I see is health coverage. If things get really tight, one of us can always go back to work, though we hope it won't come to that. We have about eight years of expenses socked away entirely separate from retirement funds. It feels like I made my own annuity and kept my money too. I guess I can eat cake and not gain weight after all!
Post: The never ending payday
Link to comment from May 10, 2026
Hi Richard, yes, I get that, but to purposefully lower returns to minimize taxes is interesting as a strategy, I am not questioning is it right or wrong but the rationalization that this is the decision to go with. If it was purely hey, I want to reduce risk, then yes, that totally fits. It was just so unique and to be honest my brain thinks the same way so I was trying to see if there was more to it, than meets the eye.
Post: Slow on the Draw
Link to comment from May 10, 2026
Hey Ed, first off, huge congrats to you both on everything you’ve achieved! It’s an awesome milestone, and I’m sure the best is still ahead. I did have a quick question about your strategy of "curbing growth" in your traditional accounts by parking your bonds there, while going 100% stocks in the Roths. I totally get that it's a tax-mitigation move, but I’m curious, have you ever actually crunched the numbers on the cost of those higher taxes and potential IRMAA surcharges versus the raw growth you're potentially leaving on the table? Lately, I’ve been leaning toward the "RMDs be damned" philosophy. My thinking is: let me chase the gains now and I’ll deal with the tax bill later. It’s not about being reckless or taking undue risk; it's just that, from what I’ve seen, the math often suggests that having more total money even if a bigger chunk goes to the IRS still leaves you with a larger net pile in the end. It sometimes feels like the logic is, "I'd rather be paid less just to stay in a lower tax bracket," which feels a bit counterintuitive, right? I’m just trying to figure out the best "sleep at night" optimization. What are your thoughts? I’m definitely not saying your plan is wrong just some food for thought as I navigate this. One thing I am learning is that : managing retirement is almost as much work as the career that got us here!
Post: Slow on the Draw
Link to comment from May 10, 2026
We are still employed fulltime, fortunately or maybe not so fortunately. We have been pondering this as we do plan on early retirement starting somewhere around age 57-58 which is two years from now. We have zero pensions, and only our investments. Currently the plan is a cash bucket coupled with PT work to bridge us to around age 64, (Roth Conversion window) then we plan on claiming Social Security and couple that with dividends should cover our basic expenses for the year. Then we plan on withdrawing a quarterly amount to refill the cash bucket for any spending over what Social Security and dividends will cover. We likely should have more in the cash bucket than we will spend so if there is a market downturn that is concerning we can stop withdrawals. No annuities, no fancy insurance products, just keeping things simple. On a separate note, I have just enrolled for a Masters In Financial Planning program which will allow me to sit for the CFP exams in a couple of years. I look forward to being more active as I dig into the content. I promise, i am not a snob and will not be looking down my nose wondering tsk tsk :-).
Post: The never ending payday
Link to comment from May 10, 2026
I've only attended one of these so I could personally hear the sales pitch. It was mostly fear mongering in a bid to sell annuities. I need to make this more about the free meal and withhold judgment on the quality of the materials. Anyone with the ability to use a BAll financial calculator will know the product are typically subpar for most.
Post: The Vision, the Babe , Einstein and the Q
Link to comment from April 28, 2026
Congratulations Chris. My daughter our youngest is about to embark on this very journey. She 17. She has 3/4 tuition scholarship coupled with a 529 plan. Those will cover books, tuition and a meal plan. She has her debit card to her account that we have been putting $100 per month into. We will likely add another $100 to that per month. She plans on working some when she gets settled. She has a car but she not taking it to school the first year. We will adjust as needed. We are not going to overthink this as there is nothing on fire and low risk to our financial situation. She's the third and last of my brood, so we have been there before although her two older brothers stayed home and commuted to school with their cars.
Post: How much to provide a college student monthly?
Link to comment from April 26, 2026
That's an awesome and inspiring story. Glad you're living your best life.
Post: Around the Obstacles
Link to comment from April 25, 2026
Hi James, totally get it. In our case we are the same age and almost have too much saved for retirement. We won't know how to spend it, just not in our DNA. That's what makes.each individual's circumstance unique.
Post: Rethinking the “Right” Time for Social Security
Link to comment from April 24, 2026
Glad you're doing well.
Post: Rethinking the “Right” Time for Social Security
Link to comment from April 24, 2026
Sounds like a through plan. Congratulations! And he's lucky to get that phased retirement from work. Know there is also the physical toll of the remodeling, things won't always go to plan. Just enjoy the moment and it will be well. Best wishes.
Post: How it all pencils out–or at least, we hope so! (Our Big “Little” Move, Part 3)
Link to comment from April 23, 2026