I’m Retiring Next Year with $450K in Savings—What Am I Missing for My $10K Monthly Goal?

Some of the best news anyone can tell themselves and others is that they are ready to retire. There might not be anything better than knowing that your time playing corporate politics and doing everything you can to avoid an endless stream of emails and meetings is about to end. 

In the case of one Redditor posting in r/retirement, they are doing precisely this by making plans to retire next year. With a pension, Social Security, and health insurance covered, they can call it quits and start to live their golden years. 

Of course, as all of us might be, they are worried about missing something from their financial retirement plans, so they are looking to Reddit as a second set of eyes to see what they might not be thinking of. 

The Plan

As it stands, this 65-year-old plans to convert their $100,000 salary into a pension that pays just around 50% from the company. By withdrawing Social Security before the full retirement age, they are also looking at approximately $3,000 monthly, so we’re already looking to be in good shape as far as earning passive income every month. 

The best part is that the company will pay for all supplemental Medicare insurance and has an 80% reimbursement program for any uncovered costs. In other words, the Redditor says it best: “Barring a multi-million dollar illness, medical is completely covered.” 

In addition to the work benefits, the original poster has $450,000 in a diverse IRA account and another $300,000 in short-term CDs. The hope is to have $8,000 – $10,000 available monthly to live on, take an immediate vacation, and then begin to really enjoy life. 

The only existing debt is a mortgage of around $350,000 at 4.2%, which doesn’t include property taxes, insurance, and miscellaneous expenses that run around $17,000 annually. The Redditor believes that when they break everything down, they can afford it all, but they are hoping for fellow Redditors to point out what they are not accounting for. 

What’s Missing? 

On a surface level, the Redditor looks to be in good shape, but a few things that should be investigated before stepping down and reducing income are missing. First and foremost, ensure an emergency fund is set aside for sudden expenses. This should be priority number one. Inspecting the home’s roof and HVAC systems is also a good idea, as these are two giant costs that could surprise you post-retirement. 

Understanding what the company means by “Golden Handcuffs “ is also essential. A few fellow commenters mention that while the company covers insurance, it is very limited in what doctors and hospitals it can use. This might be something to consider and investigate to ensure there won’t be any problems. 

We’re also missing info on anyone in the family who might be involved other than the spouse, such as children, which could have us look at the cost value differently. This could affect survivors’ benefits with Social Security, leading this Redditor to reconsider taking benefits at 65 instead of 67 or closer to 70. 

The original poster also later comments that the wife has a $1,800 monthly pension, which wasn’t accounted for in the initial conversation. The good news is that Redditor explains that they are saving for taxes, so what was an initial concern from some comments is now less of an issue. 

Can They Do It? 

Ultimately, the breakdown shows that this Redditor earns around $9,900 monthly in retirement, between a $50,000 pension ($4,100 monthly) and another $3,000 in Social Security. The wife earns an additional $2,800 between pension and Social Security, or $9,900 in total. 

This means that the non-Social Security income is high enough that Social Security will be taxable, to the point that 85% of Social Security earnings will be taxed. This means their taxable income is about $9,300, of which they would lose $1,200, giving them around $8,700 per month in take-home pay. 

Some back-of-the-napkin math shows that they should be okay, but it will be tight. The biggest concern would be rising medical costs, but if the company continues to pay, they have to know they won’t have much room for big emergencies. However, they should be in good shape to enjoy day-to-day living.