For those who have followed a couple of my posts, my Mom (turning 62 in Oct) lost my Dad (60) in February this year. I (37) have been helping Mom with finances given this was Dad's area. Their original plan was to have Mom retire next summer just shy of turning 63 - her goal is to still make this happen since Dad didn't make it to see his retirement.
As I've been helping put her plan together with her, I have a few questions I'd love the forum's input on.
Here's the run down:
~$1.8M in invested assets
- 15% in cash savings - roughly 3 years living expenses
- 25% in taxable brokerage
- 25% in Traditional IRA
- 29% in 401(k) - all pretax
- 4% in Inherited IRA from Dad's mother - her death was in 2023, so 10 year RMD period starts this year
- 1% Roth IRA
- 1% HSA
Debt: $196K
- $170K mortgage @ $1,500/mo payoff in March 2035
- $26K car loan @ $750/mo payoff in June 2027
Annual Expenses in Retirement
- $7K/mo until mortgage and home are paid
- $1K/mo healthcare premium until age 65 (although likely much lower based on ACA Marketplace and her income she is researching now)
- $202K estimated lifetime medicare expenses
Social Security
- $1,625/mo starting February 2025, then will go up to $3,019/mo when survivor benefits are claimed at age 67
Questions:
1) I've plugged all of her numbers into NewRetirement and built out her plan with conservative assumptions. It looks like she should be in a good spot to retire starting next June. Agree?
2) She is currently 12% tax bracket with Dad and will be for 2024 as a qualified widow(er). I am recommending to her that we look at her total income + what Dad earned this year (couple paychecks) and then calculate the difference up to the 12% tax bracket cap and do a Roth conversion from her Traditional IRA. We would also do a Roth contribution by April deadline next year. Trying to accomplish both for 2024 since she most likely will move to 22% bracket in 2025 as a single filer.
3) We likely would delay a RMD for this year on the inherited IRA so as to not increase her income given the Roth conversion above.
4) I'm helping Mom research medical plans via ACA Marketplaces. What all do we need to consider here around timing given she wouldn't retire until June vs. when open enrollment occurs in the fall? Are there other options we should be considering beyond ACA and Cobra?
5) What else am I missing?
As I've been helping put her plan together with her, I have a few questions I'd love the forum's input on.
Here's the run down:
~$1.8M in invested assets
- 15% in cash savings - roughly 3 years living expenses
- 25% in taxable brokerage
- 25% in Traditional IRA
- 29% in 401(k) - all pretax
- 4% in Inherited IRA from Dad's mother - her death was in 2023, so 10 year RMD period starts this year
- 1% Roth IRA
- 1% HSA
Debt: $196K
- $170K mortgage @ $1,500/mo payoff in March 2035
- $26K car loan @ $750/mo payoff in June 2027
Annual Expenses in Retirement
- $7K/mo until mortgage and home are paid
- $1K/mo healthcare premium until age 65 (although likely much lower based on ACA Marketplace and her income she is researching now)
- $202K estimated lifetime medicare expenses
Social Security
- $1,625/mo starting February 2025, then will go up to $3,019/mo when survivor benefits are claimed at age 67
Questions:
1) I've plugged all of her numbers into NewRetirement and built out her plan with conservative assumptions. It looks like she should be in a good spot to retire starting next June. Agree?
2) She is currently 12% tax bracket with Dad and will be for 2024 as a qualified widow(er). I am recommending to her that we look at her total income + what Dad earned this year (couple paychecks) and then calculate the difference up to the 12% tax bracket cap and do a Roth conversion from her Traditional IRA. We would also do a Roth contribution by April deadline next year. Trying to accomplish both for 2024 since she most likely will move to 22% bracket in 2025 as a single filer.
3) We likely would delay a RMD for this year on the inherited IRA so as to not increase her income given the Roth conversion above.
4) I'm helping Mom research medical plans via ACA Marketplaces. What all do we need to consider here around timing given she wouldn't retire until June vs. when open enrollment occurs in the fall? Are there other options we should be considering beyond ACA and Cobra?
5) What else am I missing?
Statistics: Posted by rhatfiel — Fri Jul 26, 2024 1:50 pm — Replies 0 — Views 67