The 2020 Financial Meeting at Chez Sluggy

So Hubs and I finally got a chance to sit down and go over the finances to see how 2019 panned out and what's coming for 2020.

If you've been reading here awhile, you know that Hubs retired mid year in 2017 and turned 59.50 years old in Oct. of that year.  We didn't begin taking any 401K withdrawals until 2018, and we took 3 quarterly withdrawals that calendar year(no withdrawal in the 4th quarter)of $6K each.

After seeing how much leftover cash we had in the checking account when 2018 was over we decided to stop taking 401K monies in 2019.  We figured with our built up Slush Fund(the bulk of which was most of that 401K money we took and didn't spend in 2018)would cover any income shortfalls we might have in 2019.

To recap, 2019 income consisted of a monthly annuity payment, actual interest earned and charged to us for the calendar year of 2019**, a small bit of dividend income, my equally small blogging revenue and any eBay sales.  Also included in income was a small amount of company stock Hubs cashed in for his personal use in 2019.(Not counted as income here was RMSA withdrawal that covered the health insurance premiums and HSA deposits-of which there were none.)
Total income was $45,803.38 in 2019.

**Though I calculated interest earned each month, the 2 CDs we have don't actually pay out interest monthly but once the CDs are matured/cashed in. It's easier to calculate monthly but as far as tax purposes go, much of the interest earned on non-retirement accounts in 2019 won't be taxed until 2020 when the CDs mature.

Then we added up ALL our spending(again, not counting the monthly Healthcare Premiums or HSA spending). Every other penny we spent was included.
Total spending was $52,013.92 in 2019.

That means we had to pull $6,210.54 to cover expenses beyond our "income" and this mostly came out of the Slush Fund(plus our Federal Tax Refund for 2018).

Seems our spending in 2019 went down just over $10K from what we spent in 2018 so things are heading in the right direction on outgo.

And our income in 2019 went down almost $20K from 2018's level.  That is mostly accounted for with the $18K in 401K withdrawals we made in 2018 but did not take in 2019.
We figured that while $18K dumped into the budget in 2018 was too much, not taking any withdrawals in 2019 was not enough.

So we need to refigure what we need to do for 2020 in regard to the 401K.

Plus Hubs doesn't want to live so "close to the bone" like we've been doing and I agree with him to a degree.  We had planned originally to take $36K in 2018 out of the 401K($9K each quarter)but I talked him down to $24K in withdrawals and we ended up only actually taking $18K, which was half of what he wanted to withdraw.  I just didn't think at that point in our retirement that we "needed" to take $36K out and mostly I was right, as we took half of that out when all was said and done and we still had plenty of leftover funds in the checking account at the end of 2018.

But it's time for me to loosen up the reigns on spending a bit at this point.
Again, once you've been in a "save save save" mindset for 30+ years it's difficult to mentally and emotionally reverse direction and not worry about every nickel and dime going out.
But I am trying.... ;-)

Given our stats, we are doing well..........
We've got a guaranteed income for life(the monthly annuity payment), social security will happen in 5 years when Hubs hits full SS age(another 9 months later I'll hit mine), we've got over $500K in a 401K, I've got about $400K squirreled away in non-retirement accounts plus a paid for house.
We can afford to spend more. 8-))

The good news is that by just leaving the 401K funds alone and intact to sit and compound for 1.3 years we've got $26K more than expected in there now.....Woot!

The two additional changes to our finances in 2020 we talked about..........

*  Hubs sold the rest of our stock(all but my personal small holdings I inherited from my mother)in January 2020.  The price was right so he pulled the trigger on it.  Not only will we no longer reap dividends anymore for it(only came to about $300 per year)but we have to figure out how this will influence our tax rate in 2020(obviously our taxes will go up and we may get hit with capital gains tax what with the stock gain and planned 401K withdrawals).

*  With so little being withheld on our annuity and possible capital gains income threshold being reached with the stock income it now makes sense for us to dump additional monies into our HSA for the tax advantages and to keep our tax liability lower come April 15th(and offset that stock sale too).  Since Hubs retired in 2017 we haven't made any contributions to the HSA.  Medical expense are rising as we age and we will just need to pay for more and more medical charges going forward.(And our high deductible topped $4K in 2020 before we reap any health insurance benefit. ugh)
So instead of just tapping our HSA for Rxs it makes sense to tap it for all medical bills-bloodwork, office visits, procedures, etc.

So with these 3 issues(401K withdrawals, stock income, HSA)here is the current plan for 2020.......

* The first Quarter of 2020 we are taking $12K(gross)withdrawal from the 401K.  This will net us $9600 after taxes are withheld.
$6600K(net) of that will get put into the HSA for 2019 tax purposes(can do this retroactively until 4/15/20).
$3K(net)of that will get put into the budget spread evenly over the first quarter-so $1K for each of Jan/Feb/Mar).
*  The third Quarter of 2020 we will take another $12K(gross)withdrawal from the 401K.
$6600(net) will be put into the HSA for 2020 tax purposes.
$3K(net) will be applied to the monthly budget-$1K for each of July/Aug/Sept.
*  As for the second and fourth quarter we will withdraw $3K(net)in each of these 6 months and will apply $1K to each month's budget OR we may just take $3K for the second quarter and nothing in the fourth quarter depending on how finances pan out in 2020.  After the third quarter(and that 401K withdrawal)we'll sit down and see where the finances stand at that point and if we "need" to make the fourth 401K withdrawal for 2020.

So basically over the course of the year we will withdraw about $26K from our 401K with only $12K(or less)going into our spending budget. It is more than we withdrew back in 2018 but about half of it will be to beef up the HSA for medical spending, which also lowers our taxable income and it earns almost as much in interest as if it was left in the 401K.  The other $12K will mean an extra $1K per month income in 2020 for our budget/spending.

*  Another point we talked over and decided to make a change is on phone service.  We currently have 3 phone bills each month-a cell phone, a landline and long distance service on the landline.  Our cell network is terrible some places so Hubs has refused to ditch the landline and that long distance service on it.  So we are shopping around for a new cell phone plan/provider.  I am hoping we can keep the new cell bill at the same rate as we pay for the combined 3 phone bills we have now.

*  We have more home repair/improvement plans in 2020(to get the house ready to sell in the near future)and we are earmarking the Slush Funds left to cover those costs.  The house projects are part of the 2020 Goals so I won't go into those on this post.

Ok, I guess I have rambled on enough now on our finances.
But like everything else in life, things change, and we will most certainly be revisiting where we stand later in the year.

So do y'all sit down and go over your finances on a regular basis?
Any good or bad surprises lately with your money?


Sluggy