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

Income & Spending Report....February 2018

Now that we are living on an annuity(like a pension) and 401K$ withdrawals(retirement savings), I am still going to keep track of our monthly spending and income, and hopefully we'll still be able to live BELOW our means and I'll have some leftover monies each month to tuck aside.
But this money leftover at the end of each month, at least for now(as we find our new financial "normal")won't be saved toward a yearly Savings Challenge.

The issue now is to cover all the bills with these two sources of income and not have to dip into the regular savings(that I built over the last 10 years)to pay our month to month expenses.

Got it?
OK, let's move on.

On to the February 2018 report--

I had 2 goals for February......
The 1st is to actually finish the month in the black and not the red.
The 2nd is to try to have a little cash leftover at the end of the previous month to tuck back into a slush fund.  This slush fun may be to apply toward unforeseen bills that are coming due in subsequent months, to spend on "extras/wants" during the year or to just sit there and grow until the end of 2018.

I have to report that we finished up February in the black.
The extra amount we ended the month of February with?.......$9281.68

Income

The income in February---
* Monthly annuity payment of $3173.13(after tax withholding)
* RMSA(Healthcare account)reimbursement of $1813.48
* January overage of $4604.28 that carried over into Feb. 2018
* One third of 401K withdrawal balance for Feb. of $851.10 ##
* Interest earned on non-retirement accounts of $327.54

Total Income for February......$10,769.53

## The balance of the 401K withdrawal($2553.31)got divided by 3 and gives us $851.10 in January to add to the income for the month(Feb. and Mar. will also get $851.10/$851.11 respectively)for general expenses.


Expenses in February---
* Healthcare Premium for February was $1813.48.
* Variable Expenses in February came to $2533.13.
* No Irregular expenses were due or paid.

Total Expenses for February......$4346.61

$10769.53-$4346.61=$6422.92 overage for February.
Add in the Sinking Fund(carryover from Jan. since no irregular bills were paid out of it)of $2858.76 which leaves us with $9281.68 total to carry over into March.

Outgo

As for the expenses this February, here are the good and the bad side of things....

HERE are the GOOD THINGS

*  Phone charges and internet were approximately the same as last month(Within $1 or so).
*  The electric bill was $83.90 lower than January(thank goodness!)
*  The gas card charges were $35.51 lower than last month.
*  The credit card bill was $1122.22 lower than in January.
*  The cash WAM withdrawals was $50 lower than last month.

HERE are the BAD THING

*  The water bill was $6.70 higher than in January.
*  The LA house electric bill was $30.41 higher than last month.
*  The medical payments were $365.79 more than in January.
*  $150.76 was due on two store charge cards.  Not bad or an unmanageable amount as these were much needed items(clothing)and priced right.

The Food Budget costs for February are in another post, which is located HERE.

So we end February in the black with $6422.92 in general overage.
The Sinking Fund goes into March standing at $2858.76.
Added together that gives us a cushion of $9281.68 for March.

FINAL THOUGHTS on February---No big charges I didn't know where coming in February and the "usual suspects" aka the variable bills were pretty low.
What I consider our "income" was the annuity and the partial 401k withdrawal of $851.10, so $4024.23 "income" for Februrary.  The Feb. bills(without the Healthcare premium which is covered fully by the RMSA refund)were $2533.13 so we had $1491.10 leftover from "income" when the month was over.  If we can cover the bills(variable and irregular)each month with "income" leftover, our overage will continue to grow into the succeeding month.

THOUGHTS going forward into March 2018----This month has 2 different irregular bills due; Real Estate taxes and the annual Sewage bill but we have enough in the Sinking Fund to cover those fully(plus a little leftover too).  As for variable bills-The credit card bill will be higher than I like due to Hubs trip to LA to take care of some house business there and Medical bills will be lower I'd like to say but we have some pending bills still to work off the deductible....after March this line item should settle down a lot.  If the weather stays milder(knock on wood!)the electric bill will see a reprieve. Unless Murphy happens we should be able to stay under our $4024.24 "income" for March on the bills.

Financially boring months are great. ;-)

So how was your February financially?
  

Did you spend less than the income you had in February?
Did you stay within your budget or not?
What did you do with any money leftover at the end of the month?
Did you pay off any debts or put extra toward your mortgage principle or into savings, in an emergency fund or a retirement account?
Or did you blow it on a want?

If you posted your financial progress on your own blog, leave a link in the comments so we can go check out your progress too and celebrate or commiserate with you!

Make this year was the one were you clean up your finances and pay off your debts.
Plan to set something aside if you didn't already or increased what you have banked now for your future self.
Or pay extra on the principle of your mortgage if your house isn't already paid off.

Live below your means and keep some change for a rainy day....because no matter how sunny it is in your life now, dark clouds come along and you'll be glad you have that umbrella to keep you dry.

Sluggy

The Money Going Into Retirement

If you've been reading here for awhile you may remember the post I did back in September 20115 about our big Retirement Meeting.

Since Hubs is leaving work on June 30th(7.5 weeks and counting!)I wanted to see/update what funds we will have to support us at that date into our "Golden Years".

Let me also preface this accounting by saying we have a paid for house and two paid for cars so none of this money needs to be spent on either in retirement(at least not for cars for awhile).


* Pension account--Approx. $443,240 will be in that account on June 30th.  We ares buying an annuity with this money which will give us an income of $41,004 per year.  If Hubs dies I get 75% of that amount, or $30,756 per year. Once we've passed the 10.8 year mark we'll be paid on the company's dime as that is how long that pile of money would have lasted if we had just drawn down on it at a rate of $41,004 per year(ok, maybe a little longer due to interest accumulating).

* Retirement Savings--$500,000.  We will drawn down monthly on this until we hit full Social Security.  At that point we will stop and still have $385,000 in this account.  Due to it still growing while drawing out of the account we'll still have 77% of what we started with in there at the retirement date when we stop drawing from that fund in 2024.

* Cash & Regular Savings--All together this comes to $368,000 now so will be a tad more by June 30th but a chunk will be used to pay College Boy's tuition next semester so we'll have about $360K.

* HSA account--When Hubs leaves June 30th there will be $12,923.83 in that account.

* RMSA account--This is the retiree medical savings account with which we can pay for retiree health insurance until we hit Medicare age.  It will have approx. $99,000 in it.

* Personal Day Payout-Hubs will have personal days he can cash out when he leaves.  At his pay rate that means another $4,500 in cash.

* Stock-Hubs has a moderate amount of company stock he earned when his firm went public in 2001.  He will cash it out which means about $9,000 more in our accounts.

* Add in to this mix that we still have a home and property in Louisiana we will be selling sometime this year(I hope).  We hope to clear a few dollars after that sale but at this point we don't know how much this sale will add to our coffers.



So the plan is that we'll have annuity income starting in July of $41K yr. and will tap some of our 401K$ until Hubs hits full SS age.
Between the annuity and 401K withdrawals or SS we'll have $70K yr. to live on pre-tax.
In addition to those income streams we will still have over $350K of regular savings + $385K left in retirement savings).
Once I hit full SS age the annuity/SS mix increases to $82,836 yr.(+ what's still in the nest egg accounts).

Last year we spent just under $46K total of our take-home income to "live".  That's paying for everything except-term life insurance payments, healthcare insurance payments and long term care insurance payments which all came out of the paycheck before we got it.

After figuring that last year we paid $8K OOP for healthcare co-pays + a $3K high deductible OOP before benefits kicked in, $11K of that $46K was medical spending. 8-(  We actually spent $35K for living expenses in 2016(outside of medical things).

Once retired the life insurance payments go away(unless we elect to keep life insurance on Hubs....doesn't make much sense though as it was kept on him as he was the breadwinner, but once he retires we aren't "protecting" potential income).

The health insurance payments/premiums once retired will come out of the RMSA account and it should just about cover that expense until we hit 65.(If it doesn't, and who can know right now with the ACA upheaval, we can always take some of our non-retirement account funds or some retirement account funds to cover the extra...plus we have the HSA with almost $13K in it as of June 30th.)

The only one of these three medical expenses we need to cover in retirement out of our two income streams is the long term care premiums.  Currently long term care premiums come to just under $1800 a year so this expense can be absorbed into our $70K year annuity/retirement account draw down income easily.  We know full well that long term care premiums will rise as we age though so we'll be sure to be cognizant of that expense rising over the years and make adjustments in how our financial resources are divided up so we can still cover this expense.

So add $1800 to the $46K we spent to live in 2016 and we are around $48K in yearly expenses that need to come out of our potential $70K retirement income starting July 1st.

Once we take out withholding/taxes on that $70K yearly income we will actually have $60K+/- a year net income to live off of.  Of course for 2017 this won't apply as we will have Hubs working income for half the year and living off of asset income the other half so our "income" and tax bracket will be much higher.  The first 6 months of retirement will be different financially from the rest of the years ahead when we are retired.

Once we get into 2018, if we keep our spending at where it is now, pre-retirement, we will have a nice cushion each year for any unforeseen expenses leftover from our income stream.  This doesn't count the Personal and Non-retirement Savings/Cash pot, the potential Stock Sale revenue, the cash out of Personal Days when Hubs leaves and the proceeds from the sale of the house in Louisiana which will mean additional infusions of cash into the non-retirement kitty.

I really don't see us reducing our living expenses short term due to College Boy still being on the "family payroll" for another year and Daughter living at home until she finishes her degree.  While Daughter's expense on us is not large(we feed her and she doesn't kick in for rent or utilities while in school)her being here still costs us a bit in higher electric and food bills.  She pays her own car insurance, car gas and maintenance, cell phone bill, dog expenses, clothing expenses, etc. and any extras she wants, she pays for(liquor, vape, nights out).
Come to think of it, outside of college expenses we really don't spend money on College Boy either.....maybe some clothes now and then but that's it.

Ok, this has become very long and tedious and I'll bring it to an end.

If you see anything I have missed do let me know but overall, I think we are going into retirement in a strong financial shape.  8-)
*Sluggy pats herself on the back.....


Sluggy