celticmoon Thank you so much for the plan outline. I have been thinking along these lines but never really put it on paper and crunched the numbers. I think your plan is as good as you can possibly make it with out a crystal ball. You are right about the unknown. How much will they reduce SS based on income? And how much we will have to pay for Medicare again based on income. We will have to use Medicare and buy a supplement. After all the research I did for my parents I have a pretty good idea how much it would cost today buy who knows what will happen in between now and the 3 or 4 when DH retires or in the future. I agree LTC insurance is to iffy at this point and would rather save that money than take a chance on it. If we live to be 100 one of the issues may be every day living expenses. We all have watched the price of food and most utilities double in the last 10 years. It still blows my mind to pay $4.00 for a loaf of bread or $5 something a pound for a tomato. We could also see our property tax skyrocket here in California. Some politicians would love to get rid of our Prop 13 that keeps property taxes from going up and up. After Joyful referred to my DH as being stupid for not paying attention to household finance in another post, he didn't know the whole story, I got to thinking about it so last month I told DH the bills were ready to be paid, money needing transferred, ect and ask him to do it. I had in the past told him I did most of it on the computer and showed him how to find passwords but really didn't think he paid attention. Guess what it took him all of about 20 minutes to do everything. He then said if I wanted him to do this every month I had better give him a key to our post office box. LOL Never even thought about it but in the 20+ years we have lived in the mountains he has never ever stepped foot in the post office. He now knows where the extra key is. So thanks Joyful for making me think. So all of you out there keep the questions and ideas coming. I can use all the help I can get in trying to think this through. At this point about the only thing I can think of that hasn't been brought up, not really a retirement issue but related, is pre paid funeral arrangements. Not terribly expensive but a great gift to the ones left who have to settle your affairs.

It's hard, but first off - relax. You don't want to be making any decisions when you're in a panic mode. It's just too easy to make mistakes when you feel vulnerable. No matter what, retirement and/or a change in life is always a leap of faith and when you've done your best to work out a smooth transition, it generally all falls into place. In no particular order: Make arrangements to have a talk with your 401k administrator even though retirement is over a year in the future; they're in the best position to discuss options with you. Once retired and no longer actively contributing to the plan (and having reached the age of 59 1/2) you can start either taking the 401k in monthly installments for X number of years to augment the SS payments, or withdraw some funds for a purchase, etc. without the customary 10% early withdrawal penalty and leave the rest to keep accruing until you must start withdrawing funds at age 70 1/2. If you're a member of AARP, they have a personal health insurance plan underwritten by United HealthCare Insurance Company (www.aarphealthcare.com) that might be worth looking in to. I'm always a little torn on life insurance; is that something everyone needs? With grown children, etc., does life insurance do anything more than guarantee funds to cover funeral expenses or provide a few dollars for the surviving spouse to get grounded once again? I have a life insurance policy as a benefit of retirement - and with no husband or children, all these assets will simply plow into my estate for whatever will be left for my heirs after my final expenses are dealt with. I've also made it known I want no funeral of any kind and only a simple cremation. I do have a spot in the family plot (we took care of the cemetery business as a family about 10 years ago) for my "cremains" when the time comes - hopefully, many years from now - and will arrange in advance for my footstone to be placed and for my heirs to have the dates chisled, etc. Have all your legal documents in order - seemingly a less taxing factor while still actively working: wills, Trusts (Trusts are such beautiful instruments for avoiding probate), Powers of Attorney, End of life Documents, DNR's, No CPR's, up to date lists of beneficiaries, lists of assets and where they're located. These things have nothing to do with what is generally considered to be in the process of retirement, but they do tend to get put aside to be taken care of later. Sometimes "later" happens and people are caught unprepared. And I've dealt with a few elerly relatives who left messes behind because they trusted when the time came everyone would "do the right thing". Wow, if they only knew how much time and energy went into doing the right thing...!!! Keep track of your expenditures for the next year or so, no matter how small - it gives you an idea if a corner needs to be cut somewhere or if you're sacrificing some enjoyments in favor of saving. Some things will always be beyond your control - like inflation, the cost of utilities, gasoline, health care, home insurance and property taxes. Is this a time to start using some of the things you put aside for future use - like the nice table cloths, dishes, silverware, glassware? Time to declutter, either finishing or dicarding the old projects laying around? Too many old books you won't reread, old clothes shoved to the back of the closet? These things don't necessarily help with finances, but decluttering is liberating and frees you up for what you're really interested in doing. And some traveling and fishing and spending time with family sounds pretty good.

Maybe a fund of about $1.333 million at about 3% would be a more feasible scenario. Not providing for sale of some assets, rather probable in a 1.5 - 2 million or larger asset portfolio situation (some paying almost no dividends or none), which would result in capital gains/(losses) to relate to current income. In earlier years, if one received $10,000. of dividends from Canadian Corporations, one added (Grossed-up) 25% to that figure to find the taxable amount of dividend income, to report $12,500. on the tax return. Then 13.333% of that amount, or Dividend Tax Credit of $1,666.63 was deducted from the tax that one owed. Non-refundable tax credits were available to most taxpayers, and those along with the dividend tax credits, allowed "taxpayers" with no other income to have about $27,000. solely dividend income to have nil tax to pay. Now this situation is called "Ineligible dividends" and the ratios are as indicated above. A new category of "Eligible dividends", which seems to include dividends paid by most stock-exchange-listed Canadian corporations, are grossed up by 45%, i.e. $10,000. cash is reported as $14,500. on the tax return - and have a Dividend Tax Credit of 18.9655% of the taxable amount, or $2,750. deducted from the tax owing. This, added to the Non-refundable tax credits, allows a "taxpayer" to have nearly $40,000. before becoming tax-liable. Which may be pushed higher in various other circumstances that I think that I outlined above. Most long-term Canadian residents, including non-employed people (e.g. housewives), qualify for Old Age Security at age 65 of about $5,800. annually. As this is a non-contributory Federal benefit, if the taxpayer's annual income is over about $55,000., part of that Old Age Security is clawed back by the gov't. The clawback amount increases, till the total amount of one's O.A.S. is clawed back when one's income is in the mid- to high $80,000.00s. Cash dividend of $40,000. plus 45% becomes $58,000. on tax return, plus $5,800. O.A.S., close to $64,000. taxable, will result in substantial clawback of one's O.A.S. benefit. Plus reduction in senior's Age credit, which reduces with increased "income" - whether "real" or "imagined" income! "Gross", huh? Canada Pension Plan (mandatory contributions by both employer and employee, therefore a contractual benefit) allows members who are "substantially retired" (rather loosely defined) to stop contributing and begin to claim benefits at any time between age 60 and 70, with 6% annual reduction if claimed under 65 and 6% annual addition if over 65. Taxable. Private pension plan benefits are available to some people. Benefits of up to $1,000. from private pension plan or RRIF payments qualify one for a non-refundable tax credit, dollar for dollar, up to $1,000. If one is age 69, partial owner (the government being the other partial owner) of a tax-deferred retirement account (RRSP), it must be closed out by the end of that year - or the rules provide that it will be closed out as of Dec. 31 of that year and the total amount added to income in that year. Scarcely anyone chooses this route!! Most personal money managers prefer to use the RRSP money: 1) to buy an annuity (not so hot an idea in these low-interest times), or 2) to roll over into a Registered Retirement Income Fund. With a RRIF, no more deposits allowed, and required to remove at least a given percentage annually, beginning at about 7.5% and rising to 20% annual withdrawal at age 90 and later. Residue in a RRIF on owner's death: if no spouse, infant or disabled dependent kid is added to deceased's income in year of death, or can be fully transferred to one in spouse's name with no tax consequences - yet. Residue is added to current income in year of surviving spouse's death. Where these or other income situations are obtained, the tax reduction is still substantial - but one doesn't avoid tax entirely: one is then a taxpayer (no quotation marks)! There are some other games that an astute portfolio manager can employ, if she/he is willing to a take some moderate short-term risks. There are several fairly smart women in the monthly investment shareclub that I've attended for about 7 years. Good wishes for wise and constructive use of retirement assets. ole joyful

Hi again Jimbg, I imagine that you've had some interesting thoughts regarding your retirement nest egg during the last half year or so. I hope that you have not been so smitten with fear of the stock market that you've decided to stay out of it. There are losses suffered from time to time, which can be substantial ... but over the long term, carefully chosen stocks, ETFs, etc. have produced well for their owners. As have mutual funds ... but, despite their substaial claims to superior performance, about 85% of mutual fund managers are unable to produce a higher rate of return than their chosen portion of the market. As you encourage your friends to start a retirement plan, you can follow a savings plan that's specifically geared to setting up a payout system during one's retirement, but many choose to carry investment accounts that are not geared toward retirement, as well. If one chooses to build a regular investment program, with a view to having it available to fund one's retirement, though unwilling to be tied up with the restrictions that govern retirement accounts, there's an extra benefit that can be used during one's lifetime. When I own a number of stocks or mutual funds, I can have the certificates issued to use as collateral when I make loans, often allowing me to pay a much lower rate of interest that if I must use other kinds of collateral. For example, if I want to buy a car and use the car as collateral, if the lender wants to repossess it in case of my delinquency, there's a hassle to collect it, then advertise it for sle, or go through a brokerage, which charges fees, etc. and they must wait for their money ... plus, if I didn't take good care of the car, they may not be able to collect all of the amount owing, plus costs. So they usually charge high interest rates on such loans. If, however, one has some stocks or mutual fund certiicates to use as collateral and isn't able to pay, it's fast and easy to liquidate the stock or mutual fund collateral, so the borrower almost always enjoys a much lower rate of interest on the loan. Should one have an emergency, it is a great help to one's financial and emotional well-being if one has some assets on hand to either liquidate or, perhaps more frequently, use as collateral to make a loan to cover the need, and the interest rate will be advantageous. Such a cushion helps a great deal in case one suffers long-term layoff, as many have experienced in the past few years. When one uses money that one had planned for retiremen for either an emergency, or to fund one's living during long-term layoff, one should make a strong effort to replace the money withdrawn, plus allowance for inflation, when one's financial stability is restored. Good wishes as you proceed with your plans ... and encourage others to do the same. On the day that you began work, you had brains and hands at work ... but no money. On the day that you retire, you have brains and money at work ... and no hands. If you've set aside a substantial amount regularly over the years, and learned how to manage it for a reasonable rate of return, plus some tax savings, you may well have developed enough assets in order to provide you with sufficient money to retire early. Good wishes for increasing skill in managing your income and assets. ole joyful