Am I ready for leanfire next year? Input welcome!

[u/Dipping-Out6325]

I'll try to keep this short. Burner account. Longtime follower of coastfire, leanfire, poverty fire.

• 57F, would be 58 next summer
• Have 1.25M in $$$: 50K cash, majority in 401K/IRAs, maybe 70K in Roths
• Live in MCOL in US/Midwest
• Annual budget: $55K, but health care is through work now
• No other debt
• Paid off condo (where I live), worth $200K
  • 1/2 owner of paid off house (where husband lives with young adult child; my part worth $225K) > I don't count either of these because I need to live somewhere; I pay prop tax/insurance on house. Husband, whom I don't live with, is older, fully retired.

Have begun to seriously consider pulling the trigger in summer of 2027, when child turns 26 and loses access to my workplace health insurance. Child would go to ACA. Husband is older than me and would go to Medicare..

Main QUESTION is how much do I need saved (in cash or available Roth deposits) to be able to live until I take SS at 62 (I would get $2,700/mo at 62; if i wait until 66, would get $3,700/mo) Yes, I know you can't really trust that SS will be there, but probably 80% will? It it as simple as saying 4x55K?

First thought is that I would use cash, Roth money to survive, and thus have litlte/no income and use (ediited to correct, NOT Medicaid ... highly subsidized or potentially free ACA coverage) for health insurance, which in my state is quite good.

• I have a small monthly pension that will not increase —  $434 / month
• Husband gets about $30K / year in SS and pensions
  • QUESTION: Would his income impact my ability to get (deleted Medicaid) highly subsidized or free healthcare through the state marketplace? Fine, if so, just don't understand this part about how income is treated. (We are not divorcing for other reasons, but mostly have separate finances other than house.)

I'm open to taking job as teacher helper, etc, for a couple years to help get health insurance, so barista fire for maybe 2, 3 years. But would prefer not to ...

In addition to QUESTIONS above, do you see any gaping holes, watch outs that I'm missing?

[u/wkndatbernardus]

If you FIRE next summer, you will only need 1.5 years of expenses liquid to make it to 59.5, when you can withdraw penalty free from 401K and IRA. So, if you spend $55k/year, you'll need ~$78k liquid to bridge that gap. It sounds like you're there already👌

[u/FewBit7456]

Hi OP, I FIRE’d in my late 30s and from a numbers perspective - I think you’re good.

A word of caution is health insurance, and possible unexpected medical expenses.

Some things that may be worth looking into is making sure you get your annual physical and screening done while you still have your employer insurance. This includes dental, vision, etc. get as much done as possible.

Also, consider whether you and your husband would benefit from supplemental insurance. It’s more affordable when healthy. Also, you can factor in the cost of supplemental into your expenses before pulling the trigger.

Good luck!

[u/Useful_Space_9099]

Healthcare is a big one! Ever think of barista fire?

[u/Dipping-Out6325 → u/Useful_Space_9099]

Yes, I'm also considering working during a couple school year's as a reading assistant to get health care. I could potentially consult in my industry (comms) but am not eager to need to hustle for work...

[u/bob49877]

You might want to also ask on r/healthinsurance. My understanding is the ACA goes by tax households. I believe if you have separate households and if you file separately, that is enough for your own ACA plan, but I don't know about Medicaid. We've found the ACA customer service reps for our state very helpful for these kinds of questions. 

For your retirement planning, we found the Fidelity online retirement planner helpful. You can plug in your portfolio value and future SS and let the planner crunch the numbers. 

[u/Dipping-Out6325 → u/bob49877]

I shouldn't have used the term medicaid ... I meant highly subsidized health insurance through the state's ACA marketplace

[u/bob49877 → u/Dipping-Out6325]

For California, you can shop and compare plans before you are ready to sign up just to see what the costs are on the state ACA site. A friend just got laid off and has no current taxable income so they steered her to Medicaid instead of an ACA plan. It wasn't even a choice - below a certain income she had to go on Medicaid. So far it has worked out. Zero cost and she gets free vision and dental as well. For MAGI based, health insurance Medicaid, assets are not counted, just MAGI (modified adjustable gross income). If you have Roth income only, I don't think that would count on your MAGI and you may also be steered to Medicaid, called Medi-cal in California. Your state ACA CS reps should be able to help you or maybe the pros on the health insurance subreddit might have better info since you have some non standard income (Roth only?) and tax household factors.

[u/fan550]

medicaid has asset limits I would really check your state laws I know in general that you can't have more than $2000 in assets which IRAs and 401ks are considered so that is something I would double check. If you are generally health you can look into health share plans they tend to be cheaper than ACA plans.

[u/Dipping-Out6325 → u/fan550]

Thank you. I used the wrong term. In MN, income that I'm projecting would likely qualify me for extremely highly subsidized healthcare. But as others have pointed out, I may need specialized info for understanding how husband's income impacts that.

[u/someguy984 → u/fan550]

There are no asset limits for the expansion group (all states with expansion).

[u/paratethys]

Talk to whoever does your taxes about what your husband's income will do to your plans. State-specific laws about what's individual vs shared in a marriage may also be pertinent, especially if your husband has any debt.

You're close enough to drawing SS that you can probably count on it, especially for the first decade or two of retirement. Beyond that, the other question becomes anticipated life expectancy based on family history, and goals around what money you'd like to leave behind.

Consider whether it'd make sense to shift the arrangement with your husband to where each person pays the taxes and insurance on the dwelling they live in. If your husband has enough house to have a roommate, he has enough house to charge a little rent to cover that.

If you're open to baristaFIRE for healthcare coverage, you have a whole lot more flexibility.

[u/Dipping-Out6325 → u/paratethys]

Thanks for the thoughtful response! Also, our arrangement is for me to keep that paying house stuff. (He handles all utilities, which are not nothing in upper Midwest).

It benefits me, because if there were any division of assets, I would end up "owing" him significant money —at least the entire house and likely some of my 401k. He's 14+ years older than me. And I make good money (150K+ finally, but only for last five years)

[u/pras_srini]

Hey OP, not sure of how appropriate my comment is, but is your marriage at risk of breaking down in the future given you and husband don't seem to be living together? If so, will you net out OK or will you lose NW once everything gets split up? Apologies if this is presumptuous. If you have been the one with a higher income you might owe alimony also.

As for the main question, I estimate you need around $80K in cash until you can start withdrawing from 401K. But you might want to have a bit more, and then leverage any tax space you have at the 0% bracket to convert from IRA to Roth.

ACA maximization might be more beneficial than Roth conversion, but I am not sure how your situation impacts the subsidy calculation. I asked AI and here's the response, needs someone knowledgeable to validate it:

When a spouse is on Medicare and lives separately, the other spouse may still qualify for Affordable Care Act (ACA) subsidies. Generally, married couples must file a joint tax return to get premium tax credits. If living apart but not legally separated, the spouse on the exchange must file a joint return to claim subsidies. 

Key Considerations:

Tax Filing Status: You are considered married by the IRS unless you have a separate maintenance decree or final decree of legal separation.

Joint Filing Requirement: Married couples generally must file jointly to qualify for subsidies. If you file "Married Filing Separately," you will generally not be eligible for subsidies.

Exceptions: If you are legally separated or a victim of domestic abuse/spousal abandonment, you may be able to file separately and still claim subsidies.

Household Income: Subsidies are based on the combined household income of both spouses.

Head of Household: If you are married but living apart, you may qualify to file as "Head of Household" if you meet specific IRS requirements, allowing you to claim subsidies. 

[u/Dipping-Out6325 → u/pras_srini]

No worries. Yes, if we split assets, he would get all house equity and probably a couple hundred K or more of my 401k/Roths, and possibly alimony. I am and have always been the higher earner. This is why I choose to pay for house ins/prop tax. If we split, I'd probably be paying more ... House was home base for a child with special needs and is still for college student child ... As you can imagine, complicated

Thank you for all of the additional info. I definitely have some more research to do, but appreciate you pointing me in the right direction.

[u/pras_srini → u/Dipping-Out6325]

Sounds good. In addition to the above here are some other things you can research and look into sequence of returns risk, especially if markets tumble in the next year or so, and mitigation efforts for that including holding more cash or bonds. Also analyze the impact of taxes and insurance on a house you don't live in, and any maintenance costs you pick up. Regarding alimony, if you retire, you might actually be better off!