On this Christmas Eve, I’d like to wish you and yours a Merry Holiday and a very Happy New Year in 2014!

It’s best to approach retirement with a good road map. Having a well maintained vehicle to get you through the rough patches is also advisable. Good retirement income that increases more than inflation and taxes is the keystone of your financial plan. Each part is manageable, but taken as a whole, it’s a big step. It really sounds daunting to the casual observer.

A neighbor who wanted to make the retirement plunge in January 2014, got to the edge and stepped back. “I don’t think I’m ready.”, he told me the weekend after Thanksgiving. We set up a time to meet and go over his plans.

We went over his healthcare. He had signed up for private healthcare that would supplement his company’s retirement health coverage. We checked to be sure that it was “Affordable Care Act” approved and checked all of the boxes. He had signed up for it in 2012 and it had a two year waiting period on some of his health care pre-existing conditions. His company’s retiree plan was going to be available until January 2016. All of that looked good.

We went over his 401k and pension benefits. I have to say his pension was pretty good. A lot better than mine. But then he was older and pensions are age based. The older you get, the less time you will live and the higher the benefit. Still, it looked pretty good.

We looked at the guaranteed monthly income from the pension. We multiplied it by 12 to get an annual amount. We took the annual amount and divided it by his pension lump sum (if he took it in cash) to get an idea of what interest rate the insurance company would have to get to pay out his benefit. I’ll call this “his guaranteed pension rate”.

We looked at what he made in his IRA accounts this past year and compared it to “his guaranteed pension rate”. He had done a 401k withdrawal a few years back and rolled it into a qualified IRA. His 401k rollover made 17.82%. His Roth made 17.27%. He got a little nervous last summer and went to all cash in both of his accounts. He was following my recommendations from July, 2012 through July, 2013. So the 17.82% and the 17.27% was the result of 12 months of investing.

His earning for 12 months in his investment accounts beat the pants off the guaranteed pension he would get at his company. He agreed that his income would be going up every year. And everything, taken a piece at a time, looked like it was fine. But he was still nervous.

What it really came down to was the health insurance part of the plan. He was going to wait for another year to see how the “Affordable Care Act” was going to contribute to his well being or be the monkey wrench that would cause him to go over a cliff.

I understand perfectly. The “Affordable Care Act” wasn’t even a thought when I retired and I could not have foreseen it. As it turns out, it doesn’t affect me or my family.

You may need more time as you approach your last day at work and your first retirement day. We’ll spend more time in the coming months going over the steps you need to take and help you navigate your way to taking early retirement.

Thank You!

For Taking Early Retirement (TER), I hope you are enjoying a great retirement or are close to that day!

Jeremiah John