Despite the odds, the situation has changed for the better. My original burn rate estimate has been archived.

Note: my original budget was $500/mo but in 2024-2025 inflationary pressures pushed it closer to $600/mo.

Me thinking out loud about my financial situation.

before Feb 2028 (age 62)

Meet expenses with VA disability compensation. Should no longer have to draw down 457 or savings to make it through the month although it make sense, tax-wise, to do so.

The numbers below describe non-taxable benefits (VA), half-taxable income (social security) and taxable income (state pension).1 going to describe amounts deposited in my bank as income even though VA payments are nontaxable compensation rather than income proper. Let’s call this income level 1x, where x is my present income. .

No tax burden because VA disability is not taxable for the reasons given above. I should probably spend down the 457 before taking SS to avoid the possibility of getting dinged. 457 withdrawals are income proper but it’s only about $10k so I should be able to absorb that in a calendar year.

tax ramifications

$0 tax burden. Trivial taxable income from interest and hobby income under the $12k exemption limit

May 2028 - early Social Security

I’ve run the numbers before and for my expected longevity it’s a wash to take it early or wait. I ran the model at Open Social Security suggested an optimal strategy (based on present value:

file for your retirement benefit to begin 5/2028, at age 62 and 4 months.

EARP says:

The earliest you can apply for Social Security retirement benefits is four months before the month you want your benefits to start

So file in Feb 2028 to begin in May. 1st check would actually be on the 10th since my birthdate puts me in the second Wednesday cohort.

I am not an economist but it falls within my earlier back-of-envelope guesstimates. At this point cash flow is 1.61x

tax ramifications

$0 tax burden. Earlier trivial income + half of SS still well under the $12k exemption limit)

state pension at 65 (2031)

+$585.93 if I collect 50% of it, with the remaining 50% percentage inheritable in perpetuity (reduced to account for her longer life expectancy) by my daughter.

Income is now 1.90x

tax ramifications

~$366.74 in taxes annually. Taxable income is now $3056.16 over the $12k exemption. Looks like the overage will be in the 12% bracket.

Theoretically the SS could be reduced 1:2 for income received before FRA. It might only apply to earned income, but in any case my pension income would be less than the $23,400 limit that would trigger the reduction.

timeline

  • 2025 (59.5yo) 401k no longer dinged for withdrawal; use at will. Spend down to asset limit if required (Roth IRA?)
  • 2026 (60yo) set up Escapees residency {completed}
  • 2028 (62yo) early SS2
  • 2031 (65yo) state pension (2/28)
  • 2031 (67yo) FRA
  • 2039 (73yo) mandatory 401k distributions, if any remain
  • 2049 (83yo) dead

  1. there is also taxable hobby income from affiliate links on the RVwiki hobby project. Future annual amounts will likely be in the $500 range so they probably won’t push me over the $12000 personal exemption limit. ↩

  2. I was married for >10 years, and it is conceivable that my ex’s SS benefit will be ≥2x mine. So it would be smart to check. Claiming a spousal benefit does not affect their benefit in any way. I am reading reports that the SSA sends letters to folks who are eligible for spousal. Maybe only if it’s more than one’s own benefit? ↩

Updated: