Friday, August 23, 2013

How I plan to win at the game of Yloponom: It’s all about bending the rules a little


UPDATE: This game-plan has changed! Click here to see how & why Smile 

Many moons ago, us kids had a Saturday evening tradition involving a ‘board-game marathon’.  I’d have the games already laid out in my room—stuff like Clue, “Which Witch is Which”, Monopoly (and a flavor-game of the week if we weren’t tired of playing by then). 

But when it came to Monopoly, my sister Shawn & I played by our own rules.  For instance, if I landed on Park Place I wouldn’t buy it—that was Shawn’s favorite property to own.  And the same went with her & Boardwalk, my sister let me have that one.  One night while watching us play, our older brother Duke said “This isn’t how the game is played, this is Yloponom!” 

Duke if you’re reading this—you’ll be happy to know that we still use your expression.  A couple weeks ago when I informed my sister that I’d both gained and lost 3 thousand dollars in my retirement account in 2 days, she said “Well, it’s all yloponom money to me anyway.”  Yep, to me too.

Anyway—I still have early-retirement sugarplums dancing around my head, so after a summer of reading up on investing, healthcare and retirement, here’s my “Five-Five Game”.  I’m writing it all down for future reference, but the rules can change at any time.

 1. I’ve GOTTA stay at my current company until the year I turn 55; if I don’t, this early retirement game’s over

I turn 55 in 2016. Why is that so important?  Because the IRS will allow you to begin withdrawls from a 401K without penalties the same year you turn 55 (without waiting to 59.5), provided you don’t leave the company before that year. (Click here if you don’t believe me!)

2.  But I can’t pull that plug on my work-computer until I have a minimum of 550K (in savings, personal investments & 401K combined).

Should I save even more?  Probably, and should I work until I’m 67 years old or I drop dead at my desk, whichever comes first?  Yes, but we’re not playing by the rules here!

 3. After I retire, I’ll still need to earn income annually until I turn 62.  (401K withdrawls count as earned income) 

I don’t want to tap my 401K early, that’s what my savings and personal investments are for.  But I’ll have to, for one reason:  Health insurance.  For a single 56 year old man, a good insurance plan currently costs approximate $7000.00 a year.  Under the Affordable Care Act, if I “earn” at least 12K a year I’ll qualify for a big reduction in insurance premiums.   (For states that expanded their Medicaid program, you’ll have to earn a higher amount to qualify for Obamacare.) 

But earn less than 133% or more than 400% of the Federal poverty level income level, you receive no subsidy, nothing, nil.  Click here for a subsidy-estimate calculator, it’s approved by Obama.

 4. When I hit 62, I’ll roll my 401K into an IRA, and forget about it

Social Security is now my ‘earned income’ for Obamacare coverage.  Supplement it with personal savings & give my remaining 401K balance a lonnnnng vacation!  

And hopefully over time it will earn back a little of that money I tapped from age 56-62.

5.  When I turn 65, wave goodbye to Obamacare.  Hello Medicare! 

I don’t have to worry about ‘earned income’ now.  I’ll continue supplementing that Social Security check with my personal savings (and maybe dip a toe in my 401K again if the level’s high enough).  I really need to leave that alone as long as I can, though. 

Hopefully, this so-called plan of mine will last me thirty years or so.  So what happens if I live past then?  Your guess is as good as mine!  

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