I’m retiring on my 78th birthday, have more than $200,000 in savings and share expenses with my 80-year-old boyfriend. Will I be OK?

Will I be ok for a few years? I don’t spend much and am very frugal.

See: We have $8 million saved for retirement, are in our early 50s and want to retire early, but are worried about healthcare expenses — what can we do?

Dear reader, 

This is definitely not the most popular answer to give, but the truth is — it depends. (At least it’s better than saying “no,” right?) 

Before you get discouraged or angry, know that there are many, many variables that go into determining if one will be secure in retirement. It’s also important to note that anything can change, and even people who have amassed a million dollars or more for retirement could find themselves in a predicament that forces them to go back to work or adjust their spending. 

Also note that we don’t have all of the numbers, nor do we have a solid breakdown of whether the figures you referred to were gross or net. Thus, as always, anything I write in this article will be a general starting point and I suggest you work with a financial planner (if only temporarily) to get yourself in a position where you feel comfortable and secure about your retirement. 

Also, know that your savings rate is absolutely phenomenal, and one to be admired. It is certainly not easy to save more than 40% of your salary at any age or income bracket, so be proud of yourself for that. 

Now to what you should know! 

There are many variables that go into whether or not someone will be “OK” in retirement. Your spending and your longevity will be two of the key components for your retirement security, said Kevin Gahagan, a certified financial planner and principal of advisory firm Private Ocean. For example, you asked if you would be OK for a “few years.” I’m not sure why you asked for a few years, but if it’s a question of longevity for you or your partner, that can really vary! Either way, if that means five to seven years, then most likely, yes, Gahagan said. “However, the longer the time period, the more uncertain that outcome becomes,” he added. Longevity is also one of those things people just cannot guess, although they may use family history and current health status to estimate. 

It’s great that you are frugal, if you’re doing it naturally and not because you feel you can’t afford another lifestyle. That being said, try to ensure that your future spending mimics your current spending, especially as you will be losing your greatest source of income. 

“If nothing changes for her or her boyfriend’s lifestyle, she should be able to make her savings and income last about 10 years given the necessary rates of distribution to maintain her current standard of living,” said Dana Menard, a certified financial planner and founder of Twin Cities Wealth Strategies. “That is going to be the driving force regarding her ability to not outlive her money.” 

Also try to account for the unknown expenses, or for the emergency situations. Healthcare is one of those things you need to realistically plan for. Healthcare costs have continued to rise every year, and it only gets more expensive the older a person is. Try to assess what those costs might be when figuring your future spending habits. “Healthcare and long-term care expenses can be quite expensive and can be unexpected, especially for a couple who is nearing their 80s,” Menard said. 

Beyond that, I’d like to touch on the investments you currently have. Because of your age, your investment goal should be “capital preservation,” Gahagan said. In other words, focus on fixed income — like bonds. 

Does this mean you shouldn’t have any of your investments in equities? Of course not. You do want that money you have saved to grow at a healthy pace, but too much exposure to equities could be risky. 

You might want to consider working with a financial planner, as I had suggested, or talking to an adviser at the firm that houses your retirement savings to discuss what investment options are available to you. For example, you may want to have some money in equities or growth-oriented investments (such as a stock index fund or real estate index fund), but that should be limited to no more than 20% of your total portfolio, Gahagan said. (Your total portfolio includes retirement savings and outside savings.) You will have to balance your fixed income and equity needs with your actual risk tolerance, and a professional could help you do that.  

Gahagan crunched some numbers, and assuming the figures you provided were gross (meaning before tax), he estimated that you might require a 12% withdrawal rate on your total savings. He did this by assuming your work earnings are $48,000, and then subtracting your savings rate of 41%, which leaves you with additional income of $28,000. 

Following is an example of one type of portfolio breakdown you might consider, and how it could work for you: 15% in cash, 20% in short-term bonds, 25% in intermediate-term bonds, 20% in long-term bonds, 15% in U.S. stock index funds and 5% in real estate index funds. That type of portfolio (which can be seen as 80% bonds, 20% equity/real estate) might (key word being “might”) generate a return of 3% to 3.5%, Gahagan said. With an assumed inflation rate of 2% in the future, a 12% withdrawal rate would not be sustainable and your assets would dwindle within a decade, or sooner. If you could reduce your withdrawal rate to 6%, you could double the amount of time your assets would last.  

Menard echoes the balance between fixed-income and equities. You don’t want to have too much exposure to equities, as that’s risky, but having nothing in that asset class while fixed-income investments are paying next to nothing could have your portfolio struggling to keep up with rising costs, Menard said. 

Another option is a single premium immediate annuity utilizing your retirement account, Menard said. This would provide about $1,000 a month in income, and with your Social Security, that’s about $29,000 of “guaranteed income” each year. (Just know there is a lot to understand about annuities, of which there are many types, so before pursuing one, brush up on what they are, how they work and which one is right for you.) 

Again, there are many variables that go into retirement security, and there are no guarantees with investments in any form. 

Check out MarketWatch’s column “Retirement Hacks” for actionable pieces of advice for your own retirement savings journey 

I just wanted to point out a few more things for you to think about as you make your retirement plans. 

First, keep in mind that you will be required to take minimum distributions from your workplace plan after you retire. You’d have until April 1, 2023 to take your first RMD, and thereafter the deadline would be the end of the year, said Eric Bind, a wealth adviser with Bond Wealth Management. You may want to take your RMD  in the year you retire so that you don’t have to take two in 2023 (one by April 1 and the other Dec. 31) — that delay could affect your tax liabilities. 

Another suggestion I strongly encourage: review estate plans, for you and your significant other. Look into healthcare proxies and financial powers of attorney, which would appoint each other to manage your estates in the event of incapacity, Gahagan said. You should also discuss who will act as the executor of the other’s estate when one person passes, as well as who the contingent executor will be if the first cannot act. You mentioned your boyfriend has a will, but you should make one as well, so that your assets are distributed as you intended. 

There are so many questions you and your boyfriend should seriously weigh. Bind had a few in particular: If one of you owns the home you both live in, what happens to it when one of you dies? If you don’t own the home, is there a plan for where to live that is affordable? Do you have each other’s names on HIPPA forms so that doctors will share sensitive information with the other person? How are your bank accounts titled, and will that money outside of the inheritance listed in the will be split? Are your beneficiaries and contingent beneficiaries on retirement accounts updated? 

Finally, while you are still working these next few months, why not try a test run — that is, practice how you’ll live in retirement, Menard said. “She should set up her accounts to provide the income she will be receiving in retirement,” he said. “This will give her the ability to see if she will be comfortable or if she may need to supplement her fixed income and will give her more peace of mind when her official retirement begins in less than a year from now.” 

I wish you the best of luck — and an early happy birthday. 

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