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43- To Quit or Not to Quit- and when...
Old 01-20-2016, 07:24 AM   #1
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43- To Quit or Not to Quit- and when...

I am new to this forum- and grateful for it. Nearly everyone I mention that I'm retiring thinks I'm off my rocker. So here is the situation. I am 43, my husband is 52. We have enough to retire now- I know this because I am a financial advisor. We have 1.5 mil in securities and we spend about 60k per year. We save a LOT- 40% of our income usually. We have no debt. I had planned on retiring at 1.5 mil, my husband said he'd rather have more than that (2 mil so we can live on 3% instead of 4%), but he doesn't want to retire anyway. I don't care if he retires, he has a contract work sort of job and can accept jobs or not depending on his schedule. I bet he'll slow down when I do. We should reach 2 mil in 2-3 years, depending on the market and our normal savings.

My company (where I have worked for 19 years) has come up with a retirement package that is generous- VERY generous. Its about 4 years pay for 2 years part time work. (this works out to be somewhere between 500 and 600K in today's pay, but I may make more in 4 years) But to get it I have to stay 4 more years, till my 48th birthday. I have middle school aged kids so I can't travel much anyway at the moment.

My job isn't horrible, and my hours are very flexible, but its stressful. While I am great at what I do, my heart isn't in it anymore. My company which used to be a pleasure to work for has become a pain in the butt.

So the upside to staying 4 years is I would not have to argue with my husband about whether we had enough money to go to Europe- by that time even with modest market returns our money would be double what we had planned. Also I'm having a hard time leaving a half million dollars on the table even though we don't need it. Any thoughts?
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Old 01-20-2016, 07:30 AM   #2
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Lots of reasons to hang in there and put the icing on your retirement cake.

Is it "all or nothing"? Can't you take it one day/week/month/year at a time to see if a full four years additional is actually necessary to get you where you want to be?
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Old 01-20-2016, 07:38 AM   #3
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You go girl! (Sorry, couldn't resist)

Welcome to the forum.

A few questions and thoughts. First - awesome job reaching that level of nest egg at your young age. If your plan is based on 4% return, I'd be a little concerned given the long horizon of your retirement. The studies that showed 4% as safe for 95% of the time also assumed a 30 year retirement... You will likely live longer than age 73, so a more conservative WR is in order.

Does your spending include taxes and healthcare? You're in a similar lifestyle point to me - except I'm 10 years older... I have 2 middle age kids, college in their future, hopefully, and me paying for their healthcare at least through undergraduate school. I thought I was frugal with a budget of $84k all in... Healthcare is a big chunk of that.

The part time gig seems like a pretty good deal. I understand wanting to retire NOW. I was there. But I was on the hairy edge of being ready, financially... I hung in for a few years, then pulled the plug. I'm now a lot more confident.

If you haven't seen this thread, it's a good read to make you think about the issues.
Some Important Questions to Answer Before Asking - Can I Retire?
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Old 01-20-2016, 07:40 AM   #4
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Yes I could, I'm just an obsessive planner (comes in handy with my job). Also the market is rocky at the moment, which makes my job thoroughly un-fun, and daydream about retirement.
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Old 01-20-2016, 07:49 AM   #5
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Rodi- its a LOT more expensive to live in CA than AL! Healthcare is about $7200 per year for us now, and if our spending drops, we'll switch to Affordable Care Act healthcare which should be no more than 10% of our income- so the lower we keep our income, the lower our insurance. We're living on 60K now, and healthcare is included in that, but i have to admit I am having a hard time figuring the taxes. Our taxes are currently ridiculous. I have been to CPAs about estimating taxes in retirement and no one seems to be able to give me any kind of estimate. We will have quite a bit of income from stock dividends, which should be free if we can stay under 75k per year and in the 15% tax bracket. My husband is the unknown quantity- if he really doesn't quit, he's going to mess up all my tax planning. On the other hand, we won't have to worry about drawing our assets down!
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Old 01-20-2016, 07:50 AM   #6
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You're right- I should wait. Sigh...
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Old 01-20-2016, 07:56 AM   #7
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, but i have to admit I am having a hard time figuring the taxes. Our taxes are currently ridiculous. I have been to CPAs about estimating taxes in retirement and no one seems to be able to give me any kind of estimate. We will have quite a bit of income from stock dividends, which should be free if we can stay under 75k per year and in the 15% tax bracket. My husband is the unknown quantity- if he really doesn't quit, he's going to mess up all my tax planning. On the other hand, we won't have to worry about drawing our assets down!
People typically overestimate the tax burden in retirement. How much you have in after tax vs tax deferred accounts is key. Instead of asking someone else, why not just do some "what-if" scenarios your self using turbotax?
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Old 01-20-2016, 08:53 AM   #8
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you're a FA - crank through some spreadsheets
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Old 01-20-2016, 09:28 AM   #9
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Rodi- its a LOT more expensive to live in CA than AL! Healthcare is about $7200 per year for us now, and if our spending drops, we'll switch to Affordable Care Act healthcare which should be no more than 10% of our income- so the lower we keep our income, the lower our insurance. We're living on 60K now, and healthcare is included in that, but i have to admit I am having a hard time figuring the taxes. Our taxes are currently ridiculous. I have been to CPAs about estimating taxes in retirement and no one seems to be able to give me any kind of estimate. We will have quite a bit of income from stock dividends, which should be free if we can stay under 75k per year and in the 15% tax bracket. My husband is the unknown quantity- if he really doesn't quit, he's going to mess up all my tax planning. On the other hand, we won't have to worry about drawing our assets down!
If that is the case then you need a new CPA. You can easily use Taxcaster to do a proforma return as if you were retired. Start with your current return.. take out your earnings since you won't be working... add in any tax-deferred withdrawals you will be making and make any other necessary adjustments (for example to your medical deductions to change your health insurance premiums) and you'll have your answer. If you will be selling taxable investments you will need to add in an estimate of capital gains on those sales (I did it based on current unrealized gains).

You can do a version as if just you retired or if both you and your husband were retired.

We went from being in the 28% tax bracket while working to 0% when I retired because my earnings were no longer and our qualified dividends and LTCG were at 0% since our other income put us in the 15% tax bracket. We do Roth conversions to fil up the 15% tax bracket at about a 8% tax cost vs 28% or higher when we deferred that income and an estimated 25% once SS and RMDs start.
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Old 01-20-2016, 09:33 AM   #10
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I assume you have the numbers crunched as your an FA and that you have priced out and know what your dream trips will cost and that is budgeted for. I personally wouldn't count on the ACA.

For me, your situation may be more emotional decision than financial. Given your talking part time work, I honestly don't think I could ever walk away from it as you'll still have more time to spend with your kids and it will keep you busy until they graduate and you can travel. Its hard to walk away from guaranteed money that will ensure you can cover anything that comes along.

I've had a few too many friends that they had to help their kids out with unexpected costs in college, then they didn't get jobs right away out of school so moved home, then helped with buying a few things for their first apartment, then came the wedding, kids couldn't get pregnant (so parents helped with costs of fertility/adoption). Everyone has their own philosophy on how much they are willing to financially support their adult kids and that would probably make my decision on if I stayed or not . Its usually not the planning for yourself that's an issue, its the planning for the next generation and for some reason the guilt we feel over not being able to help more, when we had the chance since in this instance you have a very clear deal on the table. (note, I was on a retention bonus for a job that was killing me, my driver for more was my parents, not my kids who at the time could not afford to retire and would not have been able to handle health care costs thus I continued to work just in case and quit only once I knew they would be ok).
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Old 01-20-2016, 12:50 PM   #11
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Rodi- its a LOT more expensive to live in CA than AL! Healthcare is about $7200 per year for us now, and if our spending drops, we'll switch to Affordable Care Act healthcare which should be no more than 10% of our income- so the lower we keep our income, the lower our insurance. We're living on 60K now, and healthcare is included in that, but i have to admit I am having a hard time figuring the taxes. Our taxes are currently ridiculous. I have been to CPAs about estimating taxes in retirement and no one seems to be able to give me any kind of estimate. We will have quite a bit of income from stock dividends, which should be free if we can stay under 75k per year and in the 15% tax bracket. My husband is the unknown quantity- if he really doesn't quit, he's going to mess up all my tax planning. On the other hand, we won't have to worry about drawing our assets down!
CA is more expensive if you have a mortgage or rent... but we have a paid for house and low property taxes thanks to Prop 13. Some things are more expensive (gas for the car, for example) but some things are less expensive - HVAC - not used as much as other climates.

Since I've only been retired for a year and a half - and that first 6 months didn't reduce my taxes very much since I was working the first part of the year, I'm still figuring out the tax thing. My first pass (pre-documents, but based on fairly accurate records) I'm getting a HUGE tax refund... largely because we paid full freight on an ACA plan, and will get the tax credit back in the form of refund, rather than premium subsidy. I wish I'd started Roth Conversions this year. The reality is closer to what my 'planning runs' with turbo tax and taxcaster predicted... but I was too afraid to assume that.

On the health care front - remember that rates go up with age... My husband's insurance at age 64 is as much as mine and the 2 kids combined. Fortunately, he'll go on medicare next year which will save some $$. (We have a similar age difference - but are 10 years older.)

Trust me- I get where you are at wanting to quit/retire and being super close. I was there. Part of me wants to scream "Do it!!!" If you've run the numbers and are comfortable with the risk... go for it... Especially if you're willing to adapt if there is an extended downturn, taxes and health insurance is higher than you think... cut extra expenses, pick up part time work... be agile and adaptable as one of our long term posters likes to say.
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Old 01-20-2016, 01:06 PM   #12
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There's no right or wrong. You can quit now if you want. Everyone seems to have the OMY sickness. Don't give in to the OMY sickness - just don't. With $1.6 M, you can call it quits right now.

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You're right- I should wait. Sigh...
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Old 01-20-2016, 01:07 PM   #13
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In your shoes, I'd stick it out for the 33% increase in already significant invested assets in just four years and retiring for good at 46 (still really, really early!). That buys a lot of security and the ability to no longer wonder if you have enough to do X, Y, Z and it doesn't sound like you dread your work everyday, maybe just that the market downturn has you down a bit. It's never made sense to me to retire super early if you're going to have to really stretch a budget. IMO, if I can get out before 50 and never question a trip to Europe for financial, I'll keep working. (Hopefully it's somewhat before 50, but that's kind of the line in my head anyway!) To each their own!
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Old 01-20-2016, 01:35 PM   #14
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I'd probably work part time if you don't hate your job but feel like it's just not fulfilling anymore, especially if your husband might work on and off as well. Perhaps the extra free time will allow you to transition to FIRE gradually. Can you change you mind after 6 months or a year of PT and retire if you feel like it?

Oddly enough I'm 43 and left work with a $1.6M portfolio last year, very similar to you. The most I've ever spent in my life is $43K in a year and usually I spend $35K so I'm below 3%.
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Old 01-20-2016, 01:58 PM   #15
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Freq flyer- No the part time thing is part of the retirement package so you can't do it indefinitely. You work part time for two years basically to introduce your clients to your replacement then you stop coming to work but they continue to pay you for 2 more years.
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Old 01-20-2016, 01:59 PM   #16
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Freq flyer- No the part time thing is part of the retirement package so you can't do it indefinitely. You work part time for two years basically to introduce your clients to your replacement then you stop coming to work but they continue to pay you for 2 more years.
sounds like an override commission - man I'd like to have those....
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Old 01-20-2016, 02:16 PM   #17
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Big- hitter-. Its basically selling your book of business. Same thing when you sell a medical or dental practice. No idea what an override commission is.
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Old 01-20-2016, 02:30 PM   #18
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Big- hitter-. Its basically selling your book of business. Same thing when you sell a medical or dental practice. No idea what an override commission is.
sort of the same thing - that's how insurance agents retire, they get commission overrides on business they sold and ceded

<<--- not an insurance agent
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Old 01-20-2016, 02:51 PM   #19
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They always say "protect the principle". That gaurenteed money is gone when you retire. A feller at the bank just retired at 55yrs old, his advice to me was to show up everyday, do my best and stick it out as long as possible. For him that was at age 55. For you who knows.
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Old 01-20-2016, 04:24 PM   #20
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If that is the case then you need a new CPA. You can easily use Taxcaster to do a proforma return as if you were retired. Start with your current return.. take out your earnings since you won't be working... add in any tax-deferred withdrawals you will be making and make any other necessary adjustments (for example to your medical deductions to change your health insurance premiums) and you'll have your answer. If you will be selling taxable investments you will need to add in an estimate of capital gains on those sales (I did it based on current unrealized gains).

You can do a version as if just you retired or if both you and your husband were retired.

We went from being in the 28% tax bracket while working to 0% when I retired because my earnings were no longer and our qualified dividends and LTCG were at 0% since our other income put us in the 15% tax bracket. We do Roth conversions to fil up the 15% tax bracket at about a 8% tax cost vs 28% or higher when we deferred that income and an estimated 25% once SS and RMDs start.

That is exactly what I had in mind to do- drop down a few tax brackets, and get my dividends for free but TWO CPAs I met with said it couldn't be done. One CPA looked confused by my question. Thanks for the advice about taxcaster- I had never heard of that and will try it.
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