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Old 05-29-2013, 12:27 PM   #21
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It sounds like you are frugal enough that with $3 million, you will leave an inheritance when you die. Start packing.

You can add time onto the front of a retirement, but not onto the back.
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Old 05-29-2013, 12:34 PM   #22
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Originally Posted by seagypsy View Post
Hi,

I've been lurking here for awhile. In 2009, my dear mother passed away and left me with a sizeable inheritance. All told, my current net worth is a bit over $3 million. I have no debt, own my home outright and live on a modest federal government salary. The only reason I haven't made the leap to ER is the low cost health insurance I could carry into retirement (if things stay the way they are).

The problem is that I'm unhappy where I work. I could retire in early 2016, with a reduced pension and keep the health insurance. Or....I could plan my escape, work part time (self-employed), and see what the exchanges bring in October.

The only two things I have decided are (1) that I will not retire until at least year end, and (2) I need to sit down with a financial planner and determine the best AA for me. I didn't want to do anything rash with such a large windfall so I've been sitting on an extremely large cash position and that just will not do.

So I am asking, if there is anyone reading this who thinks I should work another 2 years and 7 months just to keep the health insurance? My mother was quite frugal and the thought of spending more on health insurance than I might need to, might cause her to roll over in her grave.

The question is, do I live for her memory, or live for me?

Thanks in advance for your input.
With the government cutting back, maybe they will offer you an early out option before 2016. Not saying you should plan on that, but is there any way you can research and find out if it is likely your agency would offer it?
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Old 05-29-2013, 01:37 PM   #23
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I am in the camp with those who say to take your time. With $3MM in assets you can get a lot of analysis and planning help for $0 from Vanguard (for example).
I second this suggestion. If there's anything I've learned since joining this board, it's NOT TO PAY a financial advisor a % of your portfolio on a monthly/yearly basis. Fidelity and/or Vanguard will easily fit the bill and you'll be paying WAY less than if you were sharing you & mom's wealth with some advisor.

Bogleheads is a great place to learn more about asset allocation. Spend the next 2+ years learning all you can about that, unless you just can't.

Good luck to you, and welcome to the forum!
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Old 05-29-2013, 04:59 PM   #24
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Paying money to a financial planner is way more frivolous than buying health insurance. Take a little time to learn about investing and talk to the people at Vanguard. They can come up with a plan that is better than what you would get from many financial planners.
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Old 05-29-2013, 07:20 PM   #25
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You did not say if your home is included in your net worth and what fraction of your net worth your home represents. It would make a difference in what you may do.
Modest home, worth between 275K to 300K based on recent sales in the area. That is included in my net worth so 10% or less. I'd probably purchase another home in the same price range. Maybe a condo. Can't rent because I have two dogs.

BTW, I am single but in a committed relationship for over 15 years. He has his own income. We live together - no joint assets. His net worth is substantially lower than mine and he is disabled. Has a month income of $2,400. Our children are grown. Mine is living here but moving out in two weeks!

The cost of living on Long Island is definitely high. Washington state appeals to me. Some things are less, some are about the same. My property taxes here are over $10K.

I decided to review my expenses and start tracking them again. I got lazy for awhile. I know I haven't spent more than $75K and the principle is still intact, and growing too modestly.
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Old 05-29-2013, 07:23 PM   #26
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With the government cutting back, maybe they will offer you an early out option before 2016. Not saying you should plan on that, but is there any way you can research and find out if it is likely your agency would offer it?
Need 20 years in. I have nearly 12. Drat!
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Old 05-29-2013, 07:25 PM   #27
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I second this suggestion. If there's anything I've learned since joining this board, it's NOT TO PAY a financial advisor a % of your portfolio on a monthly/yearly basis. Fidelity and/or Vanguard will easily fit the bill and you'll be paying WAY less than if you were sharing you & mom's wealth with some advisor.

Bogleheads is a great place to learn more about asset allocation. Spend the next 2+ years learning all you can about that, unless you just can't.

Good luck to you, and welcome to the forum!
Thanks!

I've been a Boglehead wannbe for quite awhile. About a year ago, my mother's broker stopped by and provided me with few sample portfolios. He left disappointed. Passive investing has me intrigued. I will read more about it and call a few people including Vanguard.
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Old 05-29-2013, 07:48 PM   #28
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Originally Posted by seagypsy View Post

Modest home, worth between 275K to 300K based on recent sales in the area. That is included in my net worth so 10% or less. I'd probably purchase another home in the same price range. Maybe a condo. Can't rent because I have two dogs.

BTW, I am single but in a committed relationship for over 15 years. He has his own income. We live together - no joint assets. His net worth is substantially lower than mine and he is disabled. Has a month income of $2,400. Our children are grown. Mine is living here but moving out in two weeks!

The cost of living on Long Island is definitely high. Washington state appeals to me. Some things are less, some are about the same. My property taxes here are over $10K.

I decided to review my expenses and start tracking them again. I got lazy for awhile. I know I haven't spent more than $75K and the principle is still intact, and growing too modestly.
Initially reading the OP made me think, "FIRE and FIRE with the quickness!!” However, this post gives me pause. Your committed relationship could mean a lot more in expenses for you since your significant other is disabled and has a relatively small income. I wonder about HIS debts and other baggage which could become yours. He also has children who are aware of your financial situation and may add drama. (Maybe I watch too many programs on Investigation Discovery.).

You have children who haven't established themselves outside of your home. You can move to a lower cost state, like Washington, but I think you should wait until your children are completely on their own for at least 1 year before ER. Now is a good time to look for another position where you want to live.

Put your inheritance away in a safe place!! Watch "American Greed" on CNBC and be wary of the many people who will come your way with investment suggestions. Vanguard, Fidelity, Merrill Lynch are all fine places to park your money and realize modest growth.
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Old 05-29-2013, 08:14 PM   #29
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... and I only have 11 years in federal service, so my pension will be quite small. We're talking $1,000/month kind of pension! ...
It is interesting that you call that pension 'quite small', with an exclamation point yet!

For some perspective, it appears you are taking it at 55. My private corp pension is cut in half if I take it at 55 versus 65. I'm also guessing that your pension is COLA'd? If so, that makes it worth twice as much as a non-COLA'd pension (typical of private corp pensions).

So if the above is true, relative to my pension, your $12,000 is doubled in value for being able to take it at 55, then doubled again for COLA. That is $48,000 annual. Which is significantly more than I will get for over 28 years of service at MegaCorp (over 2.5x as long).

Quite small? Not when you put it in perspective. Wanna trade?

Of course there could be other offsetting factors, pay, 401K, some company match, profit sharing, etc. But, if you are strictly calling out 'pension', I just don't think it would be considered 'quite small' by many.

Regardless, put those numbers into FIRECALC for some baseline and then consider the HI issues.

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Old 05-29-2013, 08:16 PM   #30
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Initially reading the OP made me think, "FIRE and FIRE with the quickness!!” However, this post gives me pause. Your committed relationship could mean a lot more in expenses for you since your significant other is disabled and has a relatively small income. I wonder about HIS debts and other baggage which could become yours. He also has children who are aware of your financial situation and may add drama. (Maybe I watch too many programs on Investigation Discovery.).

You have children who haven't established themselves outside of your home. You can move to a lower cost state, like Washington, but I think you should wait until your children are completely on their own for at least 1 year before ER. Now is a good time to look for another position where you want to live.

Put your inheritance away in a safe place!! Watch "American Greed" on CNBC and be wary of the many people who will come your way with investment suggestions. Vanguard, Fidelity, Merrill Lynch are all fine places to park your money and realize modest growth.
Thank you for your input. Son is 24 and he has been saving for this day. I expect some bumps along the way.

Boyfriend has no debts (believe me, I'd know). He is 54 and has Medicare for insurance. Since he is single, he also qualifies for assistance with RX. This is positive.

The majority of my assets are parked at MSSB as well as various banks throughout the area and online. No fees to MSSB. I won't pay them anything because they keep trying to sell me crap. I tracked the performance of some funds they recommended a few years ago. With expenses, I'd be in a worse position than I am today!

Anyway, I am not running out the door just yet. I see I have some work to do, and I can accomplish most of it by year end, then revisit the ER issue.

Thanks again!
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Old 05-29-2013, 09:37 PM   #31
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Have you contacted an insurance broker in the area you wish to move to in order to provide quotes? I've been paying out of pocket for my own family policy for as long as I can remember. It only costs about $500/month for me to have a PPO for my family of four with deductibles of about $2,000 per person per year, and copays of about $30/visit. Not sure if you have pre-existings or not, but you might as well talk to an insurance broker now and find out if you're making a mountain out of a molehill.
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Old 05-29-2013, 10:27 PM   #32
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Have you contacted an insurance broker in the area you wish to move to in order to provide quotes? I've been paying out of pocket for my own family policy for as long as I can remember. It only costs about $500/month for me to have a PPO for my family of four with deductibles of about $2,000 per person per year, and copays of about $30/visit. Not sure if you have pre-existings or not, but you might as well talk to an insurance broker now and find out if you're making a mountain out of a molehill.
Not yet. I should investigate a bit but my understanding is that half of current individual plans don't meet the requirements of PPACA for 2014 so many of them will either need to change their offerings or they will disappear. Once these exchanges are online in October, I can look into that and then determine what individual plans might still be available next year.
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Old 05-29-2013, 11:23 PM   #33
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I think the prudent things to do are all what the other posters have suggested - track expenses, create a retirement plan using spreadsheet or online calculators, run it by the reps at Vanguard for input, etc.

If it was me, I'd probably take my savings, social security benefits, and any other retirement income, make a budget to fit, get health insurance on the exchanges, quit my job and enjoy life. Maybe do some part time or self employment work.

Moving to a lower cost area is great on the budget, but harder to do if you have young adults just getting launched who still might need a local home base. But sometimes you can drop housing costs dramatically just moving an hour or two out from a big metro area.

We have looked at nice homes at 25% of the price of our current house just 30 minutes by freeway. If you aren't working you may not need to pay extra to live within commute range of a major job market. You could cash out the house and live some place less expensive. Or you might have enough money to stay put depending on your annual expenses since you have a large nest egg. The book Retire on Less Than You Think has some good ideas.

But with $3M I would figure out how to use that money to buy free time and not have to work at a job I didn't enjoy.
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Old 06-03-2013, 07:34 PM   #34
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To the OP: I am not a federal employee or retiree but welcome to the forum anyway.
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Old 06-03-2013, 08:40 PM   #35
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I am a federal employee, planning to retire before the end of this year. I recommend you try to stick it out long enough to be able to retire with the FEHB (Federal Employees Health Benefit) program. It's a good deal, and while Obamacare may impact it, I don't expect it to go away altogether or be severely damaged. I base that on nothing besides my own opinion. Welcome!
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Old 06-04-2013, 01:12 PM   #36
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My only input is if you're going to use a Financial Planner, use a fee-only planner and don't let them know how much you really have. Tell them you only have 500K lest they start to salivate over your cash.

With 3 mil you're more than all set for ER even with health care. Don't over think it.

Enjoy and welcome.
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Old 06-04-2013, 01:16 PM   #37
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It sounds that you have a tough decision to make and posters are not helping...one says jump and another advises to stick around.
I've read people saying that just knowing that you can taste your freedom from w*rk makes w*rking quite bearable. You definitely have the means to close the door of a fed office right this minute, but for some reason you don't feel better which might mean that your job totally sucks...hence my vote to jump the ship and become happy. I don't think you mother would like to see you unhappy.
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Old 06-04-2013, 01:34 PM   #38
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Quote:
Originally Posted by seagypsy View Post
Hi,

I've been lurking here for awhile. In 2009, my dear mother passed away and left me with a sizeable inheritance. All told, my current net worth is a bit over $3 million. I have no debt, own my home outright and live on a modest federal government salary. The only reason I haven't made the leap to ER is the low cost health insurance I could carry into retirement (if things stay the way they are).

The problem is that I'm unhappy where I work. I could retire in early 2016, with a reduced pension and keep the health insurance. Or....I could plan my escape, work part time (self-employed), and see what the exchanges bring in October.

The only two things I have decided are (1) that I will not retire until at least year end, and (2) I need to sit down with a financial planner and determine the best AA for me. I didn't want to do anything rash with such a large windfall so I've been sitting on an extremely large cash position and that just will not do.

So I am asking, if there is anyone reading this who thinks I should work another 2 years and 7 months just to keep the health insurance? My mother was quite frugal and the thought of spending more on health insurance than I might need to, might cause her to roll over in her grave.

The question is, do I live for her memory, or live for me?

Thanks in advance for your input.
When you are talking about the FEHB for health insurance, I would go the minimum time to get that. Because the employer paid portion stays the same in retirement, it will save you a bunch of money the rest of your life. Just because you are FI doesn't mean not to be frugal.

2 yrs 7 months is just enough time to get all your personal affairs in order and plan your get away! Save your annual leave for the lump sum payment, etc.
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Old 06-06-2013, 08:07 PM   #39
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Regarding vacation and sick leave . . .

My employer counted sick leave towards years of service. I got 9 months of sick leave applied to my years of service. I used my 10 weeks of vacation to leave in December instead of March. Maybe it's not as long as you think.
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Old 06-06-2013, 09:58 PM   #40
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When you are talking about the FEHB for health insurance, I would go the minimum time to get that. Because the employer paid portion stays the same in retirement, it will save you a bunch of money the rest of your life. Just because you are FI doesn't mean not to be frugal.

2 yrs 7 months is just enough time to get all your personal affairs in order and plan your get away! Save your annual leave for the lump sum payment, etc.
Since I originally posted, some positive things have happened at work which have reduced my stress level. I'm really not impulsive but I often overanalyze things. I realized that if I am willing to wait until year end to decide, I'll be that much closer to 12/21/2015. It's not like I can sell my house and move clear across the country in mere seconds (drat). I'll work on getting my financial house in order then plot my escape. The thought of spending more money for health insurance than I have to does seem silly and wasteful.

For now, I'll take lots of deep breaths and a few steps forward.
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