About to lose my job at 55, I think I can do it....

[JoeWras]

Continue hanging out here and you'll learn a lot about this sort of thing. (Legally) minimizing or avoiding taxes is a popular hobby amongst many forum members.

Yeah, I thought I knew a lot until I came here.

For example, similarly I have an IRA with both before and after tax contributions. I learned here that when we retire, I can start converting the IRA to Roths, and take the income hit (pro-rata between taxable and non-taxable portion) in order to maximize the amount up to a tax bracket. Similar to what ziggy29 is suggesting, but instead with roth conversion money.

Very obvious once you start hanging out here.

 

[FREE866]

If I have the numbers right you have like 1.4 million and your expenses are 24K per year. If you even spend like 500K on a house then per FIRECALC you have 100% success....maybe I'm missing something

 

[Aerides]

If your location is that good, you might want to look into AirBnB'ing a room at a weekly rate here and there (will probably make close to a roommate income off it for less than a full time guest).

The AirBnb'er is a short timer, so if you don't click it's nbd because they are gone in a few days. I'd give it a shot at least a few times while you decide.

 

[kb50872]

If your location is that good, you might want to look into AirBnB'ing a room at a weekly rate here and there (will probably make close to a roommate income off it for less than a full time guest).

The AirBnb'er is a short timer, so if you don't click it's nbd because they are gone in a few days. I'd give it a shot at least a few times while you decide.

Another great idea in the que!

 

[kb50872]

If I have the numbers right you have like 1.4 million and your expenses are 24K per year. If you even spend like 500K on a house then per FIRECALC you have 100% success....maybe I'm missing something

I've always been of the mindset I work as long as I can, just like my dad, and everyone I know retired in their 60s. I do not know anyone who managed retirement in their 50s. I can say this is one the best things that has happened to me! I feel free now.

 

[FREE866]

I've always been of the mindset I work as long as I can, just like my dad, and everyone I know retired in their 60s. I do not know anyone who managed retirement in their 50s. I can say this is one the best things that has happened to me! I feel free now.

Gotcha! If you don't mind the work then that's a good plan.
I'm just so out of gas and want out. Been doing sales for almost 30 years

 

[bclover]

One question, not sure if I skipped it but what's your health care situation. You've got 10 years before your eligible for medicare.

Your story is almost a carbon copy of mine. My job give me a "please go away nicely" package this April at almost 56. I was over the moon because I had hated that job.

Anyhoo, let me just say I was pretty much in great shape until..... lol bad knees popped up and I'm sitting here recuperating from total knee replacement. I'm lucky in that I am eligible for my companies retiree health care but I'm still going to have a couple of grand co pay bill.

Have you factored healthcare in?

 

[bclover]

other things that I' finding are popping up.

Home maintenance?/home projects? lol, unfortunately unlike fine wine, houses don't tend to get better with age. I had to get a new roof and roof deck (I live in middle of a city) that set me back 28K.

LOL my one expense that I did not remember to factor in was my dog!!! I have a 12 year old german sheppard/ beagle mutt. Yowazza!! dog developed doggie diabetes and I now spend ~1300 a year on doggie insulin, and that's not including regular vet bills.

Good luck, take it slow and steady. I wouldn't pay off the house just yet until you get you're retirement legs up underneath you.

 

[socca]

I need only 2K per month based on today's needs. This is a pretty low amount.

Like you, I'm also currently running about $2k / month for necessities (housing, food, medical insurance, auto), EXCEPT my number goes to $3k / month when I include allocation to reserves for items such as: roof replacement, A/C replacement, car replacement, computer replacement, dental & vision care, etc. Have you included this in your budgeting?

When I add in personal and self-employment taxes and allocation to savings for "retirement" (25% of MAGI), it's surprising how much it takes even for a single guy with no dependents to live a middle-class lifestyle in the U.S.

 

[kb50872]

One question, not sure if I skipped it but what's your health care situation. You've got 10 years before your eligible for medicare.

Your story is almost a carbon copy of mine. My job give me a "please go away nicely" package this April at almost 56. I was over the moon because I had hated that job.

Anyhoo, let me just say I was pretty much in great shape until..... lol bad knees popped up and I'm sitting here recuperating from total knee replacement. I'm lucky in that I am eligible for my companies retiree health care but I'm still going to have a couple of grand co pay bill.

Have you factored healthcare in?

Ouch, sorry to hear this. I do have an HSA account, and most of my previous expenses have been dental. It seems most of dental is not covered under Medicare, so that is my vulnerability. No medical issues thus far, but who knows the future. I can hear dice rolling ...

 

[NW-Bound]

Continue hanging out here and you'll learn a lot about this sort of thing. (Legally) minimizing or avoiding taxes is a popular hobby amongst many forum members.

When we were still working, there weren't a lot of things I could do after maxing out our 401k. We did not qualify for IRA or even Roth. The only thing I could do was to put some money into my children Coverdell accounts, and they allowed a stingy $500. Could you believe that? $500/year to save for college? And that's after-tax money?

Now, no longer in the "gainfully employed" club, I have more leeway to make up for the past.

 

[haha]

Get a roommate. You should be able to get a younger person to take a room in your home. That will help out immensely.

Great idea. Any city that supports run of the mill $800k+ houses will have a strong rental market.

He may even find a friend, or at least a helpful ally.

Ha

 

[kb50872]

other things that I' finding are popping up.

Home maintenance?/home projects? lol, unfortunately unlike fine wine, houses don't tend to get better with age. I had to get a new roof and roof deck (I live in middle of a city) that set me back 28K.

LOL my one expense that I did not remember to factor in was my dog!!! I have a 12 year old german sheppard/ beagle mutt. Yowazza!! dog developed doggie diabetes and I now spend ~1300 a year on doggie insulin, and that's not including regular vet bills.

Good luck, take it slow and steady. I wouldn't pay off the house just yet until you get you're retirement legs up underneath you.

A pet keeps you happy and sane, but the downside is they are "only human" and can break like us. Glad to see you are taking care of your best friend.

Most things in my home are functioning fine, new or replaced. New roof earlier this year in anticipation of selling the home. I have had some minor issues with plumbing, but nothing major with the house. We are due for a big earthquake here, but I have EQ insurance with carries a huge deductible. That would be a financial disaster, but all of California would be suffering, I would be in good company. There any number of things that can happen with the house, this one a wild card.

 

[kb50872]

Like you, I'm also currently running about $2k / month for necessities (housing, food, medical insurance, auto), EXCEPT my number goes to $3k / month when I include allocation to reserves for items such as: roof replacement, A/C replacement, car replacement, computer replacement, dental & vision care, etc. Have you included this in your budgeting?

When I add in personal and self-employment taxes and allocation to savings for "retirement" (25% of MAGI), it's surprising how much it takes even for a single guy with no dependents to live a middle-class lifestyle in the U.S.

***** please read *****

I need to very clear here.... My 2K / month is assuming AFTER I had paid off my mortgage, which brings my NW down, but my home equity way up. Selling the house and downsizing should bring up my NW and reduce living costs, but that is only a thought for now.

********************

I tend to buy reliable cars and drive then a long time so I have basic maintance figured in, you are correct, it might not be enough. I also use public transport a lot. My computers are working and somewhat dated, I have an old iPhone. I never need the latest or greatest, even clothes are from discount places these days.

I wasn't always like this though, used to be "somewhat" status conscious or have some ridculusly expensive hobbies, at least as much as thought I could afford to spend at the time. I could have easily saved this money, I would be in a better situation, but not THAT much better. My life could end tomorrow, and at least I did some things that gave me satisfaction.

This is why I think my retirement won't require much "hobby money". But I could also be wrong and get stressed on everyday stuff. Really tough call.

I have never lived on "reduced" income, just the prospect is eye opening and challenging!

 

[kb50872]

UPDATE, just came back from some financial counseling, my advisor plugged in my numbers into a program simular to the ones you guys are using (1000+ scenarios using Monte Carlo Analysis), AND we made the assumption I would retire immediately after leaving work. With an assumption of moderate risk, I had a 99% chance of success. This is kind of mind blowing, I can't make sense of it, but it coincides with the numbers you guys are turning out.

The problem I immediately saw was cash in the bank is way too high, and many of my funds are positioned for aggressive growth. I will immediately get the cash working in some fund combination, and rebalance the accounts that are positioned for too much risk (it HAS payed off recently though).

Since I have some time before I stop working, the morgage will probably be refinanced, no intention of paying it off right now. These are things that make financial sense right now.

 

[socca]

My 2K / month is assuming AFTER I had paid off my mortgage...

I have no mortgage, so we're comparing apples to apples. There is plenty of discussion on this board regarding the pros & cons of paying off a mortgage; no need to rehash that here. Like many people, I have zero regret being debt free. My house is perfect for me, but has a market value much below yours.

I'm thinking of increasing my budgeted amount allocated to reserves for 2017 to cover the max annual out-of-pocket expense on my medical insurance, assuming one major medical event every few years. I've been lucky so far - almost never needing medical help, but this could change. Getting old can be nasty.

 

[supernova72]

FWIW I'm in a similar situation to you and just about six months ahead so to speak.

My position was surplussed in July of 2016 so I'm 5 months into ER. It was not a planned event on my part. 31 yrs working in a megacorp ending in IT project management.

It's been a larger transition that I expected (not working) but each day brings more closure so to speak. I'm feeling fortunate to having retiree medical, pension, severance, and a 401k. The next decision I need to make (I'm 90% decided) is to pay off a the mortgage or not. I'm strongly leaning towards paying it off and taking the tax hit in 2017. Peace of mind more than anything.

Here is my story:

http://www.early-retirement.org/forums/f26/my-employer-gave-me-my-60-day-notice-yesterday-82015.html

 

[kb50872]

Hi Supernova72/Socca,

I completely agree about the "piece of mind" bit, I was always intending to payoff my mortgage at some point before my termination notice ever came, and this event has really made me think. I am of the mindset ultimate freedom comes from owning things and not going into debt. This is the American Dream, to own your property, no bank involved. Some will say this is a mistake, use the banks money at low interest rates to make more money. This is a valid business plan for those inclined. But how many people have lost their homes due this very situation? The financial institutions will see cash in front of their eyes to "invest for you", sure sounds good, it's making money at a higher rate than the interest you are paying. Then miss a mortgage payment or 2, then see your home go into foreclosure,

That said, paying off my home sometime in the future is still on the table, as is selling and downsizing. We singles used to have only 1 income, and now it's zero. I really think those keeping a mortgage into retirement have a large pool of income producing investments working in their favor, or spouse still working.

I am seeing the amount of payment/equity in my home is producing a lot of stress, it seems to be out of proportion to my other assets. A part of me wishes real estate in California could have appreciated at a much slower and rational level, this way everyone has a chance at home ownership.

 

[kb50872]

FWIW I'm in a similar situation to you and just about six months ahead so to speak.

My position was surplussed in July of 2016 so I'm 5 months into ER. It was not a planned event on my part. 31 yrs working in a megacorp ending in IT project management.

It's been a larger transition that I expected (not working) but each day brings more closure so to speak. I'm feeling fortunate to having retiree medical, pension, severance, and a 401k. The next decision I need to make (I'm 90% decided) is to pay off a the mortgage or not. I'm strongly leaning towards paying it off and taking the tax hit in 2017. Peace of mind more than anything.

Here is my story:

http://www.early-retirement.org/forums/f26/my-employer-gave-me-my-60-day-notice-yesterday-82015.html

Glad to see things are looking up for you, for me it is starting to feel a bit like a death in the family, although I will be termed next year, I hope to have fully adjusted when I actually leave.

 

[bclover]

Hi Supernova72/Socca,

I completely agree about the "piece of mind" bit, I was always intending to payoff my mortgage at some point before my termination notice ever came, and this event has really made me think. I am of the mindset ultimate freedom comes from owning things and not going into debt. This is the American Dream, to own your property, no bank involved. Some will say this is a mistake, use the banks money at low interest rates to make more money. This is a valid business plan for those inclined. But how many people have lost their homes due this very situation? The financial institutions will see cash in front of their eyes to "invest for you", sure sounds good, it's making money at a higher rate than the interest you are paying. Then miss a mortgage payment or 2, then see your home go into foreclosure,

That said, paying off my home sometime in the future is still on the table, as is selling and downsizing. We singles used to have only 1 income, and now it's zero. I really think those keeping a mortgage into retirement have a large pool of income producing investments working in their favor, or spouse still working.

.

How many more people would even own a home if not for a mortgage? the reality is, for most Americans walking into a realtor an plunking down 200K in cash is not an option. I won't even think about how long it would take my kids to try and save for a decent house where we live. So for the average Joe it's not about leaving your cash somewhere to make money. heck, I know plenty of folks who struggled to even get the 20% down needed for a conventional mortgage.

Now I also think having been raised in NYC, I never knew many people who lived in the eternal pursuit of owning a home, then I married a European who lovingly said all the time, "the world works to live while Americans live to work".

What I am finding is that for me is retirement is a "continuous" process, especially when one retires early so don't get discourage if next year you are still figuring out what retirement life would be. Even "retirement" comes with preconceived notions. lol, I use to hear how everyone would travel when they retire. Most of my friends and myself who have retired really don't travel any more than they did before retirement. at most 1 extra trip. When I got my "please go away" papers from mega corp, I looked forward to finally pursuing my passion/dream of owning my own bakery. then I did the investigation and found out exactly how much work I was going to be putting in and that "dream" and said, "Oh H%$%LL no", lol now I have a part time gig at a bakery. best of both worlds. I pretty much make my own schedule and enjoy the baking while letting some one else be the boss.


for me the ability to have "choices" is really the peace of mind. If I want to pay off my mortgage I can, if I decide to hang onto it for another year (I usually reevaluate every year) I can. I still have visions of owning a house on the beach down south some where so that will be another choice down the road (do I downsize and sell this one?? hang onto it and be a snowbird??) You really don't have to have it all figured out by the time you leave.

 

[Mdlerth]

Awesome!

...and off-grid living sounds really interesting right now.

I applaud this sort of thinking, although that may reflect my having only limited data about it. I've long been fascinated by the concept I have a brother who lives off-grid half the time. (The other half he spends on the road for his j*b.) He loves it.

If you take this leap, I would be delighted to read updates about your experience.

 

[supernova72]

Hi Supernova72/Socca,

I completely agree about the "piece of mind" bit, I was always intending to payoff my mortgage at some point before my termination notice ever came, and this event has really made me think. I am of the mindset ultimate freedom comes from owning things and not going into debt. This is the American Dream, to own your property, no bank involved. Some will say this is a mistake, use the banks money at low interest rates to make more money. This is a valid business plan for those inclined. But how many people have lost their homes due this very situation? The financial institutions will see cash in front of their eyes to "invest for you", sure sounds good, it's making money at a higher rate than the interest you are paying. Then miss a mortgage payment or 2, then see your home go into foreclosure,

That said, paying off my home sometime in the future is still on the table, as is selling and downsizing. We singles used to have only 1 income, and now it's zero. I really think those keeping a mortgage into retirement have a large pool of income producing investments working in their favor, or spouse still working.

I am seeing the amount of payment/equity in my home is producing a lot of stress, it seems to be out of proportion to my other assets. A part of me wishes real estate in California could have appreciated at a much slower and rational level, this way everyone has a chance at home ownership.

True true and +1.

On another thread I threw out the pay off mortgage decision and was very surprised to see the responses I got on this forum and from friends. 50% said "you can make more return in the stock market" and then even a few "refinance again to 30 yrs" which is surprising to me. I'm at 4%, 15 yr, 6 yrs to go. Owe 115K on value of 565K.

Then a lot of folks point out that it helps me at tax time. I get that but then again that deduction is getting smaller and smaller (and I'm paying 4K a yr in interest). Then again by posting on an ER forum I should expect a lot of different perspectives.

I'm banking on peace of mind to outweigh the math part.

Are you northern CA, LA, or Bay Area?

 

[kb50872]

True true and +1.

On another thread I threw out the pay off mortgage decision and was very surprised to see the responses I got on this forum and from friends. 50% said "you can make more return in the stock market" and then even a few "refinance again to 30 yrs" which is surprising to me. I'm at 4%, 15 yr, 6 yrs to go. Owe 115K on value of 565K.

Then a lot of folks point out that it helps me at tax time. I get that but then again that deduction is getting smaller and smaller (and I'm paying 4K a yr in interest). Then again by posting on an ER forum I should expect a lot of different perspectives.

I'm banking on peace of mind to outweigh the math part.

Are you northern CA, LA, or Bay Area?

I'm in the LA area. high rents, impossible home prices, high cost of living, but I grew up here. Nice weather, and..... That is about it, forgot we are in a drought. I also may be ready for a change, nothing keeping me here. Could be worse, I am grateful for what I have, and the people here on this board. (Thinking about that last scene in the Life of Brian, nailed to the cross "bright side of life").

 

[EastWest Gal]

Much of the country has great weather about half the year instead of the whole year and no earthquakes. I gave up on California 17 years ago. No regrets. The high COL is mostly housing, though.

Regarding winter: I plan on skiing twice a week this year minimum. I can see our local ski resort from our bedroom window. Night season pass at 3 resorts was about $250. Snow = good weather for skiing. So I guess we have good weather 9 months out of the year.

 

[Dd852]

Despite all the advice from professionals and many in this board and similar, and despite the logic of the mathematics, I cannot even begin to describe the feelings of freedom and control we got when we paid off the mortgage way early. Then when we did the same on the next house we moved to the rush felt even greater. And when managed to pay cash for the investment rental property, I knew FIRE was mine! It may be about personality types more than investment theory, but in this family for sure channeling extra money into paying off the mortgage first paid off psychologically in huge multiples!