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Did I do the right thing?
Old 07-08-2008, 04:08 PM   #1
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Did I do the right thing?

I am a 55 year old single wm who retired this year after a 30 year career in the insurance business as a claims rep. The work was getting very stressfull and it was time to go. I have a pension, own my home and have no debts, own two cars, have about $120,000 cash and about $700,000 in retirement accounts that I cannot access until 59 1/2. At times I wonder if I did the right thing and left. On the other hand I would like to just find another less stressfull job out there to earn some cash and pursue some of my other interests such as working out again, reading, travel etc. My $ assets are not as great as some of the others posts I have seen here and wondering if I will have enough money to semi-retire. Any suggestions?
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Old 07-08-2008, 04:21 PM   #2
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How big is the pension and what's your budget like?
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Old 07-08-2008, 04:23 PM   #3
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Why can't you use the retirement money before 59 1/2?
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Old 07-08-2008, 04:41 PM   #4
Confused about dryer sheets
 
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My pension is only $22,000 per year, my other expenses are very low. With assoc dues, utilities, internet etc my monthly expenses are about $550 per month. I can not access the 401 k as I will have a 10% penalty for premature withdrawal.
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Old 07-08-2008, 04:47 PM   #5
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Quote:
Originally Posted by uswpas15 View Post
My pension is only $22,000 per year, my other expenses are very low. With assoc dues, utilities, internet etc my monthly expenses are about $550 per month. I can not access the 401 k as I will have a 10% penalty for premature withdrawal.
uswpas15,

There is a provision in the tax code for accessing your retirement funds prior to 59 1/2 without paying the 10% penalty. It is called SEPP (Substantially Equal Periodic Payments) or 72(t) after the section in the tax code where it appears.

It is not well known outside of the early retirement community, but it does exist, it is real, and it would certainly be worth looking at.

There are several restrictions to using it, which you should certainly look at to see if you can live with them.

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Old 07-08-2008, 04:58 PM   #6
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Welcome , with a $22,00 pension and $820,000 in savings and low expenses I think you are good to go . Do you have health care coverage ?
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Old 07-08-2008, 05:20 PM   #7
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yes, I have health coverage and am in good health
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Old 07-08-2008, 06:47 PM   #8
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If you retired at age 55, you may be able to access your 401k without penalty. I believe I have read that on this site. It doesn't apply to me, but may apply to your situation. Also, enjoyable PT work combined with your pension may provide a very nice lifestyle for you.
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Old 07-08-2008, 06:53 PM   #9
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If you have a 22K pension and nominal expenses you will be fine! Read up at Welcome to 72t on the Net to learn and understand the rules on getting to the retirement funds early if you decide you need them. A part time job and the pension and playing out the 120K in after tax monies should leave you in fine shape without needing to tap into the pension bucks. Just depends on how thrifty you want to live. The part time job is an option for you. If you took 1K a month from the 120K and earned no intrest on it that alone will last for 10 years. And then SS could well be available.

Breathe in, breathe out and relax. You have done well. Learn 1st and then chart your course. Make changes as needed or desired. The ER pool is fine.
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Old 07-08-2008, 07:50 PM   #10
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To echo what others have said you are in pretty darn good shape.

If your pension has a COLA provision it is worth at least 25*22,000=$550,000. Even if it is fixed amount, it is still equal to about $325,000. Which means you have more than million dollars and a paid off house, and medical, so you are well ahead of 90%+ of the population congratulations.

A 72(t) is a great potential way to tap into retirement accounts, and the link given above is the definitive source for information on using it.

Above all be very very leery of hiring a financial adviser or locking yourself into a long term investment like an annuity. You are in the insurance business, so you know first hand that insurance is a profitable business.

Rule #1 don't lose your money
Rule #2 don't be so conservative that you let your money shrink due to inflation.
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Old 07-08-2008, 09:24 PM   #11
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One thing we are doing is planning on withdrawing our health ins. premiums from our 401k without paying a penalty. Perhaps that is something you could look into. You sound like you can easily live on your pension and have the $120k as a good emergency fund. Also, if you only withdrew a little (if you had some good reason to )from the 401k taxes and penalty might not add up to much, if you are living only on your pension and your tax bracket is low. Might want to run some numbers. That's what DH has done.

Don't let others' assets scare you. We have a lot less (even than you), but we live on a lot less.
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Old 07-09-2008, 10:17 AM   #12
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the key here is LOWER stress and it's priceless. i believe u did the right thing. u can always budget your finance accordingly but u can't "budget" your stress at work. Getting out early is cool.

heck, with the money u got, u're rich. yes u're rich. on top of that $22k/yr is alot if live in the midwest, right


enuff
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Old 07-11-2008, 04:24 PM   #13
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My $ assets are not as great as some of the others posts I have seen here and wondering if I will have enough money to semi-retire.
Based upon the information you have provided, it certainly sounds like you are in good shape. Your pension more than covers your expenses, so the 'Micawber Principle' says that you will be fine [Charles Dickens, David Copperfield: "Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."] Also you have a cash reserve available to handle any immediate extra needs, and your house is paid for. In the worst case, you can always accept the 10% penalty if absolutely necessary to tap the 401k early. Alternatively, you could sell one of your cars (presumably you don't really need to own/maintain/insure two vehicles).

Don't worry about other people's net worth; portfolio envy is a complete waste of time. All that really matters to your retirement are your own personal circumstances.
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Old 07-11-2008, 09:04 PM   #14
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Time

The current market situation is certainly unsettling. Markets go up, markets go down. Regardless,there is one thing in which we all share equally, the relentless march of time. Each of us has only so many days, some of those days may see our health and mobility compromised. The sun set today and we all have one less good day left as a result. We all need to remember this during periods of uncertainty in the markets. How many more good days do you want to sell or give up before you enjoy what may be left. Think of the certainty of growing old, possibly infirmed, and the eventual end of the line. Morbid, fatalistic attitude possibly, but I find it is something I need to remind myself from time to time to keep my perspective when things are unsettled. The obituary of someone you know happens from time to time, it should be more unsettling than a downward trend in the market. If you remember this it should help give the resolve to know you did the right thing.
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Old 07-11-2008, 09:13 PM   #15
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Originally Posted by uswpas15 View Post
My pension is only $22,000 per year, my other expenses are very low. With assoc dues, utilities, internet etc my monthly expenses are about $550 per month. I can not access the 401 k as I will have a 10% penalty for premature withdrawal.
Thats amazing you only spend 550 per month..Have a great er!
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Old 07-11-2008, 09:27 PM   #16
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I think you'll be fine, but that also depends somewhat on what you want to do with your time. If you live simply (sounds like you do), have inexpensive hobbies that are fullfilling, and are not a world traveller, you'll be fine. But ya know, its all about doing what ya wanna do, so if you WANT a part-time job to help you fill your time and help stash a little extra cash, by all means, do it. But you probably don't have to. And to be honest, I'm a bit envious, because even though our assets may be greater, we do not live so simply, we are world travellers, our hobbies tend to be expensive, we have no pension and will be on our own for healthcare when we FIRE. It all makes for a lot of uncertainty, even though there are a lot of things we could cut (gotta keep DW happy though).

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