Golden Handcuffs - a tougher form of the "one more year" syndrome.

[Shawn]

Quote:

Originally Posted by militaryman It is an interesting equation.... Time is Money [...] However, the OP was not asking about this. He clearly explained his situation at hand estimating that he currently had "enough" but ponders whether staying to get "more" (not a goldmine) was worth it.

The OP said that his pension would quadruple if he retired at 60 instead of 50. That may not be a goldmine, but it's still a big difference.

As for me, my pension plus savings will give me about $100K/yr if I retire in a year at 50 (when I'm eligible for lifetime medical), $140K/yr if I retire at 53, and $250K/yr if I retire at 60. These estimates are inflation adjusted but do not factor in taxes. My current annual expenses, not counting mortgage and taxes, are about $20K. I'm well into my comfort zone, but the prospect of additional money is tempting. If I work 3 years past 50 I'll increase my before tax income by 40%. Is it worth it? Tough call. My current plan is to retire at 50, but it still has me thinking.

[chinaco]

Quote:

Originally Posted by rs0460a One of my favorite ER "subjects" (and why I ER'ed!)

Good one! I agree... in the end Time > $.

For many of us, we hope to figure out how to maximize the equation (without ending our lives early)... (Time - $ = 0) Die broke. OR better yet (Time -$ = - mucho $) Die owing... the last fling on the credit card .


Ohhh.. come on... its a joke!

[Grep]

Shawn,

It's interesting to hear back from you. I see you survived those few years to ~50 (there were doubts back when I posted to your old thread), as I have.

So now we both have to decide where to go from here, and I sense that you are still in a similar boat as I. You don't sound quite as burned out at the moment as you did back then. Perhaps that's because you are now at that point where you could retire vs. quit?

I'm hoping that will make a psychological difference. I may not be "three bad days from retiring" but I certainly could be three bad quarters from retirement.

I've done many calculations, wondering how that quadrupling of my pension would impact my security and lifestyle. On a year by year incremental basis (work one extra year for $X extra for life after taxes), it's not very significant. If I had to make that single trade-off, I would not work that extra year. However, in total it is a fair amount that is hard to give up. Even so, I'm not sure I would continue unless I felt the social and other gratifications of my job were worth-while in their own right. In my case, it can be if the political system spares me and I can manage the right adjustments in attitudes and habits.

[Meadbh]

Grep, as an academic myself (medicine, nontenured, no pension) I can relate to your dilemma. Despite your current feeling of burnout there are many perks in academia, notably, a lot of control over your time, "academic freedom", intellectual stimulation, the satisfaction of discovering new knowledge, mentoring young minds, and the opportunity to speak at conferences, often at other people's expense. Sure, there's politics, but there's politics in every workplace.

How about a sabbatical? Take six months off to study turtles in the Galapagos, chaos theory in Hawaii, or something else that interests you and can support an application. It'll do you the world of good.

When you come back, get into some collaborative research. It's a lot more fun that way!

Personally I think you have it made.

[Shawn]

Quote:

Originally Posted by Grep [...] So now we both have to decide where to go from here, and I sense that you are still in a similar boat as I. You don't sound quite as burned out at the moment as you did back then. Perhaps that's because you are now at that point where you could retire vs. quit? [...] I've done many calculations, wondering how that quadrupling of my pension would impact my security and lifestyle. On a year by year incremental basis (work one extra year for $X extra for life after taxes), it's not very significant. If I had to make that single trade-off, I would not work that extra year. However, in total it is a fair amount that is hard to give up. Even so, I'm not sure I would continue unless I felt the social and other gratifications of my job were worth-while in their own right. In my case, it can be if the political system spares me and I can manage the right adjustments in attitudes and habits.

Over the last several months, I've started to see the light at the end of the tunnel. I could be wrong, but I think this has reduced my level of stress. While I won't be 50 until November of 2009 (when I can officially retire), I can quit 4 months prior to this date (August 2009) and still be eligible for lifetime medical benefits. The main drawback is that I'd have to purchase COBRA coverage for those 4 months. More so, I could stop working ~3 months earlier (May 2009) and take accumulated vacation. Also, I have enough available sick leave that I probably could take an extended medical leave of absence, if needed, and stop working today. I think these "milestones" have had a positive effect, relatively speaking. I still hate most aspects of my job, but at least I don't feel as trapped. I'm guessing that in a year or so from now, when I can retire without question, it may feel even better. It may be that I will decide to take it one year at a time. So yes, being (almost) able to retire vs quit is a positive feeling.

I've done the same calculations with respect to the incremental return for each additional year of work. There are multiple ways to look at it but for me it turns out to be about $7K/yr of additional after-tax income for each additional year at my job (at least in my early 50's). This is about 10% a year. So while a single year of additional work isn't immensely beneficial, it certainly starts to add up if I work 3 or more years.

Another issue is that I'd like to be able to save beyond my pension. That is, I'd like my pension to pay my living expenses, with some left over funds for savings/investing. My pension will be $40K/yr if I retire at 50 and $70K/yr if I retire at 53. Since my living expenses are $20K/yr without mortgage and $30K/yr with mortgage, even one additional year of work can add a good deal of "extra" money. This is especially true considering taxes and the partial COLA aspects of my pension.

So it's a lot to think about. And once the decision is made, there is no turning back. I'm not certain if I'll feel a loss because "I'm giving it all up." Regardless, my intention today is to retire in a year at 50. I'll have to wait until next year to see if my feelings change.

[Darryl]

Ditto on Ha's comments I think aaron and Milton were there to. Just take a breath and get your mind right.
I was b#t$hing about my job a few weeks ago to a friend I hadn't seen in a year and as I layed it all out he said "it sounds like a dream job to me".
He is talking career change and going back to school. Everybody goes through this stuff.
I have been increasing my charitable giving the last few years and plan a big increase again for 2009 deducted right from my paycheck if I leave I wouldn't be able to afford to continue and it would stop on it's own but while I work it feels good knowing I'm kicking something in. I'm not FI yet and have other tartgets I need to work on too but I can hit them all on a lot lower income and probably lower BS quotient but find that something for you is it the weekly massage, the summers off?? You don't need to quit for god's sake your tenured.

[Max Power]

I haven't read all the previous posts, so I'm not sure if I'm echoing other sentiments or not. However I did see that someone mentioned the fact that you don't want to die at your post. I'll agree with that 100 percent. I'm currently 60 years old and plan to retire at age 62. My wife is battling Multiple Sclerosis. Right now I'm at work 10 hours per day, 5 days per week, and I'm looking forward to spending much of that time with her instead of my work colleagues. Yes, it will mean cutting a few corners and making do with a bit less than if I waited until age 66 to retire. But I'll be forever kicking myself if something were to happen to her while I was working "just a few more years" instead of spending that time with her. There is nothing like a big reality check like this to open your eyes. One thing you have to do is be honest with yourself. Are you a work-a-holic? Does that extra money mean more to you than the time spent at a reduced income? The cemetary is full of people who might have said, "I wished I had done it all differently."

Only you can answer questions like this, but to use a worn out phrase, "money isn't everything."

[DangerMouse]

Interesting position to be in.

One question I do ask, is whilst you seem to have your ducks in a row on the financial side, what would you intend to do if you do retire at 50? Do you have a plan for that, as for many that can be the downfall.

[Milton]

Quote:

Originally Posted by Grep For example, they do need to hear the facts about academia vs. other options from me. Very few of my colleagues can offer a balanced view since they have never lived the alternatives, and most of them are too busy defending their own choices.

Fair enough.

Quote:

Originally Posted by Grep Finally, the over-all impression I have from your commentary is that few things really matter greatly in working life, that nothing in working life matters in comparison to personal freedom, and that more personal freedom is always better.

Exactly! Well put.

[shotgunner]

A very distinguished professor at the Univ. of NH, where I now work P/T, passed this month at age 53 after being diagnosised with liver cancer in April of this year. It is not likely that this will happen to you, but what if it did. Which side of the equation do you want to gamble with the most, your money or your time?

[FIYes]

I am dealing with the one more year syndrome right now. I could retire right now, but if I wait just a little over one more year then I get a better deal on my retirement. It does seem that the closer it gets---the slower it goes. About 2 years ago I decided that I would stay for the better deal and the time just zipped by until now.

[Grep]

If I died at my desk, I’d be dead, with no regrets left to be had. If I did find myself looking back on my life, I might feel some satisfaction about many of the struggles and successes I’ve had in my career. I’ve fulfilled the most important dreams that I had as a child. I’d also be sad at the heavy price I paid for that, but this is water under the bridge.

What I regret now, while I’m still alive, are the little deaths that occur day by day, and the gnawing knowledge that work contributes most of them. But it’s not all bad – some of it is pretty good, which almost makes it worse – if it was all bad, my decision would be easy.

Shawn, you sound like you are still in the “it’s pretty much all bad” camp. The fact that you are even counting the days and months until you can bail out before 50 is a pretty sure indication of that. (I have similar options, but I at least have no problems staying until 50 or beyond.)

I’ve also considered that a reasonable exit point is when my pension covers my basic expenses. For me that is not until 55 or so. For you it is quicker (i.e., 50, not even padded to 53, by your numbers) due to your much higher salary and pension. However, this is really just an arbitrary threshold and an unnecessary emotional security blanket given our savings vs. expenses. The pension's weak indexing to inflation is also irrelevant compared to those factors.

I especially don’t understand your desire to be able to save out of your pension. What would you be saving for – retirement?!? If you had goals that required spending that money, fine. If you are really looking for justification to stay an extra few years at your hated job, then do yourself a favor and buy a 40 ft sailboat and a home in Tuscany. Otherwise, do yourself a favor and recognize that with your savings and spending habits, you don’t have a need to “save” in retirement, especially at the cost of more years of work. You’ve already earned it and paid taxes on it, so pensions are meant to be spent and enjoyed!

[Milton]

Quote:

Originally Posted by Grep I’ve also considered that a reasonable exit point is when my pension covers my basic expenses. For me that is not until 55 or so.... I especially don’t understand your desire to be able to save out of your pension. What would you be saving for – retirement?!? If you had goals that required spending that money, fine. If you are really looking for justification to stay an extra few years at your hated job, then do yourself a favor and buy a 40 ft sailboat and a home in Tuscany. Otherwise, do yourself a favor and recognize that with your savings and spending habits, you don’t have a need to “save” in retirement, especially at the cost of more years of work.

Given that your investment income currently covers your expenses, it seems like you are in exactly the same pre-retirement boat as Shawn. Both of you are apparently aiming at "an arbitrary threshold and an unnecessary emotional security blanket given (y)our savings vs. expenses".

Perhaps, rather than lecturing him, you should take your own advice.

[Grep]

Milton,

I am aware that I am FI at least at a basic level, and I stated that in my first post. I am also aware that I'm in the same boat with regard to potentially waiting for some arbitrary threshold, etc. It's a common and very human condition. It was not my intention to lecture. Thank you.

[FinanceDude]

I'll guess $1,600,000 in retirement, a 4% withdrawal would give you $64,000 a year. Add a $20,000 a year pension onto that, and you get $84,000 a year before taxes. So, you can retire quite easily,it seems.

The harder part is the pull between career and retirement. You could always write continue to do research and get published, you could co-author articles, you could ask to speak at the annual meeting for your specialty, etc. Heck, depending on your speciality, you could work overseas and get paid.

Lots of opportunities, what is your specialty??

[FinanceDude]

Quote:

Originally Posted by Grep Milton, I am aware that I am FI at least at a basic level, and I stated that in my first post. I am also aware that I'm in the same boat with regard to potentially waiting for some arbitrary threshold, etc. It's a common and very human condition. It was not my intention to lecture. Thank you.

You are a professor, it is a natural instinct to lecture......... My late sister was a PhD, more of a research professor than a teaching one, but she used to "lecture" me all the time.............

[Grep]

Yes, "lecturing" (hopefully in a helpful way) is a hazard of being a Professor that we all fall prey to from time to time.

One nice thing about retiring as a Professor is that one typically becomes "Professor Emeritus." This title typically comes with a bit of support (e.g., office space, etc.) so that a "retired" Professor can stay engaged in the life of the campus. I work at a research institution, and many Professors here would prefer to give up the teaching responsibilities but stay engaged in the world of research. However, after over 100 publications and who-knows how many conferences, I find it a bit of a treadmill that I'd vastly prefer to get paid for.

As for finances, I'm not sure 4% is safe over 40+ years (one can hope) looking forward. But at 3% of ~$2M plus $20k plus low-cost health insurance plus a paid-off house plus S.S., my basics plus a little extra should be well-covered.

One point I left out is that I have an extremely interesting project that is possibly coming up at work. It would involve some rather unique and thrilling exploration that would satisfy another childhood fantasy of mine. It's not a ride on the Space Shuttle, but it's close in a way. If this research is funded, there's no question that I would retire before another ~3 years, while I devoted a big chunk of effort to that goal.

[MasterBlaster]

You can probably do a bit better than 3% SWR.

Here is Bernsteins chart on SWRs for various durations for a mixed stock-bond portfolio

Also, as you may know, if you take on somewhat more risk (ie a 99 or 95 percent safe withdrawal rate) the SWR goes up a percent or so.

[Grep]

MasterBlaster,

Can you please point to the article that this chart came from?

I think my portfolio is more conservative than most that that are used for these sorts of studies (40% diversified stocks, 20% bonds, 40% cash equivalents), but you are probably right that I could take more than 3%.

[Shawn]

Grep, yes, my desire for early retirement is mainly driven by the fact that I do not like my job. While there are many things I'd like to do as an early retiree (e.g., adventure-type outdoor activities), I'm counting the days until I do not have to work as opposed to counting the days until I get to "have fun." As I've said before, the technical work is interesting, but the environment in which it is performed is horrendous. I suppose I could get a more pleasant job, but it would not come with the embedded rewards that I have now.

Waiting until lifetime medical at 50 seems like a prudent choice. It's a little bit of suffering for a fairly substantial reward. However, my thoughts of going to 53 (or 55 or 60) are not particularly rational. At 50, I'll have an effective (pension plus savings) withdrawal rate of about 1%. That's extremely safe and almost guarantees that my net worth will continue to grow at a fairly substantial rate. I tell myself that the extra money may someday be useful, but it seems unlikely that it will ever come in play. My personality is not to buy a $2M house. I have a blue collar outlook. An extravagant evening for me is bowling and dinner at Denny's (OK, I haven't done either in a long time, but hopefully the point is clear).

My desire to continue savings through my pension is also an emotional security blanket. Today, it feels good that my monthly salary pays my expenses and a lot more. It's a feeling of freedom, flexibility, and power. Financially, I continue to grow. Investments are variable, but the stability of the regular income feels good. Again, I acknowledge that this is not a rational feeling (i.e., my savings/investments will give me most of my income and growth). But it's a feeling nonetheless.

One reason I like reading this forum is to get the personal perspectives of other people about why and when they plan to or did retire. I find these types of threads quite interesting.