Hello from Northern California

[Ron G]

I'm 43 years old and have worked for city government full time for 23 years. We are part of Cal PERS and also have a deffered comp plan. I have not paid into social security since I started full time 23 years ago. With Cal PERS, we are eligible for retirement at age 50 @ 2% of current salary for every year of service (will be 29 years and 60%). At age 55, it jumps up to 2.7% of salary (will be 34 years and 92%).
I own two, home base businesses that could produce a lot better if I just had the time. It's the old saying work tends to get in the way of, Well, more work  .  My plan is to have someone else run the businesses after I retire and I will manage them. I have no desire to sit around after retirement there are simply to many fish to catch out there and I aim to do my part.   
Should I retire at 50?. What would you do?. 

 

[zcung]

Yes, if your businesses (without you) can bring you at least 80% of your current income.

 

[Nords]

Welcome to the board, Ron.

I'm 43 years old and have worked for city government full time for 23 years. We are part of Cal PERS and also have a deffered comp plan. I have not paid into social security since I started full time 23 years ago. With Cal PERS, we are eligible for retirement at age 50 @ 2% of current salary for every year of service (will be 29 years and 60%). At age 55, it jumps up to 2.7% of salary (will be 34 years and 92%).
I own two, home base businesses that could produce a lot better if I just had the time. It's the old saying work tends to get in the way of, Well, more work  .  My plan is to have someone else run the businesses after I retire and I will manage them. I have no desire to sit around after retirement there are simply to many fish to catch out there and I aim to do my part.   
Should I retire at 50?. What would you do?. 

What about retiring from your day job the minute you turn 50, farming out or selling your two businesses, and fully retiring?

Forget the 80% stuff, that's journalistic soundbites. You'll need to run FIRECalc on the different scenarios for your expenses in ER. See what the money numbers offer you.

Presumably you've been paying something into SS with your home businesses, but I don't think I'd want to have to make or break my ER decision on whether or not I was getting SS.

 

[Mountain_Mike]

Hi Ron,

Are you in public safety? I'm in the school side of PERS, and we "only" get 2% at 55. I, like you, started at 20 years old, and at this stage PERS is a good path for those who wish to ER in their 50s.

 

[JonnyM]

A couple observations:

1. Having recently retired from public service with an approx payout of 35% of final salary, my expectation for you is more than positive. I would expect that if you max deferred comp for the remaining 7 years (I tried that with some success) you find your actual net spendable cash is 60 percent or less anyway. In other words if you pull the plug at the earliest possible age of 50 you're take home DBP cola'd pension is going to be a wash with what you've been spending for the past seven years, assuming no debt accumulation. As a bonus you'll have another $100,000 plus dollars in your 457 nest egg. Whoo Hoo!

You will be totally In Like Flint at 50. I'm telling you I'm there right now (2 months into my FIRE) and it's Tony Tiger GRRRRRRRREAT!

2. The scale for the benefit calc is a sliding one. Sure you'd get 2.7 percent at 55 but create a spreadsheet with all the intermediate percentages. You'll find it's a pretty flat rising curve from 50 to 55. You may like for example 51 as the magic sweet spot age with a payout between 65 and 70 percent of final salary payout. Take a look. I kept my spreadsheet ( constantly updated) in the background on my PC at work for years as inspiration as the time clicked off to ER.

No matter what you're on course for a great result. My guess is when you get there or close to there, you'll be able to best fine tune the "plan".

Enjoy 8)

 

[Ron G]

Great advice and thanks to all.
JonnyM , congrats on the ER, public service does have a great retirement plan if done right.
Question, I can max out my 457 contribution and end up with an additional $100,00.
Or, should I make principal payments and buy my mortgage (current balance of $325,000, house value of $750.000) 

 

[bosco]

Presumably you've been paying something into SS with your home businesses, but I don't think I'd want to have to make or break my ER decision on whether or not I was getting SS.

OP sounds like a candidate for the windfall elimination provision. Even if he qualifies for SS, he will be lucky to get $.50 on the dollar. I ran both my wife and my SS projections through the detailed calculator (downloadable from the SS website. It's hard to get accurate info on the WEP except from this calculator). Because we get a pension and did not contribute to SS during that period (like the OP), she gets about 43% and I get about 60% of the SS to which we would otherwise be entitled. Seems unfair since we paid in the full premium, but oh well.

 

[Leonidas]

OP sounds like a candidate for the windfall elimination provision. Even if he qualifies for SS, he will be lucky to get $.50 on the dollar. I ran both my wife and my SS projections through the detailed calculator (downloadable from the SS website. It's hard to get accurate info on the WEP except from this calculator).

That's a good lead, I'll need to dl that calculator. Thanks

I'm like Ron, I get the annual report from the SSA that says my anticipated benefits are zero. But, the Princess is due SS benefits from when she worked. I know my pension will affect her future SS benefits, and whatever I have coming as her spouse, but whenever I started to figure it all out I lost interest - too much calculating and reading for something I never factored into my plan to RE. The calculator sounds ideal for my lazy man's approach to this issue.

Ron, you will find there are differing opinions and a lot of debate here about paying off mortgages. For me, the decision comes down to how much sleep do I lose over having a mortgage, and where does my money work the best for me. My mortgage is about 33% of what my house should sell for and the payments are manageable. While I would love to not have to make the monthly payment, it’s not making me lose any sleep. I opted not to enroll in the 457 plan here because I felt I had better alternatives, but rather than take a straight retirement I did chose to take full pay while I burn all of my leave. My pension payments and ten percent of my salary (plus a city match) is going into my DROP account where it’s tax-deferred and earning a higher rate than my mortgage interest. When I finally retire I’ll reevaluate the situation then.

 

[Ginger]

My DH also receives a Cal Pers pension and also a County pension. No social security. 2.7% for County, 2.2% for Cal Pers. He is receiving about 80% of final salary. I spoke to a Social Security representative and DW's pension does not have an effect on my SS payment in the future. If I die first, DH would only receive a reduced payment for survivor benefit on my SS- very minimal payment.

 

[Leonidas]

My DH also receives a Cal Pers pension and also a County pension. No social security. 2.7% for County, 2.2% for Cal Pers. He is receiving about 80% of final salary. I spoke to a Social Security representative and DW's pension does not have an effect on my SS payment in the future. If I die first, DH would only receive a reduced payment for survivor benefit on my SS- very minimal payment.

You're right - I didn't really check into it all that much because I knew I wasn't getting squat - but I did miss the part where it said that pensions not based on your earnings were not impacted. So, if I die first she gets all my pension and all of her SS, but if she goes first I'm not going to get diddly from the SS as a surviving spouse. Not complaining, but that seems strange - the pension payment is the same in either case, but one spouse gets all the SS benefit and the other gets a reduced (or eliminated) SS benefit. Maybe it has something to do with the number of pensions that only pay reduced percentages to surviving spouses.