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Hi, Wife wants out of full time gig!
Old 09-17-2016, 07:40 AM   #1
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Hi, Wife wants out of full time gig!

Hey all, new to the forum a couple of weeks back. I'm 57 years old, DW is 55 able to collect her pension immediately.

DW wants to retire now!!!!!! I'd like to wait 20 months until I'm 59.5.

Currently :
275k in 401k & IRA.
25k cash
Primary residence that has a value of 155k - 80k of which is heloc debt used to buy 4 income properties in a place we plan to retire.

Rental properties include 2 condo,1 townhouse and 1 ranch home valued at 600k total with 330k mortgaged.


If we sell our primary residence now we'd net 65k or so after the real estate transaction on the home sale. Wife's pension is 3400/month and if we moved into one of the rentals our net rental income would be 1650 per month from the remaining 3 units.


We live modestly, the retirement and rental income leaves us enough to pay all our bills including health care, income taxes and have about 1k a month mad money.
(These numbers do not include withdrawals from the 401k, IRA or supplementing with the cash from the home sale.)

I'd like us to both keep working and wait the 20 months, fatten the 401k up to about 350k get the heloc paid way down and have 120k or more in cash. The rest of the equation remains the same.

I did tell DW she could retire now and I'd work till 60 but that option was poo poo'd.

Our friend firecalc gives us 0% failure rates in either scenario.

What say you??

PS I can't really talk to anybody else about this stuff, not much interest. That's why I posted here.
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Old 09-17-2016, 07:59 AM   #2
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My wife retired about two years before I pulled the plug. She was very happy from the very outset, and quickly found ways to fill (or over-fill) her time.

When you're doing your firecalcs, don't forget to budget some amount for an occasional new car or new roof. We put in an extra 10% or so in our calcs. Don't forget that your medical costs are likely to get higher as your knees, hips, or (in my case) neck wears out.

At first glance, our nest egg looks fatter than yours, but having a pension and rental income is wonderful. We have neither.

I'm sure other smarter people will also respond. I mainly wanted to mention that having one partner retired and one working is quite reasonable.
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Old 09-17-2016, 08:24 AM   #3
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Thanks Slow But Steady, we're very blessed that the wife's family plan health insurance carries on with a modest monthly premium until we're 65. It's modest now but who knows in the future. I'm going to get both knees replaced when I quit working. The knees are one of my reasons for getting out at 59.5.

We're a way out on the car too, just purchased our 2014 Honda CRV that we'd leased.

I'm counting on our stash of cash for repairs and unexpected emergencies. I'm also planning on taking SS at 62.
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Old 09-17-2016, 08:26 AM   #4
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If your income from pension & rentals covers all your expenses (including taxes) comfortably, why not retire? Your nest egg is just a bonus. But make sure you have included taxes in your thinking.
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Old 09-17-2016, 08:40 AM   #5
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To me, currently your assets seem a little low. Do you really know your expenses as in have you been tracking them each month ?

Questions for you to consider:
Have you had the rentals for many years ?
In you view of the net income for rentals , are you subtracting those major but rare repairs like new roof, furnance, A/C ? And of course an empty unit for a month ?

Will your wife pension go up if she stays longer, or is it frozen at $3,400/mo ?
Will you get health care from wife pension plan , where does it come from now ?

I cannot help but notice you want to work to reach 59.5 the magic number, why not 59? , it suggests you need to tap the IRA when retired ?

In your plan of working 20 more months, you list how you will save over $165K which is a lot of saving, compared to what you currently have saved. How real is this saving plan considering you didn't save at that rate over the past 20-30 years ?
Perhaps your situation changed, and you have been saving at this rate of ~100K per year for the past 4 years ?

Will you both qualify for SS, and when do you plan to take it, and why at that age ?
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Old 09-17-2016, 08:48 AM   #6
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If your income from pension & rentals covers all your expenses (including taxes) comfortably, why not retire? Your nest egg is just a bonus. But make sure you have included taxes in your thinking.

I did include taxes in my calculations, our accountant is on speed dial.


"Comfortably" is the word I'm having a hard time with. It's funny DW wasn't really thinking of retirement in dollars but the magic number of 55. I wasn't thinking about it at all until a year or so ago. DW changed departments and started to hate work when I got to researching investments and we bought the rentals. I'm really late to the game in that respect.

I guess we only get one chance to give the jobs up, I want to make sure it's not premature.
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Old 09-17-2016, 08:49 AM   #7
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....What say you??...
You can obviously do either, but IMO sooner is better than later. At this point, time has a higher value than money.

Or if you want to rationalize your decision, then you are not retiring... you are just quitting you full-time job to become a part-time real estate manager so you are still working.
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Old 09-17-2016, 09:23 AM   #8
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To me, currently your assets seem a little low. Do you really know your expenses as in have you been tracking them each month ?

Been tracking and budgeting over the past 12 months

Questions for you to consider:

Have you had the rentals for many years ?

Entering our second year with tenants on the condos and townhouse. The ranch was purchased for our daughter to live in while she did her residency at a local medical center and for us to retire too when the time comes. That house has been great as it was only 4 years old when we purchased it.

In you view of the net income for rentals , are you subtracting those major but rare repairs like new roof, furnance, A/C ?

The condos exteriors are covered through our condo fees. However those fees may rise. New roofs are planned over the next 5 years. The town house was 2 years old. Both condos had new furnaces/ac units before we purchased. I do have monies set aside for failures.

And of course an empty unit for a month ?

We have a super guy who interviews and vets our prospects. Since the places are pretty new, well kept and we rent slightly below the max for the area tenants shouldn't be a problem. However, I do figure there may be a month or 2 from time to time a rental may be vacant. This is one of the reasons I'd like to shore up the cash portion a bit. We bought these places in an area thats 10 minutes from the ocean who's property values got beat down bad in 08. Property values and rental rates are rising.

Will your wife pension go up if she stays longer, or is it frozen at $3,400/mo ?
Will you get health care from wife pension plan , where does it come from now ?

Healthcare will continue until 65 and her pension will increase if she stays. Pension gets COLA after 5 years, one penalty for early retirement in this case.


I cannot help but notice you want to work to reach 59.5 the magic number, why not 59? , it suggests you need to tap the IRA when retired ?

I dont need to take it at 59.5 but would like that luxury if need be. Also that time allows us to up both portions of the retirements, cash and 401k.

In your plan of working 20 more months, you list how you will save over $165K which is a lot of saving, compared to what you currently have saved. How real is this saving plan considering you didn't save at that rate over the past 20-30 years ?

No kids at home, no more college payments, no car payments, for 20 months 3500/ 4k per month on the Heloc and 3500.00 per month into retirement accounts I'd get 2- 5k bonus' in that time frame, wife would get 2 raises.

Perhaps your situation changed, and you have been saving at this rate of ~100K per year for the past 4 years ?

Situation changed dramatically, sold our larger home, downsized paid cash for our primary residence. Bought the ranch for the retirement homestead, daughter was covering the mortgage while living there. It was 1/2 the rent in the area at the time, we all got a deal there. Got the HELOC and bought the rentals. We had a pretty good relationship with our realtor and he really did us a great service in initiating and providing us with wonderful people to work with through the whole income property purchase.

I probably overdid that explanation.

Will you both qualify for SS, and when do you plan to take it, and why at that age ?
Yes, me at 62, DW at full retirement age.
Please see above....
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Old 09-17-2016, 09:34 AM   #9
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As long as you really understand the budget, it seems you are fine to have DW and yourself retire now. Sure the total savings seems low, but a $3400/mo pension is very nice offset to that. Think of the $3400 as being worth about $1M in equivalent savings using a 4% withdrawal rate. It is great you have the low-cost health care coverage along with that pension.

Rental real estate will take some time and work on your part, so not like you will be vacation every day. Also as suggested, there can be infrequent but high cost repairs needed. I have had rental in the past, I used to figure 1 month lost rent whenever a tenant moved out to clean and show the place before back to having rent income. I don't anymore, prefer the less hassle approach to just have it in mutual funds/REITs/bonds/etc.

On top of the pension and rental income, at some time I assume you are eligible for SS, so that makes it even more cushion and less need to tap the savings. The only thing I can really see is the risk of the pension paying that $3400 and health care subsidy for future years.
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Old 09-17-2016, 09:47 AM   #10
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Originally Posted by SonofCohoes View Post
Hey all, new to the forum a couple of weeks back. I'm 57 years old, DW is 55 able to collect her pension immediately.

DW wants to retire now!!!!!! I'd like to wait 20 months until I'm 59.5.

Currently :
275k in 401k & IRA.
25k cash
Primary residence that has a value of 155k - 80k of which is heloc debt used to buy 4 income properties in a place we plan to retire.

Rental properties include 2 condo,1 townhouse and 1 ranch home valued at 600k total with 330k mortgaged.


If we sell our primary residence now we'd net 65k or so after the real estate transaction on the home sale. Wife's pension is 3400/month and if we moved into one of the rentals our net rental income would be 1650 per month from the remaining 3 units.


We live modestly, the retirement and rental income leaves us enough to pay all our bills including health care, income taxes and have about 1k a month mad money.
(These numbers do not include withdrawals from the 401k, IRA or supplementing with the cash from the home sale.)

I'd like us to both keep working and wait the 20 months, fatten the 401k up to about 350k get the heloc paid way down and have 120k or more in cash. The rest of the equation remains the same.

I did tell DW she could retire now and I'd work till 60 but that option was poo poo'd.
Mention to DW that time cannot be purchased. Her time in retirement now would help you both in the next 20 months. Her pension won't grow that much, I assume. But getting the house ready for sale, and all of the other planning requires free time. She can stop working and get "paid" $3500/month.
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Old 09-17-2016, 10:01 AM   #11
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Everything you have said makes sense and sounds well planned out.

Can your wife take the pension and still work, because if not, then from her point of view , she gets ~ $41K retired, so work is worth: work income - 41K

Perhaps a middle ground of both quit in 6 or 8 months, or she retires and you work 1 more year, or until you are convinced it's ok.

I admit, my DW told me she wanted to retire and for 2 years I kept putting off, thinking we couldn't, telling her no way. Then friends did, and when I ran the numbers I realized she was right all along.

It is good that she takes SS at full retirement age (or later), as statistically she will live longer and need the higher SS.
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Old 09-17-2016, 10:18 AM   #12
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Everything you have said makes sense and sounds well planned out.

Can your wife take the pension and still work, because if not, then from her point of view , she gets ~ $41K retired, so work is worth: work income - 41K

Perhaps a middle ground of both quit in 6 or 8 months, or she retires and you work 1 more year, or until you are convinced it's ok.

I admit, my DW told me she wanted to retire and for 2 years I kept putting off, thinking we couldn't, telling her no way. Then friends did, and when I ran the numbers I realized she was right all along.

It is good that she takes SS at full retirement age (or later), as statistically she will live longer and need the higher SS.
She can still work and plans to part time without jeopardizing her pension. Being married to me for almost 30 years and only spending a few hrs a day with me, all day everyday may be very taxing for her.

I could work too, I know locally I could work part time in my field without question. Moving 11 hrs away where I'm an unknown may be a bit more difficult.
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Old 09-17-2016, 11:03 AM   #13
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As others have said, your wife's pension can cover the base needs, which is an awesome situation to be in. Congratulations to the both of you!

If your wife is miserable, she should retire now. But don't be too rash for you. Give yourselves two months to see how things are going before deciding your current employment. I think that would be a more difficult scenario to poo-poo.

If it were me, I would've retired when her pension plus your other assets plus some margin of error gave me over 80% success rate on FireCalc. But I think most here aren't so daring.
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Old 09-17-2016, 11:15 AM   #14
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At first glance it seems like a slam dunk. The only potential problem I see is if your wife passes early. If the pension would give you at least 50% of her benefit for life then you should be ok. $1700/mo pension+$1650 rentals+$1250 SS at 62=$4600/mo or over $55K/yr. So if the pension has a survivor clause then I would retire now at least from full time work.
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Old 09-17-2016, 11:16 AM   #15
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Thanks everyone for the encouragement.
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Old 09-17-2016, 01:40 PM   #16
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I think your wife should retire. I have had friends die in their 50's & 60's so you just never know. At this age time is more valuable.
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Old 09-17-2016, 04:04 PM   #17
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At first glance it seems like a slam dunk. The only potential problem I see is if your wife passes early. If the pension would give you at least 50% of her benefit for life then you should be ok. $1700/mo pension+$1650 rentals+$1250 SS at 62=$4600/mo or over $55K/yr. So if the pension has a survivor clause then I would retire now at least from full time work.

That figure is for either survivor. If she passed first I'd lose the COLA, oh and my DW.
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Old 09-17-2016, 04:11 PM   #18
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Originally Posted by SonofCohoes View Post
Hey all, new to the forum a couple of weeks back. I'm 57 years old, DW is 55 able to collect her pension immediately.

DW wants to retire now!!!!!! I'd like to wait 20 months until I'm 59.5.

Currently :
275k in 401k & IRA.
25k cash
Primary residence that has a value of 155k - 80k of which is heloc debt used to buy 4 income properties in a place we plan to retire.

Rental properties include 2 condo,1 townhouse and 1 ranch home valued at 600k total with 330k mortgaged.


If we sell our primary residence now we'd net 65k or so after the real estate transaction on the home sale. Wife's pension is 3400/month and if we moved into one of the rentals our net rental income would be 1650 per month from the remaining 3 units.


We live modestly, the retirement and rental income leaves us enough to pay all our bills including health care, income taxes and have about 1k a month mad money.
(These numbers do not include withdrawals from the 401k, IRA or supplementing with the cash from the home sale.)

I'd like us to both keep working and wait the 20 months, fatten the 401k up to about 350k get the heloc paid way down and have 120k or more in cash. The rest of the equation remains the same.

I did tell DW she could retire now and I'd work till 60 but that option was poo poo'd.

Our friend firecalc gives us 0% failure rates in either scenario.

What say you??

PS I can't really talk to anybody else about this stuff, not much interest. That's why I posted here.
I'd let her retire now, she has a full time job taking care of the home, my wife retired at 44, I never realized how much of a job being a wife is " especially a mom ". Anyway she wants out of the workforce and there's no reason with the funds you guys have that you can't do it, besides money can't buy back that lost time. Have her to resign tomorrow.
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Old 09-17-2016, 04:28 PM   #19
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Why did she poo? Does she think your working longer has no merit (thinks you could retire when she does, and all would be well financially), or does she just not like the idea of being home alone? Twenty months is not very long.

Either way, my instinct as a spouse would be for you to let her do what she wants, and her to let you do what you want. No poo-ing necessary (except the bathroom kind, of course). That is the philosophy we have used to stay married to each other for 30 years.

Good luck!

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Originally Posted by SonofCohoes View Post

DW wants to retire now!!!!!! I'd like to wait 20 months until I'm 59.5.

I did tell DW she could retire now and I'd work till 60 but that option was poo poo'd.

O.
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Old 09-17-2016, 05:13 PM   #20
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Why did she poo? Does she think your working longer has no merit (thinks you could retire when she does, and all would be well financially), or does she just not like the idea of being home alone? Twenty months is not very long.

Either way, my instinct as a spouse would be for you to let her do what she wants, and her to let you do what you want. No poo-ing necessary (except the bathroom kind, of course). That is the philosophy we have used to stay married to each other for 30 years.

Good luck!
When she retires she wants to sell the primary residence and move right away. She doesn't want to be retired and stay in the same area were in now. Comment went kinda like, heck with that, I'll just keep working if we're gonna stay here.....
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