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Living for the day
Old 10-09-2009, 09:09 PM   #1
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Living for the day

Hello to all from a brand-newbie. My name is Ken. I just discovered the site and am so excited to find so many kindred spirits. My wife doesn't seem to understand how passionate I am about ER, or is it RE (sorry, I'll get the protocol down soon). Wy wife says, "dont wish your life away." and stop thinking about it (ER) so much." But, I can't help myself.

O.K. now for the numbers. I am 54 and will qualify for ER in 6 months. I fly for one of the big companies that you are familiar with. I will take a substantial hit on my pension by leaving early (3% per year for each year before age 60). What this amounts to is a $80,000 pension at age 55 that will grow to about 120,000 if I wait til age 60. My plan is to retire in 3 years. By then the house and RV will be paid for and the last of our four children will be finishing high school and be off to college. Our 401 and IRA total at the moment about 600K. My current AA is 80/20. If I leave in three years, the pension will be about 100K. Except for our two daughters college, there will be no outstanding debt. What think you?
Thanks for being there. I look forward to catching up on alot of reading in the forums and using you to brainstorm my situation.
Regards, Ken
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Old 10-09-2009, 10:30 PM   #2
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Hello fellow North Alabamian, welcome to the board.

It looks like you are in great financial shape. It's hard to go into details because you didn't say how much you needed to cover your expenses in retirement, but given the cost of living around here, 100K should be more than enough to support a very nice lifestyle especially with all debts retired. So it looks solid to me.

I have a few question though. Is the pension income fixed or adjusted for inflation? Are you at all worried about the airline going bankrupt and losing a big chunk of your income if the pension fund gets turned over to the PBGC?

Again, welcome.
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Old 10-09-2009, 11:24 PM   #3
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Thanks dreamer,
Expenses I estimate at about 75,000 (based on current on-going obligations and being generous with our personal allowances). These expenses dont include what we will yet need for the two daughters college. I've got about 15K each put away so far. After the house and RV are paid in about 18 months, I'll attack their 529's until they graduate (3 yrs). Pension has no COLA.
Your comment on the airline bankruptcies is well taken. Ours is a so-far very profitable non-passenger type endeaver and as we speak, all pension responsibilities are funded, but you never know what the future holds.
I guess my biggest hang-up on when to go is looking at the early retirement penalties (prior to age 60 = 3% per yr) as my money. Leaving early equates to (at least in my mind so far), giving back to the company something I've earned for the priviledge of retiring. If it wasn't for the penalties, I would probably retire in 6 mos when I hit 55. Ken
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Old 10-10-2009, 12:11 AM   #4
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Originally Posted by kenmck02 View Post
I guess my biggest hang-up on when to go is looking at the early retirement penalties (prior to age 60 = 3% per yr) as my money. Leaving early equates to (at least in my mind so far), giving back to the company something I've earned for the priviledge of retiring. If it wasn't for the penalties, I would probably retire in 6 mos when I hit 55. Ken
You are struggling with the same question many of us struggle with: when is enough really enough. When does "more free time and less money" become more compelling than "less free time but more money"? It's a personal decision.

Perhaps it will help to look at it this way. What you have earned is the right to retire at age 60 with a guaranteed income of $120K a year. By retiring before the age of 60, you are in effect exceeding your rights and it seems fair that the privilege would come at a price. So perhaps you shouldn't think of it as a penalty (the term is too negative). You are simply purchasing a few extra years of freedom. The question is: is the price for that extra freedom right or is it too high?
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Old 10-10-2009, 03:56 AM   #5
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Dreamer, An interesting way to look at it, thanks. I often say when I come home from a week-log trip that I've bought myself a week of freedom. I guess what I need to start doing is quantifying exactly what a year's worth of freedom is worth. Oh by the way, Audentes Fortuna Juvat "Fortune favors the brave and the bold" is our family's motto found on the anciient crest. I appreciate your thoughts. Ken
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Old 10-10-2009, 07:21 AM   #6
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Originally Posted by kenmck02 View Post
My wife doesn't seem to understand how passionate I am about ER, or is it RE (sorry, I'll get the protocol down soon). Wy wife says, "dont wish your life away." and stop thinking about it (ER) so much." But, I can't help myself.
Spend some time here. It will help if she understands your motivation. For most of use FIRE was the exact opposite of wishing our life away. Does she work and plan to stay employed longer than you?
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Old 10-10-2009, 11:57 AM   #7
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You are struggling with the same question many of us struggle with: when is enough really enough.
Enough is not an American concept. This must be some kind of dirty commie import.

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Old 10-13-2009, 03:45 PM   #8
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Originally Posted by kenmck02 View Post
My wife doesn't seem to understand how passionate I am about ER, or is it RE (sorry, I'll get the protocol down soon). Wy wife says, "dont wish your life away." and stop thinking about it (ER) so much." But, I can't help myself.
If you were currently 29 years old and ER was quite a few years away, she might have a point. But since you are 54 and can qualify for ER in only six months time, it seems only natural that you are anticipating retirement.

Quote:
Originally Posted by kenmck02 View Post
I guess my biggest hang-up on when to go is looking at the early retirement penalties (prior to age 60 = 3% per yr) as my money. Leaving early equates to (at least in my mind so far), giving back to the company something I've earned for the priviledge of retiring. If it wasn't for the penalties, I would probably retire in 6 mos when I hit 55.
As FIREdreamer says, it is a personal decision when "more free time and less money" becomes more compelling than "less free time but more money".

If you enjoy your j*b, you may as well keep at it and qualify for the maximum pension. But since you describe yourself as "passionate" about ER, you "can't stop thinking about it", and are "living for the day" when you can retire, I infer that you are either sick of w*rking, or tired of the politics/BS (some is inevitable in just about any line of w*rk). Or perhaps there are simply other things that you would prefer to do with your time.

Since you are passionate about ER and apparently will have sufficient pension income to meet your needs at age 55 (or 58 at the latest), I wouldn't recommend hanging on to squeeze the absolute maximum out of your potential retirement rights. Once you have enough, money becomes much less important than time (of which we all have only a finite, non-renewable supply); and 'golden handcuffs' are still handcuffs.

P.S. You might enjoy Joe Dominguez's and Vicki Robin's Your Money or Your Life: Transforming Your Relationship With Money, especially chapter 4 ("How Much is Enough? The Nature of Fulfilment").
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Old 10-13-2009, 07:26 PM   #9
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P.S. You might enjoy Joe Dominguez's and Vicki Robin's Your Money or Your Life: Transforming Your Relationship With Money, especially chapter 4 ("How Much is Enough? The Nature of Fulfilment").
I agree. I, also, suggest Spend 'Til the End: The Revolutionary Guide to Raising Your Living Standard-Today and When You Retire.

Or, best of all, spend some time here: An updated FIRE recommended reading list (with a military twist)
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Old 10-13-2009, 11:54 PM   #10
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Welcome Ken.

With the exception of children, your life has mimicked mine almost to a "T" including pension. Same job, different company. Someone once told me, "It's better to retire a little too early than a little too late." I took his advice and have never looked back.

Bottom line, do you still enjoy your job? I didn't, times had changed, tired of being tired and left early. Btw, if you have ever non-rev through MEM you probably met my wife.

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Old 10-14-2009, 07:00 AM   #11
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Most flyboys I have known still love to fly after they punch out of remunerated flying. How about you? If so, will you be able to afford it on a non-COLA pension at the 80k level? ...and for how long? Just some food for thought.

IMO you will also want to run the numbers and see what 80k means 5 years, 10 years down the road in today's dollars. You mentioned 75k in expenses. That means a non-cola pension covers that for only about 2 years, then you begin dipping into savings. I don't have a pension so I have never looked into that aspect of FIREcalc, but would highly recommend you give it a go, just to see how the numbers work for you. 'Course, I'm a belt and suspenders guy, but I'd include this stuff in my considerations. Maybe 60 is taking it too far, but 55 might be a year or three early.

R
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Old 10-14-2009, 07:52 AM   #12
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IMO you will also want to run the numbers and see what 80k means 5 years, 10 years down the road in today's dollars. You mentioned 75k in expenses. That means a non-cola pension covers that for only about 2 years, then you begin dipping into savings
I think if he waits 3 years he gets 100K, but still the fact that it doesn't have a COLA may need to be thought out. However, he can start tapping his tax deferred money at about 24K per year to offset inflation. How much tax would you see on that 100K pension?

I didn't understand the college expense part. You only have 15K set aside for each daughter for college? Where does the rest come from?

Overall it looks doable (other than the college expense). And take it from me, if you keep waiting for "enough", it will never be enough. At some point you just have to pull the plug and do it, or be pushed into it like I was.

Finally, I understand you wife's reluctance, but you can tell her my story to try to change her mind. For the last few years I had my business I desparatly wanted to get out because I was burned out and I saw some bad things coming on the horizon. However, we were still making really good money so my wife thought I was crazy. Finally the business fell apart and I HAD to close it. So, I waited too long trying to eeek the last dollar out of it, and it cost us money.
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Old 10-14-2009, 05:38 PM   #13
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I didn't understand the college expense part. You only have 15K set aside for each daughter for college? Where does the rest come from?
His plan: "in about 18 months, I'll attack their 529's until they graduate (3 yrs)."

I agree that that seems unlikely to yield sufficient savings to finance a decent undergraduate education. But perhaps the children will be expected to earn scholarships, or finance part of the own education through loans or part-time/summer j*bs [personally, I believe all students should be expected to make at least some contribution towards the costs of university/college, rather than expecting mom and dad to pay for everything. That's only my opinion, of course].
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Old 10-15-2009, 03:53 PM   #14
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Thanks to all responders. I may have been too hard on the DW. I think she may be cautious about the "half the money, twice the husband" syndrome.
As for college for the girls, yes there may be some shortfalls, but yet there may be some scholarships too. I estimate in three years I can have each of their 529's to about the 40K level. Check 6, I appreciate the comments. Someone who has flown the back side of the clock for 22+ years on top of 10 military knows what "tired" truly is. Not that I dont enjoy flying anymore, but it is now just a job, a good job mind you, but still a job. The worst part is being away from home. I find my toleration for being gone growing less by the month. And no, there will most likely be no leisure flying after ER, but plenty of RVing with DW. Thanks again for the welcome; I'm really enjoying the site.
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Old 10-15-2009, 03:55 PM   #15
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wow. if i had 100k/year pension there would be NO question what to do. of course, i dont live your lifestyle and think i could be happy with 30k/yr if my home was paid off.
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Old 10-16-2009, 07:52 AM   #16
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Most flyboys I have known still love to fly after they punch out of remunerated flying.
R

Rambler,

You might also be surprised how many don't even want to go near an airplane after retirement either on a commercial flight or their own.

My wife has to point a gun to my head to get me to travel although we did go to Europe twice last year. My own plane has been collecting dust for the last couple years.

Ck 6
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Old 10-16-2009, 10:36 AM   #17
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wow. if i had 100k/year pension there would be NO question what to do. of course, i dont live your lifestyle and think i could be happy with 30k/yr if my home was paid off.
Yeah, OP is not in the same plane (pun intended) as me. I am aiming for $60K/yr+inflation expenses and a 2-3% WR. Sounds like he may have exceeded my goals...
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Old 10-16-2009, 10:41 AM   #18
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My wife has to point a gun to my head to get me to travel although we did go to Europe twice last year. My own plane has been collecting dust for the last couple years.
My dad was a pilot in the Air Force. For the rest of his life since the day he was grounded for medical reasons, he wouldn't fly. He wanted no part of being on an airplane unless he was the one in the cockpit.
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Old 10-21-2009, 01:15 PM   #19
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Thanks to all responders. I may have been too hard on the DW. I think she may be cautious about the "half the money, twice the husband" syndrome.
As for college for the girls, yes there may be some shortfalls, but yet there may be some scholarships too. I estimate in three years I can have each of their 529's to about the 40K level. Check 6, I appreciate the comments. Someone who has flown the back side of the clock for 22+ years on top of 10 military knows what "tired" truly is. Not that I dont enjoy flying anymore, but it is now just a job, a good job mind you, but still a job. The worst part is being away from home. I find my toleration for being gone growing less by the month. And no, there will most likely be no leisure flying after ER, but plenty of RVing with DW. Thanks again for the welcome; I'm really enjoying the site.
I just retired on September 30th at age 53 with a govt pension. Although I had been eligible for the last 5 years, I failed to see, or look for, any compelling reasons to retire (until I found ER Forum). The job was not stressful, I was appreciated and respected and the work conditions were ideal. However, after I became a regular fan of ER Forum, I realized three things: 1) there is a big world and endless possibilities for retirees, 2) I was extremely fortunate to be in a position to retire early, and 3) I could maximize my time with DW, and our 3 daughters (14, 11, 10) while they are still young.

I too, could have continued to increase my annual pension by "working just one more year (or 2,3,4...)." But, over the last few months, thanks to some ER perspectives, (and our careful planning through the years for college) I'd become increasingly passionate about ER to the point that I though about it everday. Even though DW, who is 9 years younger and a professor, had regularly expressed sentiments like your DW's, I finally layed it out and clearly described the benefits our family would experience (more time together/less driving and other duties for her). It took only moments for her to sign-off.

Someone on ER Forum said: "If you retire early, you can always recover. If you retire too late, there is no recovery."

Best wishes as you contemplate ER.

Budatx
ER'd 09/30/09
The Possibilities are Endless!
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Old 10-21-2009, 03:45 PM   #20
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The job was not stressful, I was appreciated and respected and the work conditions were ideal. However, after I became a regular fan of ER Forum, I realized three things: 1) there is a big world and endless possibilities for retirees, 2) I was extremely fortunate to be in a position to retire early, and 3) I could maximize my time with DW, and our 3 daughters (14, 11, 10) while they are still young.
Good for you! You were very lucky to have such a job ... and blessed to have enough perspective that you didn't feel the need to hang onto it unnecessarily.
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