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Might retire early for health reasons
Old 09-01-2017, 09:18 PM   #1
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Might retire early for health reasons

Hello,

I am 51 years old and currently working full-time, but cutting back to a 30 hour schedule in January primarily for health reasons.

I've always been healthy until I was rear ended at a stop light hard and had several spinal fractures and other issues. I recovered reasonably well, but still have daily headaches and get fatigued more quickly as I've never slept the same since the accident. I'm in a position where I am not able to work as I once did but not really disabled either. So I am trying to limp to the finish line as best I can with this 30 hour schedule and hope my employer continues to be happy with my work which is not as good as it was before the accident when I was very healthy.

My wife is 49, and my best friend that I am lucky to have. She hasn't worked in 25 years and has some physical issues and is uncomfortable with the idea of working again.

With my reduced income I am still able to pay all expenses and save. In 9 years I start receiving my pension which is 6,037 per month and unless we have massive inflation is enough to live on. Aside from that we have 400k in IRA and 401k accounts. I have 130k in my pension account which isn't earning great interest, but I've kept it there. I can either convert that to an annuity for another 1,000 or so per month or roll it to an IRA. Even though I put the money in on a post tax basis, it's considered mostly pre-tax. We have 300k in CDs and savings earning between 1.2 and 1.55% which was our fund to pay off the house. We have a house worth 400k we owe 300k on with a payment of 1300/month (30 year 3.2% interest).

We have no other debt and alot of our big expenses are out of the way - roof, both cars, AC.

I want to work as long as I can but am not sure how I will hold up and feel my performance is not at it's best due to the constant headaches so I feel my job is at risk at some point even though at the moment they seem happy despite my limits. I am hoping when my hours drop from 52 to 30 my concentration and performance will get a boost to carry me to 60 and my pension, but I am skeptical.

A few things I am trying to figure out
- pay off the house or keep the cash. I would normally say pay off the house, but I feel I could be out of work at some point and maybe the cash is better.
- If I am not able to work I would use a combination of SEPP penalty free withdrawels and post-tax money to get me to 60, but that would drain alot of resources as my expenses are about 55k per year with the mortgage. It still seems SEPP would make sense since my tax rate would be low.
- What to do with the 300k cash if I don't pay off the house.
- part-time options if my 30 hour schedule doesn't work out.

So I am limping into retirement which is not what I was hoping for, but I still consider myself lucky and it seems it should work out ok.

I am not sure how to enter my pension into FIRE so I haven't been able to get a solid # there.
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Old 09-01-2017, 10:06 PM   #2
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My theory is to get out ASAP because nobody knows what tomorrow holds, travel or do whatever you enjoy doing if you can afford the lifestyle without working, life is relatively short, even the 30 years you might have left will go very fast
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Old 09-02-2017, 03:51 AM   #3
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Dresden, welcome to the forum. I am sorry to here about your health issues. One other item to consider is health insurance. If you leave work earlier than you had planned, what will you do for health insurance? While it is available through the ACA, I would be concerned about high deductibles and co-pays if I had ongoing health issues. You may want to consider keeping the job while you are working to resolve some the health problems.

Have you checked into your companies long term disability insurance?

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Old 09-02-2017, 04:13 AM   #4
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Dresden, from a financial standpoint, I think you are in pretty good shape and have some options. If it were me, I would convert the $130k in the pension account to the monthly annuity adding $1k per month to your pension. That would give you $7k per month ($84k annually) in retirement with a current budget of $55k per year. You have $700k to use over the next 9 years and you have a withdrawal plan. I know you had not planned to use this money, but it should get you to age 60 if needed. Will you also receive social security? Since your job situation is uncertain, I would not pay the house off at this time. You may need the $300k to get to age 60. It looks like you can handle the house payment once you receive your pension. If you have cash left over at that point you can consider paying off the house.

Does the pension include a cost of living adjustment to account for inflation? If not, you would need to account for inflation in your future budget. If you will receive social security, that would help.

I like your plan to work a reduced schedule. If you can make it a couple of more years in the job, you should be in great shape financially.

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Old 09-02-2017, 05:42 AM   #5
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Is there a chance to get back to the other driver and the insurance for your long term damages?
Several spinal fractures, daily headaches and sleeping disorders are not "not disabled" in my book.
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Old 09-02-2017, 05:51 AM   #6
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Yep, hire a lawyer specializing in disability.

To pursue the other "at-fault" driver (their insurance company) plus navigate your company's disability program (if available) and more importantly, SS's disability program.

You have a significant time gap until pension/SS retirement for which your income (from whatever source) needs to be protected.

And, even when eligible, it usually takes a significant amount time for SS disability to be awarded, making an attorney a must in that process.

Please meet with an attorney before telling work that you want to reduce your schedule.
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Old 09-02-2017, 05:56 AM   #7
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I had to do the same years ago without having saved much. Both your pension and savings are better than mine. Since I'm doing fine I would say welcome to FIRE!
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Old 09-02-2017, 06:14 AM   #8
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Is there a chance to get back to the other driver and the insurance for your long term damages?
Several spinal fractures, daily headaches and sleeping disorders are not "not disabled" in my book.
+1

Get a good lawyer. It's not revenge, it's justice.
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Old 09-02-2017, 06:45 AM   #9
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Welcome and I'm sorry for the troubles that this unfortunate accident is causing you.

I think you have enough... especially since your pension exceeds your expenses by a wide margin. Your problem is more of an accessibility problem. BTW, you didn't mention social security... do you or your wife qualify for social security retirement benefits?

I think your instinct to not pay off the mortgage is spot on... you'll need that money to live on between age 51 and 60 when your pension starts. Between a SEPP on your $530k of retirement savings and withdrawals from the $300k you should have enough to fund your $55k of spending between now and 60 but not with much room for bad things happening.

I would invest the $300k in a CD ladder to squeeze out a bit more interest and invest the $530k of retirement savings in a balanced stock/bond portfolio in the 40/60 to 60/40 range.
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Old 09-02-2017, 06:49 AM   #10
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When did this accident happen? The advise to get a lawyer is fine but if too much time has passed that will be a problem.

If the accident was recent you might just need a year or two break from work to rest your brain, get intensive therapy for your back and maybe try a pain management clinic.

If my math is right your wife hasn't worked since her early 20',s was she at home raising your family? Unless she has worse physical problems or perhaps a mental issue she could step up here and earn some money. She sees you suffering daily and says she's "not comfortable" getting some type of job, she's 49 not 69.

If you leave your job start to document that its for no other reason except for health issues get this all on paper with HR before you pull the plug. Remember if you are US based they must make accommodations for any disability that you document. Again if you are US based be very certain that you have continuous health care so you wont get tripped up in a pre-existing condition problem if thing change. Also after you have worked on your health by leaving your job and perusing more treatment, you could attempt to obtain SSI if you still can't work. Get all the documentation that you can.
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Old 09-02-2017, 06:53 AM   #11
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...I am not sure how to enter my pension into FIRE so I haven't been able to get a solid # there.
I assume that you mean FIRECalc. There are light green tabs across the page about 1 1/2" from the top of the screen. Enter your pension on the Other Income/Spending tab.

Do not include your mortage in your spending on the Start Here tab... put your other spending there ($39,400). If you include your mortgage in spending the program will make inflation adjusted withdrawals of $15,600/year for life but your mortgage payments are fixed and ultimately end.

This is going to sound wierd, but put your mortgage on the Other Income/Spending tab. One entry for $15,600/year of fixed off-chart spending beginning in 2017 and one entry for $15,600/year of fixed pension income beginning when your mortgage ends. That will get you a more accurate success rate.

Also, if you have SS, enter that on the Other Income/Spending tab in the top section.

Also, change the AA on the your portfolio tab to reflect your AA. It may be better to omit the CDs from your portfolio on the Start Here tab (only include $530k) and put the $300k in as $33k a year of additions until 2027 in the Not Retired tab.
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Old 09-02-2017, 07:36 AM   #12
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If the OP pays off the mortgage, his expenses should drop from $55k quite a lot to about $40K. He still has enough money to get him to his pension. I would pay off the mortgage.
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Old 09-02-2017, 07:45 AM   #13
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The problem is that he does not have penalty-free access to his retirement money since he is only 51. Paying off the mortgage is a BAD idea in his case since SEPP will max out at ~$23k a year and will not give him the $40k a year that he needs to live on. He needs that $300k in savings for living to get to 59 1/2.
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Old 09-02-2017, 08:31 AM   #14
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My empathy.

I have degenerative disc disease and multiple herniated and bulging discs. For some reason I seem to be the most popular vehicle on the road to run into.

I had one in 2010 that took year's to recover from the daily severe headaches, sometimes they'd go to cluster headaches. I was to a neurologist and pain management, nothing really helped. The gave me mild opiods, they helped till they didn't..

Somehow my DW and I end up in a gym. I'd done PT after each incident and it was beneficial to some extent. Some of the exercise was familiar to the PT, except for the weight. The PT I did was with 5-10 pounds, now I'm doing many of the same exercises with 50, 75, 100 pounds.

My daily headaches are gone, opiods a thing for history books.

Best wishes to you.
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Old 09-02-2017, 11:58 AM   #15
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Like the rest, sorry that the health issues are putting you in this position. I agree that you should get an attorney and investigate the issue of lost wages, medical expenses and that infamous "pain and suffering". Can you get permanent disability classification? That would give you your FRA social security amount, and you would have health insurance coverage. Then you don't work, and can be focused on getting better. You state that your quality of work is down and can not do the full time. So it seems you are potentially eligible?

As for the money side, I agree keeping cash available is wise at this point. I do think you might be too conservative with savings and are missing potential growth and outpacing inflation.
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Old 09-03-2017, 07:51 AM   #16
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I appreciate the ideas, information and kind words. A few more details:

- My accident happened after our group was given notice by [Mod edit] (assets in business unit sold - people layed off) but before I started with the new company. I have disability insurance, but it doesn't cover pre-existing conditions so it would only cover some new issue, not anything related to the auto accident. I had the offer before the accident and knew several people at the new employer. They knew about my issues and didn't withdraw the offer - so I really appreciate the company and the people at the company as I was in a rough situation if they withdrew that offer.

- I have 20k in a health savings account. While I am working I am letting that grow and not spending from it. At this point there isn't much doctors can do for me so my medical expenses aren't super high - I see a doctor once per month and physical therapist once per month following exercises on my own the rest of the month. Any new health insurance I get would cover injuries related to the auto accident since pre-existing conditions are included now. As you said, with high deductible I probably would be paying out of pocket anyhow.

- I have an attorney for the auto accident and that will probably be resolved by the end of the year, but the person that hit me didn't survive unfortunately and didn't have great insurance. I am thinking all the money will go to doctors and my own insurance may even kick in to cover the rest (underinsured other driver protection). The attorney has been great even knowing fully she may not get much or anything. If I get anything it will be very small. I will get back my out of pocket medical expenses which is around 10k. Total medical expenses were around 200k, but some of the bills were sent directly to the attorney so that is an estimate.

- I do qualify for social security with 35 years of continued service, but the early years were high school/college and not very much. If I calculate what I've earned assuming no future earnings it's 2500 at age 67 or 1770 at 62 or 3135 at age 70. 70 would be ideal since both my and my wife's social security will be based on my record so each year I take it early is a double hit. If I worked the next 8 years part-time it would increase it by 25/month for each year I work except the last year it would be a smaller bump.

- I don't have a disability attorney, but I am seeing doctors regularly in case my condition worsens. I did research it a little and it seems if you are over 50 and work a physical job you can get disability if you are unable to do the same job, but if you work a desk job you can only get it you are unable to do any job. So social security disability seems unlikely unless I get worse which I hope is not the case.
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Old 09-03-2017, 08:12 AM   #17
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I suspect that you will find that if you run FIRECalc or any of the other popular calculators that adding SS to what you gave us in your OP that your success rate will increase to 100%.

If your wife will collect SS based on your work record, then she will get half of your FRA benefit beginning at her FRA. Google "SS Analyze" to see what the best claiming options are for you. So if you both claim at FRA that would be $3,750/month on top of your $6k/month pension.

Did you have long-term disability insurance as a GE employee? Usually, you would have had a payroll deduction for the cost of coverage. If so, you may have a legitimate claim.

If the at-fault driver didn't have great coverage to cover your damages, then your insurer's UM coverage may kick in.
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Old 09-03-2017, 08:19 AM   #18
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If the OP pays off the mortgage, his expenses should drop from $55k quite a lot to about $40K. He still has enough money to get him to his pension. I would pay off the mortgage.


What are the tax implications if he pays off his mortgage?
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Old 09-03-2017, 08:26 AM   #19
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I retired due to health problems incompatible with work demands (HVAC technician) at 55. If your work load affects your health, you should retire. If doctors see no solution / treatments what could restore your health then you do not have a choice.
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