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Obsessed with getting out early
Old 01-27-2006, 07:59 PM   #1
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Obsessed with getting out early

As they say on the talk shows, Long time listener, first time caller.* Thouroughly enjoy the site.* My details:*

- 45 yrs old
- Married, 2 kids in 3rd, 5th grades
- Hoping to make it to 50 before retiring
- Basically working for the ~ free retiree health ins. that kicks in at 50
- Have been maxing out on the 401k for years
- House almost paid for $250k value)
- Living below means, no credit besides small house mortgage

Could leave now with ~$1.1MM in liquid funds, split 65% tax deferrred / 35% after tax.*
Should have ~$2MM at 50, partly due to L/S pension ramping up another $250k by 50,

- ~$30k dedicated to educ funds, +$1k/mo currently being invested (another reason to work to 50))

Concerns:* 65% tax deferred currently- will have to have a plan to eat into that sparingly before 59-1/2 - I know about the = & substantial w/d's...??
- Can easily live on ~$65k after taxes; probably more like $50k (todays $'s)

Biggest issue is whether I can last in the workplace another ~ 5 yrs! I'm pretty confident that if I can last to 50, I'll be set. Question is how iffy is it if I can't make it that long..!

Comments?
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Re: Obsessed with getting out early
Old 01-27-2006, 08:11 PM   #2
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Re: Obsessed with getting out early

Welcome to the board, getoutearly!

Quote:
Originally Posted by getoutearly
Biggest issue is whether I can last in the workplace another ~ 5 yrs!* I'm pretty confident that if I can last to 50, I'll be set.* Question is how iffy is it if I can't make it that long..!
It sounds like the main reason you're planning to stay is the health insurance. If you can absorb the cost of buying your own health insurance and still ER on your current portfolio then you're FI and just awaiting the appropriate moment to ER. Sometimes knowing that you're FI is enough to endure the waiting. Other times it makes you speak up more often.

You can work through the 72(t) early withdrawal math at Intercst's website.

The ER now/later decision is even easier if you decide to let your kids shoulder more of the burden of their college educations. There are pros & cons for that issue and it's largely a personal choice-- or it's another potential chain to your cubicle.

Another option is part-time work as described in Bob Clyatt's book...
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Re: Obsessed with getting out early
Old 01-27-2006, 08:21 PM   #3
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Re: Obsessed with getting out early

Thanks Nords.* You've pretty much hit it on the head!* I agree with letting the kids pay for more of the college.* Need to convince the wife (I did it; but then edu costs were a bit less then... and being a boomer, we have to spoil the kids right?)

I've thought about the part time work. Not sure I want to do it in my current field (that's why I want out now!). And not sure I could make even a fraction in another field. I have no intention of ER and then just sitting on my behind; just don't want to be in a positon where I NEED the income. Would be better off working a few more fulltime years....
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Re: Obsessed with getting out early
Old 01-28-2006, 05:58 AM   #4
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Re: Obsessed with getting out early

Quote:
Question is how iffy is it if I can't make it that long..!
Well, only you can answer that. This is a case of cost-benefit analysis:

benefits: more $ for retirement and college expenses, free health care insurance
cost: 5 more years of work

If the benefits outweight the cost, stay for 5 more years - the working enviroment may improve (e.g., different boss, people, management, customers, nature of the work), and you might enjoy working.
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Re: Obsessed with getting out early
Old 01-28-2006, 06:24 AM   #5
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Re: Obsessed with getting out early

Thanks Whoda. *Staying around for the healthcare is my base case. *Having worked for the same major international company for 24 yrs, I have gotten spoiled with the very good benefits. *Getting used to not having them will be a big adjustment in itself. *My biggest fear would be to do something rash, and leave too early. *

The way I am looking at it, there should be absolutely nothing holding me there after 50 (except maybe my wife not being completely sure she wants me around the house more often; as it is, I put in some pretty long days away from the house with an hour + commute each way. *Another top reason for getting out early.).

All in all, I'm definitely not whining about my situation. *Based on everything I read, I'm better off than 90% of the country - on an FI basis. *Just want to make sure I learn the best way to manage my investments and expenses once I get to the RE stage. *

Need to also make sure my wife is on board with the concepts. *She doesn't want to even have to worry about it. *Luckily, she doesn't have extravagent needs either. *No new cars every year, no lavish house (very comfortable in a great neighborhood, but not a showpiece). *

What kills us (me actually, doesn't seem to bother her!) is the nickel and dime expenditures each month. *With no car payments, no credit card debt, and only a $1000/mo oultay for a mortgage, including taxes and insurance, it really shouldn't cost us ~$55k/yr in living expenses (IMHO). *All this on a $100k+ salary (mine; she stays at home). *Still allows me to max out on 401k investments, put $1k/mo into college funds, and should be able to pay the house off with future income surplus over the next 4.5 yrs.

We don't actually have a "budget". *Which used to bother me (actually, still kind of does if I am honest about it). *Recently, I ready a book (can't remembr which one) which basically said, "budgets" don't work anyway; they're like diets, eventually you fall off of them into binge spending. *The trick was to make conscious decisions about what you buy. *The real trick is to be able to actually talk with your partner about it!!

Looking back, I realize I should probably take this to another part of the message board (maybe an online financial psychologist?!). *

Thanks for listenning, and the help. *
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Re: Obsessed with getting out early
Old 01-28-2006, 08:29 AM   #6
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Re: Obsessed with getting out early

getoutearly,

I'm really impressed with what you've been able to save at such a young age with one income and raising kids !!!

I started saving late and will have to work till I'm 56. If my projections are correct, I'll hit my magic number about the same time I will qualify for retirement health care benefits.

I still have 7.5 years to go, but who's counting ....

I hope you continue to post on this board.

Best regards,

-helen
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Re: Obsessed with getting out early
Old 01-28-2006, 10:07 AM   #7
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Re: Obsessed with getting out early

getoutearly,

I don't completely understand the financial ramifications of your leaving early. Are you bound by golden handcuffs as I was?

I worked long enough in a job I disliked to retire at age 49 and start collecting pension right away. In contrast, there were coworkers who were unwilling to stay and left 1 to 5 years early. By my former employer's rules, those folks who left early have to wait until they are age 65 to collect their vested pensions.

As far as I know, the people who bailed out are still working at some job or another. Thank God I haven't had to work for 5 years. The monthly pension checks helped make that possible.
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Re: Obsessed with getting out early
Old 01-28-2006, 03:05 PM   #8
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Re: Obsessed with getting out early

Template,

Our retiree health benefits aren't awarded unless you leave at at least 50 and also have the right number of points (yrs of service + age). I'll qualify on points at 49, but still need to get to 50.

I can take the pension lump sum (or as a monthly pension) at any time. It ramps up dramatically at 50 though (it almost triples between now and 50 - sounds unbelievable, but true). It goes up a lot after 50 also, until 60, but I'm not that greedy!

The ideal situation would be a severance package at about age 48 that added a couple yrs of service and age, to get me over the point requirement before 50. In my industry, it's more likely these days they'll be offering retention bonuses to keep people around longer.
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Re: Obsessed with getting out early
Old 01-28-2006, 06:06 PM   #9
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Re: Obsessed with getting out early

I'm glad you do not have* to worry about being RIF'd. I'm five years from my goal of 55, and put my chances of making it to where I can leave on my own at 50/50. Good job and good luck.
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