Planning early retirement from IT

[FreeBear]

Very sobering to hear how tough it can be for many (most?) IT folks in their 50's. Sound similar to what I've seen in my field of niche med/consumer electronics tech.

Also seems like folks can hang on by aggressive re-training and hustling, again similar to my field. I too just got tired of all that... I'm really glad I developed an exist plan near the start of my career so that I managed to FIRE when the fun stopped.

FB

[retire2020]

I'm almost 52 and have been in IT for past 25 years. Job market is good but my desire to keep working has gone down in last three/four years. I've had couple of management opportunities to move up and enhance my career which I turned down. Just can't deal with politics any more. I would like to put up with current job for two-three years and just quit or get laid off.

[retire2020]

Quote:

Originally Posted by FarAway401 He had not applied to every additional scholarship possible, and therefore, I thought it was fair for him to take whatever federal loans we were eligible for. Private loans is highway robbery .

+1. I've my daughter taking stafford loan eventhough I've enough in her 529 just to keep her in the game of responsibility.... Private loan - agreed a robbery and will never take it unless my kids go to Med School and run out 529.

[Trooper]

Hi FarAway401 and congrats on starting the planning process. ..it will pay big dividends going forward.

I too retired from IT this year and agree that the skills ramp is constant. Have you considered looking into a project/program management position at your firm? Some of the best PMs I've worked with don't have the greatest technical skills.

Also you mention needing an account that you can draw from prior to age 59.5. Are you aware that the IRS will let you withdraw from your company's 401k if you retire at age 55 or greater? You will still need to pay taxes but can avoid the 10% penalty.

Sent from my SM-G900V using Early Retirement Forum mobile app

[samsterdog]

Quote:

Originally Posted by retire2020 I'm almost 52 and have been in IT for past 25 years. Job market is good but my desire to keep working has gone down in last three/four years. I've had couple of management opportunities to move up and enhance my career which I turned down. Just can't deal with politics any more. I would like to put up with current job for two-three years and just quit or get laid off.

Wow this sounds familiar. I would have liked to get laid off but was well thought of within the company. Just finally reached the point of "had enough" and resigned. 2 months RE so far and haven't looked back. Only my working DW probably is glancing back.

[aida2003]

Quote:

Originally Posted by FarAway401 Um, 250K is gross, sorry, if I wasn't clear. We net 11k/month after taxes and retirement contributions. So 132K net, not 190k. 2.5K for both mortgages (after accounting for 400 received in rent), 5K food/household items/insurance/cell phones/cable. $200 for water and gas, $335 car payment, $195 HOA. In theory, we should have 2.5-3K left every month, but we don't. So yeah, it's going somewhere. Not to mention, it's been a while since I dissected the 5K in the paragraph above to see what's what. So, point taken about tracking spending. I'm pretty sure hubby and I can live on 30% of our current income in retirement, so no 5MM will be necessary, but it's good to know for sure how much we need.

I agree with the rest of other posters that you should do better tracking than this. Maybe sign up for Mint.com?
I'd honestly be curious how much music lessons and camps cost and what else you spend on your kids that it costs $3k/month. My kids are not 12 yet so I might learn something new what's waiting for me in the near future.

E.g. Just this weekend I learned that it's not cool to wear Sketchers anymore . My friend handed me down her 10 year old son's almost brand new Sketchers ($60) because kids at school were laughing at him. I'll see what happens at our school in a year or so. If doesn't work, he'll wear them outside at home or for our hikes. I was told you pretty much have to wear Nikes only. My other acquaintance paid $150 for a pair of Nike's for her 10y.o. daughter. What in the world?!?!

[jayfriendly]

Being in the IT (mobile app dev) field myself, I know that feeling when technology outruns us and the company politics gets too much to deal with. I went through similar situation at my last stable and high paying but quite stressful job and left work for ER. Although, after over a years worth break (and bring bit bored), I decided to take up a part-time contracting work (paying almost same net pay) at a different company. I feel like I have more control and freedom of how many hours I choose to work every week and do not have to deal with BS for a full time position. Fortunately, it is relatively easier to get a decent job in IT field.

Just keep your expense under a check and make a realistic budget based on your lifestyle before opting for ER or semi-ER. I am sure you would be able to enjoy ER better once you are prepared.

[FarAway401]

Quote:

Originally Posted by Trooper Hi FarAway401 and congrats on starting the planning process. ..it will pay big dividends going forward. I too retired from IT this year and agree that the skills ramp is constant. Have you considered looking into a project/program management position at your firm? Some of the best PMs I've worked with don't have the greatest technical skills. Also you mention needing an account that you can draw from prior to age 59.5. Are you aware that the IRS will let you withdraw from your company's 401k if you retire at age 55 or greater? You will still need to pay taxes but can avoid the 10% penalty. Sent from my SM-G900V using Early Retirement Forum mobile app

Wow, I didn't know about 55 year rule! I don't know how I missed it. Basically, if I understand correctly, if I keep rolling off my 401k-s to my current employer every time I change jobs (I do quite often it seems), I have access to all of my retirement assets (that are in 401k) at 55 without penalty. Am I correct?

As far as PM - but... I have very good technical skills . I struggle with people skills though. Long time ago, before switching from web development to ERP development, I considered PM route and found that it doesn't pay as much as development plus doesn't match my personality as well. But thanks for the suggestion!

[MRG]

Quote:

Originally Posted by FarAway401 Wow, I didn't know about 55 year rule! I don't know how I missed it. Basically, if I understand correctly, if I keep rolling off my 401k-s to my current employer every time I change jobs (I do quite often it seems), I have access to all of my retirement assets (that are in 401k) at 55 without penalty. Am I correct? As far as PM - but... I have very good technical skills . I struggle with people skills though. Long time ago, before switching from web development to ERP development, I considered PM route and found that it doesn't pay as much as development plus doesn't match my personality as well. But thanks for the suggestion!

On 55 it depends. The summary plan description(SPD) must have the language to support it, some don't. The custodian must also have a method to distribute partial distributions, some don't.

Your correct at least from my Megacorp, PM doesn't pay what development does.

[FarAway401]

Quote:

Originally Posted by aida2003 I agree with the rest of other posters that you should do better tracking than this. Maybe sign up for Mint.com? I'd honestly be curious how much music lessons and camps cost and what else you spend on your kids that it costs $3k/month. My kids are not 12 yet so I might learn something new what's waiting for me in the near future. E.g. Just this weekend I learned that it's not cool to wear Sketchers anymore . My friend handed me down her 10 year old son's almost brand new Sketchers ($60) because kids at school were laughing at him. I'll see what happens at our school in a year or so. If doesn't work, he'll wear them outside at home or for our hikes. I was told you pretty much have to wear Nikes only. My other acquaintance paid $150 for a pair of Nike's for her 10y.o. daughter. What in the world?!?!

My older one was a competitive swimmer since he was 9. The kind that go to out of state meets several times a year. That cost us ~$400/month between regular coaching fees, competition cost and travel.
My younger currently takes violin at the cost of $200/month. Recently he picked up drums and was doing private drum lessons. Next school year he will be in the performance program where they rehearse with a band for 3 hours/week and also get 45 min of private lessons a week. The cost is $325. I admit, this seems too high, but I see real quality in this program, and we will try it for year. He also swims, although not at the level or cost of older one's.

I spend VERY LITTLE on my kids in terms of clothes or gadgets. Both are boys who don't care about fashion or brands. They wear one pair of sneakers for a year. Literally, my 18 year old wore his Nike's for a year, and it was his only pair of shoes. Well, ok, he has hiking boots that he wears on the days of heavy snowstorms (we live in Colorado) 5-8 times a year. It is a good pair of shoes that costed me $80, but I think it is worth it. Whenever he needs clothes that are out of the ordinary (he went to Prom both his junior and senior year), he pays for them himself from a little side job that he has.
My younger one is very similar when it comes to clothes. Both don't have any gadgets that I deem excessive. Younger one has a small Asus laptop that he needs for school (crazy, I know, but his charter middle school REQUIRES students to have laptops) - it was $180. We bought older one a very good laptop for his 18th birthday, thinking it will last him through at least several years of college. That's it!

Oh, and my boys eat a LOT . I calculated that when older one leaves and starts eating on campus, my food bill will go down at least $300/month.

[FarAway401]

Quote:

Originally Posted by aida2003 I was told you pretty much have to wear Nikes only. My other acquaintance paid $150 for a pair of Nike's for her 10y.o. daughter. What in the world?!?!

I buy my kids Nikes or Asics, not because of the brand name, but because of their quality. They still make quality shoes that last a long time. Probably not as important for 10 year olds, because they will outgrow them faster than they wear them off, but is a good move for when their feet stop growing or don't grow as fast.
I usually find a good model and buy the same one year after year, going a size up every time. I had a picture of 3 pairs of shoes my younger one had over the course of two years - three pairs of trail shoes from LL Bean, all the same color, each pair slightly bigger than the previous one .

[UnrealizedPotential]

FarAway,

You say in theory you should have 2.5-3k left over every month. Okay, what would happen if you took 2.5k off the top every month and put it toward retirement? Where would you be short if you did this? That is what you need to find out.

[FarAway401]

Quote:

Originally Posted by UnrealizedPotential FarAway, You say in theory you should have 2.5-3k left over every month. Okay, what would happen if you took 2.5k off the top every month and put it toward retirement? Where would you be short if you did this? That is what you need to find out.

I'd be short on paying our day-to-day expenses that we put on CCs, then pay off in full every month. Or mortgage payment.

Also, I recently enrolled in my company's ESPP, which takes 10% of my after-tax salary, so my take home is reduced, and we are now bringing about 9.5K between the two of us. It was even less first half of the year, as my husband is self-employed, and pays estimated taxes, and that schedule leaves more income in the second half of the year.
I ran some calculations and also looked into our recent credit card statements, and will be digging further into that. Right now, there is not much left of that 9.5k after paying all the bills, and doing small contributions to savings and college fund. But when I sell my shares from ESPP, that should cover tuition. I'm planning on participating in ESPP for as long as I'm with this employer - it is a convenient way to save and make some money, pretty much risk-free. Also, as I mentioned, my stock grants will start vesting in Feb. 2017, and what I don't have to spend on tuition, I will sell and put into savings or brokerage account.
What I need to work on is reducing our expenses, so that we can save an additional 1k/month or so, regardless of stock grants. (This is after contributing to 401k and SEP IRA to the max)

[daylatedollarshort]

Quote:

Originally Posted by FarAway401 What I need to work on is reducing our expenses, so that we can save an additional 1k/month or so, regardless of stock grants. (This is after contributing to 401k and SEP IRA to the max)

What we found helpful was printing out the annual expense tables in the Consumer Expenditure Survey, putting our budget in the same categories and comparing them side by side. A few things really jumped out right off the bat where we high, and over time we're even lower in some categories these days than average. Most households have to live on much less than $200K+ a year, but it is easy to spend that much if all you see are your similar income neighbors and co-workers spending habits, and statistically most of them probably do not have enough saved for retirement to maintain their current lifestyles.

[FarAway401]

Quote:

Originally Posted by daylatedollarshort What we found helpful was printing out the annual expense tables in the Consumer Expenditure Survey, putting our budget in the same categories and comparing them side by side. A few things really jumped out right off the bat where we high, and over time we're even lower in some categories these days than average. Most households have to live on much less than $200K+ a year, but it is easy to spend that much if all you see are your similar income neighbors and co-workers spending habits, and statistically most of them probably do not have enough saved for retirement to maintain their current lifestyles.

Thank you, those tables are great! I love data . Will compare to our expenses, I have a feeling I know where we will come higher or much higher than average.

[daylatedollarshort]

Quote:

Originally Posted by FarAway401 Thank you, those tables are great! I love data . Will compare to our expenses, I have a feeling I know where we will come higher or much higher than average.

We stumbled upon the tables in our fifties, and realized if we cut our expenses we could ER the next day, otherwise we would have to both work at least an extra decade or likely more. So we just kept asking ourselves would we rather have to both work another 10+ years or retire and live a bit closer to a more middle class lifestyle than we had been, and we decided there wasn't much we wanted more than leisure time.

It's been several years and so far no regrets, except we both wish we'd looked at our expenses more carefully and ERed much sooner. We live in the same house and actually bought nicer cars and go out more. We just started price shopping, made the house energy efficient, had time for more DIY like our own taxes, and a lot of the little stuff all added up.

[JoeWras]

It adds up.

Glad I don't spend $489 per year on shoes.

Many of the other standard expenses are surprisingly close to my own experience, such as food.