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Pondering retirement
Old 07-03-2016, 11:29 AM   #1
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Pondering retirement

Hello, I'm new to the forum. I'm 53 and have come into a small inheritance which, with that I'd already saved for retirement, is causing me to consider retiring now while I'm in good shape, and frankly as the thought of continuing my high stress career for another decade doesn't have much appeal. I've registered here in an attempt to learn if my hopes are realistic or not.
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Old 07-03-2016, 11:33 AM   #2
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There is a firecalc calculator which will help you decide.
Or for a really rough estimate just calculate 3.5% of your stash, does it cover your expenses ?
Lots of folks will say you should have a firm knowledge of your expenses, and add in the cost for health coverage.
Will you get a pension from work ?
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Old 07-03-2016, 12:32 PM   #3
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Thanks, that gets me a fairly good start right there. At least at 3.5% I think I can cover expenses, although the wife is pretty panicky about the concept.
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Old 07-03-2016, 12:39 PM   #4
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That's kind of what we did. We had saved well and were on track for an early retirement anyway when a bunch of money came raining down on my husband's head. We wound up well exceeding our goal and stopped working. I stopped as soon as I could, but my husband waited another year because he was uncomfortable with the idea. He also insisted that we retire to a place that would make consulting easy.

Take your time about making your decision. Once you're out of the work world, it may be difficult to get back in. My husband had a little taste of not working and the "consulting" idea went right out the window.

Pull your expenses for the year and add them up. It's a lot of work, but it gives you an idea about what you are currently spending. Think about contingencies like cars, family issues, and home repair, check health insurance costs, think about the costs of activities you may explore in retirement.

Definitely use firecalc.com a bunch of times.
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Another option
Old 07-03-2016, 01:02 PM   #5
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Another option

One other option, which is working well for me, is to determine the most fun and least stressful parts of your current job and craft a part-time retirement career based on those. I ran a large chemical plant with hundreds of employees, lots of regulations and crazy stress and faced just what you are facing.

I also received an inheritance that pushed me over the top financially and choose to retire at 60, earlier this year. But I liked the lobbying and PR aspects of my former job so I moved directly into a part-time position that let's me work with all my existing political and business contacts but has no emergencies and little stress.

The bonus is it pays enough to minimise the drawdown on my investments, let's me travel and enjoy entertaining on an expense account and makes my wife happy that we still have an income and that I'm well entertained by the challenges of the new gig. I might expand my work in the future, or may stop working at all at some point. But there is no urgency to decide. I'm very rarely sitting around bored. I haven't missed being the big boss at work even once and I've been retired for six months. I've never been happier and I think a lot of it is I get the validation of working, but don't have to work so hard. I also do a couple of fairly involved volunteer non-paid jobs but it is the paying work that means the most to me now.

Hope that is helpful.
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Old 07-03-2016, 04:42 PM   #6
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Quote:
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We had saved well and were on track for an early retirement anyway when a bunch of money came raining down ... wound up well exceeding our goal and stopped working ... insisted that we retire to a place that would make consulting easy.

Take your time about making your decision. Once you're out of the work world, it may be difficult to get back in. ...Think about contingencies like cars, family issues, and home repair, check health insurance costs, think about the costs of activities you may explore in retirement.

Definitely use firecalc.com a bunch of times.
+1 to all of these from AllDone.

We were on track for early to mid-50s when megacorp employer was sold resulting in a nice (unexpected) windfall that nearly 2x our liquid NW -- that took most of the quantitative side out of the equation, making things alot easier.

Firecalc was a huge help in convincing DW that we were not crazy and/or headed for the poor house (or both), and have been able to make it a year so far on just consulting income and options/futures trading profits w/ no dimunition in principal or lifestyle.
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Old 07-03-2016, 07:10 PM   #7
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I had planned to retire in my 50's, the early the better, since my early days in mini-MegaTech. A few years ago, I suddenly realized that I hated my job and a combination of circumstances offered an opportunity to get out even earlier.

Similar to your situation, my DW was originally very skeptical from a financial perspective. We were walking away from solid $$. I offered a 2-3 year time horizon to plan and "think about it". Well, we both retired just a year later.

I spent most of this time calculating current expenses, projecting future expenses, looking at social security, and figuring out ACA health and ACA subsidies. This gave me decent expense projections to start modeling our scenario in simulators like Firecalc and others. After all the hand-wringing, I estimated a 90% chance of our money outlasting us. So we both agreed to retired within a year. We've been free for more than a year now and loving life

I love retirement, but like others I suggest you take some time to plan things out. I recommend a look at the FAQ page; there's a comprehensive list of considerations. Here are some of the key things for us:

- Know current expenses, averaged over a few years, accounting for big ticket stuff like cars, AC, roof, kids' college, etc.

- Get a grip on other (future) income like social security, pension, etc.

- Look at heath care!! If you don't have cheap retiree health, check out ACA and ACA subsidies. Don't forget that Medicare isn't "free" either, at least as most play the game.

- Develop model retirement budgets (dream, baseline, just survival)

- Decide if you must leave a legacy (obviously easier if not a "must")

- Figure out if you'll run out of money. Rules of thumb are a starting point. The 4% rule is common, but is geared toward a 30 yr retirement (ie you're in your 60's). I like the suggestion of 3.5% (or lower!) for younger folks, but running a simulator like Firecalc is even better. It gives you a better idea of how all expenses, savings, and style of investing all fit together.

- Look at the details of how to draw down money in retirement. If you are younger than 59.5, then this takes taxable investments (after tax) or other strategies (ROTH conversions, rule 72T) to avoid IRA early withdrawal penalties. This can take serious advance planning...

- Insure you are still comfortable with your investment asset allocation when no longer getting a paycheck. Also insure minimal investment expenses (expense ratio, advisor (!!), other nonsense), say well less than 0.5%, otherwise you may have to work longer

- Finally, and most importantly, what are you and DW going to do all day?? Will you still get along with all this time on your hands

I know this sounds like a lot; well it is. We ironed out the basics in the year before we retired, at least as a first pass plan. Now we have been retired for a year+ and are still fine-tuning and cost-cutting. No regrets, though. It has been the best year of my life

FB
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Old 07-03-2016, 08:21 PM   #8
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Have you looked at the questions to ask yourself before retiring link?

And welcome! Feel free to post specific questions about your situation and I'm sure you'll get some useful feedback.
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Old 07-04-2016, 05:44 AM   #9
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. . . . is causing me to consider retiring now while I'm in good shape, and frankly as the thought of continuing my high stress career for another decade doesn't have much appeal.
I completely agree with this. DW and I started taking ambitious trips around age 50 and it has been great. I am now 57 and can already feel the difference. I will RE early next year. We could do it now, but in part I put the date out a bit for DW to be prepared to give up my paycheck.
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