Portland Resident Wants to Ease Out of Full Time
I'm 55 and still working in Portland, OR. I am married with three grown children. Here's the bottom line:
1. Housing: We have successfully raised three children in a house we bought in 1989 when we moved here. We owe about $185K on it and it's time to get out. It is now more house than we need, and with rise in property tax, we cannot afford to stay. It is in a desirable neighborhood, but while it might have sold for $850K 3 years ago, we will feel fortunate to get $750K. Therefore, when it sells in the next year (we hope), we will be sitting on between $400K and $500K. No gains taxes, we will be able to qualify with improvements, etc.
2. Employment: I work as middle school teacher, a career I started in 2006 at the age of 50! With teaching at night one night a week and my bride working halftime, we make a bit over $49K.
3. Debts: about $12K in consumer debt. Too high, and working hard to pay it down; in the next month it should be down to $9K. House sale would wipe it clean, and we've learned our lesson.
4. Pension: For 30 years I worked in the entertainment industry and as a result will have two pensions at retirement at age 65. I haven't calculated the spousal benefit reductions in the pension,(you know, all the pop-ups if we take less so my wife can have survival benefits) but without all the pop-ups the straight pension adds up to about $4800 monthly. Social security for me (HA, if it's there) would be $2000 a month (and I think my full retirement age is 68). For the bride, about $900. In addition, I have about $50K in a straight taxable IRA, right now sitting in cash because as a teacher here in Oregon I could be out of a job at any moment, and my seniority is only 4 years and I'm an arts teacher. We have no cash savings so that $50K was the life raft. Once we get out of the house it can be put to better use.
5. Inheritance: We stand to gain between $500-600K, providing our beneficiaries still have estates at the time they meet their makers. They are all elderly, and we're happy they're still with us. If the should need long, long care then we will not inherit and those assets will be used for them. So that really can't be counted on.
Okay, here it is. We'd like to sell the house, and rent for a few years, investing the capital in income producing instruments. Ideally, I'd work one or two more years full time, and then switch to half time, where our income before investments would be about $28K. I think we could do it on that. We'd continue to rent unless we came into an inheritance, when we might buy a townhouse. Halftime until 65, and then retirement, and probably out of Oregon because of COL.
Do you think this "semi" early retirement pencils out? Where would you invest the cash for the safest return, and what kind of yearly income do you think we could produce off $400K or so?
Sorry for the long post, but there it is.