Retiring early w/ pension to save my sanity!

[pb4uski]

Have you run your situation through Firecalc? Firecalc will allow you to put in your pension, SS, mortgage, etc and assess your situation... since your assets are modest just leave them out... exclude the mortgage from your expenses but include it as "off-chart" spending starting when you retire but offset by a corresponding "pension" the year your mortgage is paid off (in both cases with no inflation adjustment).

An important point is that your pension grows with inflation but your mortgage payments do not and your mortgage eventually ends but your pension does not so that will provide some wiggle room but not until later.

I suspect that you will find out what you already know, that you are cutting it close and a major unexpected cost could be difficult for you to bear when you are living so close to the edge.

 

[drumgal]

I have a small credit card debt which will be paid off by months end, is what I meant by "nearly"! My SS is subject to WEP, but I will still get a monthly check. That much I know..My job really is TOXIC! I have worked hard all my life and took this job to help raise my son- I was a single parent. Now he's grown, and I would like to enjoy some of MY life (while I'm young enough to do so) instead of going to a job that wrenches my gut every day. This is precisely my point. Isn't happiness worth something? Can't a person live with less and still be content? one more year would only mean $100 more on my pension check. I have had to ask myself if it is worth it... believe me, I am reading all of these posts!

 

[drumgal]

Yes...I DO have some part-time work lined up. I was just hired to do some at-home data entry for a local company. The job/pay will expand when I retire and I can work my own hours. I also work as a musician. This was my plan precisely- to save all that money from the part-time work and live on the pension. I know it's close, hence the anxiety, but I cannot bear too much more time at this job! I know that probably only makes sense to me...*sigh*

 

[drumgal]

I will try Firecalc, and thank you for your input! All this helps a lot.

 

[MichaelB]

This is precisely my point. Isn't happiness worth something? Can't a person live with less and still be content? one more year would only mean $100 more on my pension check. I have had to ask myself if it is worth it... believe me, I am reading all of these posts!

Sure happiness is worth something. A lot, in fact, to most of us. And yes, many can get by with less.

Just to help you understand the responses you're getting, many of the members tracked their expenses carefully for years and know exactly how much they need in retirement. They also saved a great deal, to make sure they had enough to keep their current standard of living in retirement, and also deal with unexpected expenses. The responses you are getting are telling you that there is some financial risk in your plan.

As long as you are aware, no problem. You are choosing a different route. Instead of focusing on "can I do it?", you might want to try to focus this (and other) threads on "how do I make this work?"

 

[Another Reader]

Did you pay into Social Security at this job? If not, you will receive a much lower SS check than you would if all your employment were covered because of the pension offset. Please look at your SS to see what you would actually get. I would not even consider retiring in your shoes without a clear understanding of ALL my income sources in the future.

I retired from a local government agency and my health insurance was $300 a month. Several years later, the agency cut the retirees loose, and the pension system had to scramble to find pre-Medicare retiree insurance. My premium is close to $1,000 a month now, but is subsidized so I pay around $715. Could you absorb a big hit in the form of insurance premiums that more than double?

Run your numbers through a couple of the retirement calculators. If you are making extra now as a musician and still not saving a lot of money, my guess is using realistic expenses as well as income will not give you a satisfactory result.

 

[drumgal]

I will be eligible, but subject to WEP...

 

[euro]

I don't know your entire situation of course, but contrary to other responders, I don't think you are in THAT bad of a shape. Since you work at a library, I assume that you are probably not pulling in six figures from your current job, and your expenses are already in line with that. Therefore, your $7200-9600 from your new data entry job may fill a pretty good portion of the 25% that you give up by quitting and taking the pension. How much do you expect to bring in from your gigs? Between that, the pension, and the data entry job, how close do you come to your current cashflow?
Definitely talk to the SS administration about how much SS you can expect at 62 and at FRA.

 

[drumgal]

Thank you! That helps a lot...I'm trying not to get too discouraged!

 

[Sunset]

I have a small credit card debt which will be paid off by months end, is what I meant by "nearly"! My SS is subject to WEP, but I will still get a monthly check. That much I know..My job really is TOXIC! I have worked hard all my life and took this job to help raise my son- I was a single parent. Now he's grown, and I would like to enjoy some of MY life (while I'm young enough to do so) instead of going to a job that wrenches my gut every day. This is precisely my point. Isn't happiness worth something? Can't a person live with less and still be content? one more year would only mean $100 more on my pension check. I have had to ask myself if it is worth it... believe me, I am reading all of these posts!

Happy to hear you are smart enough to solicit folks opinion for consideration. Everyone wants to enjoy life, nobody likes a job that is horrible.
Yes happiness is wonderful, but you can't eat it.
Maybe you are focusing on the wrong parts of your job, and focusing on other aspects could make it better. Maybe you could transfer to another job within the County ?

I have a friend who quit a $100K per yr job (yes imagine that income!) as she felt she didn't need to work. Well now 15 yrs later she is asking me advice on how to get a job that pays more than minimum wage, because life got more expensive than she thought it would..

That WEP thing is important, it can in fact be a real killer. I know as I'm subject to WEP, and everybody's situation is different due to a lot of factors, but for example my SS is expected to be reduced by 1/2 of my other Pension. You number will be different but imagine taking that amount off your SS.

I would phone and make an appt with SS, and go in to see SS and find out exactly what it will be, as honestly this is pretty crucial to your survival.

When you say your Pension would go up $100 is that $100/month or $100/year ?

 

[drumgal]

Yes...I live pretty cheap! I don't make a ton of money now. The gig money has gone towards remodeling. I'm a DIY all the way! Sometimes the music pay is good, sometimes not so! This is why I took the data entry job. However, I will be able to take more music work when retired. Thank you for the advice. I need to make some more calculations!

 

[Walt34]

Just to explore options - how important is it to own the house? And your profile says you live in Reno, NV - is that a low cost of living area? If not, would you be willing to move to a lower COL location?

Selling the house and renting an apartment, or moving to a rented or purchased park trailer type home, might greatly improve your cash and COL positions. Purchasing gives you some inflation protections other than utilities, taxes, etc. since your housing costs are fixed. I would think repairs/maintenance would be cheaper, but perhaps more frequent.

A park trailer looks similar to a mobile home but is intended to be moved only once, to it's permanent location.

 

[rodi]

It is very normal to feel stress and anxiety when making a major financial shift like this. Lord knows I was a nervous bundle of anxiety about walking away from a good paying job that I had grown to hate...

The way I handled the stress is that I focused sharply on watching my spending the first year or so. I don't have a pension (well... I do... but it's less than $500/month and didn't start till 2 years after I retired.) So savings and a small rental income stream were it... Boy was I nervous.

What I found was that I found more ways to enjoy cooking at home, especially finding ways to make healthy, inexpensive food. I found free activities that I absolutely love - like walking my dog at the beach every morning - FREE! And I became a power user of the library. (Something you're probably already a real expert at!)

After a few years of being hyper vigilant about my spending I'm starting to feel a bit more relaxed... and have NO regrets about leaving work. I'm sure you'll feel the same way.

 

[Another Reader]

I have a small credit card debt which will be paid off by months end, is what I meant by "nearly"! My SS is subject to WEP, but I will still get a monthly check. That much I know..My job really is TOXIC! I have worked hard all my life and took this job to help raise my son- I was a single parent. Now he's grown, and I would like to enjoy some of MY life (while I'm young enough to do so) instead of going to a job that wrenches my gut every day. This is precisely my point. Isn't happiness worth something? Can't a person live with less and still be content? one more year would only mean $100 more on my pension check. I have had to ask myself if it is worth it... believe me, I am reading all of these posts!

The $100 per month is nice, but if you can cut your expenses and contribute to an IRA and/or the 457 (b) plan plus work three or four more years, you will be in much better shape. If you can't save on what you are making now, I don't think you can afford to retire on 75 percent of that plus whatever you net from your data entry job. Too much risk of failure.

 

[drumgal]

I have transferred within my department 7 times over the years. I am grandfathered in because I do not have a degree, only years of experience. Library positions now require an MLS or equivalent. Little college leave me ineligible for most county positions. I DO have some part-time work lined up after I retire. I have an appointment with SS. If I work another year at this job my pension will only go up $100 a month.

 

[FreeBear]

Drumgal,

I feel your pain. DW is an artist and I'm a musician. The corporate world was killing me, so I left when I was 45. We had saved enough money for 4 decades of living, though.

I agree with others that your safety margin is very small. So I agree that it's absolutely critical to go in to SS to determine exactly how much you will receive.

It sounds like you are REQUIRED to work after you current job just to survive. Hopefully, you'll get enough from SS to fully fund total expenses at some point, so then earning money becomes purely optional.

It looks like are able to enjoy cheap travel. Still, travel represents typically a small part of most budgets. Home and car are others big items, given that you have decent health insurance options. Have you considered downsizing your home? An apartment or condo could save a ton of money, but places some constraints on music-making. Or perhaps rent out room(s) in your house to help cover expenses.

Would it be possible to build up your emergency fund to at least 6 months of expenses (including mortgage)? Single family homes can get very expensive...

 

[Another Reader]

How much will it go up if you work three more years? What will it be if you work until 62 and take both pension and SS at that time? How much could you save in the IRA and 457 plan if you continued to work? Have you tracked your expenses to insure you are being realistic in your calculations? All these are questions I would look at before I made a final decision.

 

[drumgal]

I will lose some of my health benefits if I move out of the area, and I think it would be hard to find a rental for less than what my monthly mortgage payment is! I've looked! I DO want to keep my house. That is why I refinanced for a lower monthly payment.

 

[Accidental Retiree]

I have transferred within my department 7 times over the years. I am grandfathered in because I do not have a degree, only years of experience. Library positions now require an MLS or equivalent. Little college leave me ineligible for most county positions. I DO have some part-time work lined up after I retire. I have an appointment with SS. If I work another year at this job my pension will only go up $100 a month.

Well, if you can get more paid into SS with your part-time "substantial" earnings (something like $22,000/year), you may also decrease the WEP impact when you take SS later on.

 

[Walt34]

I will lose some of my health benefits if I move out of the area, and I think it would be hard to find a rental for less than what my monthly mortgage payment is! I've looked! I DO want to keep my house. That is why I refinanced for a lower monthly payment.

Okay, good reasons to stay where you are. I understand about the housing expenses, when I was divorced in 1984 I strapped myself to buy a SF house. Five years later the rent on a one-bedroom apartment was half again what my house payment was and I had foreseen that coming.

 

[drumgal]

Thank you! Your words are encouraging...I'm hoping for more posts like these that focus on how I CAN rather than why I SHOULDN'T. *sigh*

 

[Another Reader]

OK, assuming you are a librarian with Washoe County, the website says you make a decent salary. You are done with the child raising expenses - what are the reasons you have not saved more money? We know the job sucks, but with just a house payment, how much could you put away if you went to work for a few more years with cotton stuffed in your ears and a smile on your face? That's the approach I would likely take in your shoes.

 

[Teacher Terry]

Hi Drumgal, we also live in Reno. Rents have been really skyrocketing here along with house prices. If things get too tight you could always sell your house and buy a condo that is cheaper. That's our plan if we ever need some of our house $. We are both PERS retirees and government can be very toxic indeed.

 

[Choices]

Check out Financialducksinarow.com for info on WEP. The have a quick and dirty matrix from what I remember.
I mentor seniors who find themselves with too much month left at the end of the money. My first suggestion is to really look at what you spend, have spent for the past few months. Secondly, think about getting a roommate, this can have a huge impact on your bottom line.

 

[drumgal]

I am not a "Librarian", but a "Library assistant." Pay is ok. Not great.

I did awesome things with my money, like travel the world. Nope. Didn't save much, but what great experiences I've had! Do I have regrets? Not entirely. Well, sometimes. And so here I am! Not much I can do about that. I did what I had to do while I was still young. I could never do now what I did then...backpack the Amazon, Safari in South Africa, etc.

My fake smile is starting to crack...I know you are right. I COULD save more, but I want OUT! I need to find a way to make this work