Retiring early w/ pension to save my sanity!

[drumgal]

Hello! I have recently announced my retirement from a County position where I have worked almost 20 years in a public library. My last day will be the first week of July this year (2017)

I will have a pension approx 75% of my present income, minus a penalty because I am not yet 60 (57 in February). I have added monthly expenses, done the math, and I will be able to do this, barely, although I will be relying on part-time work to supplement. I am a professional musician, and I was just hired to do some data entry from home for a local company.

Sounds great perhaps? I hope so, because now that all is said and done I am experiencing major anxiety! Did I mention I hate my present job? Well, I've known for a long time that I needed to leave for health and sanity reasons. I have been enduring this for years.

A few other co-workers are retiring also, with substantial savings and incomes from spouses, etc. I have no partners income to rely on and I have little savings. Still, every fiber of my being is telling me I must GO! I am experiencing fear and guilt- giving up a "perfectly good job" for a future with less money, certainly. I don't need much. My idea of a perfect vacation is tent camping! I spent a lot of money on international travel for yearly vacations. hence, not a lot of savings. I am buying a home (have refinanced to lower the monthly payment) and I am nearly debt free otherwise...My boss made some snide comments to me about retiring so early, and now others are doing so as well. Don't know why I feel so guilty? Afraid? Does sanity count for something? Anyone have some advice?

 

[travelover]

It is normal to feel anxiety over big changes. If you have done the math and have a plan for health care and inflation, you can relax. Retirement can be very cheap with very low taxes. And worst case, find a lower stress job and use the pension as a safety net.

 

[Walt34]

Welcome to the forum!

How are you set up for health insurance? If you can't keep employer's insurance be sure to shop around for that - there are plenty of threads on that subject here.

Also: http://www.early-retirement.org/for...re-asking-can-i-retire-69999.html#post1399715

Buying a house, you'll need to have a large wad of cash for unplanned-for, but inevitable, things that break and/or wear out - roof, well or city water line breaking, and stuff like that.

 

[drumgal]

I will have health insurance when I retire. Still trying to decide between high deductible (no monthly payment, $2500 deductible with a $2000 yearly account set up by the county to help cover- rolls over every year) or to go with my present subsidized plan (about $230 a month which includes dental).

I don't have a lot of cash for repairs. My roof is fairly new. The house is in very good condition at this time. Perhaps I would consider a HELOC if I need repairs? Or maybe just a conventional loan to cover expenses. I will be debt free when I retire, other than my mortgage...

The list of questions are good ones! Thank you for your time to answer my post!

 

[drumgal]

I plan to strictly budget myself and save the money as much as I am able from my part-time work. I will need my pension to live on. One of the reasons I wanted to retire is so I can play music more. Music is my true calling, but it rarely sustains anyone full-time these days! I find your words encouraging! Did not expect so much anxiety...

 

[travelover]

I will have health insurance when I retire. Still trying to decide between high deductible (no monthly payment, $2500 deductible with a $2000 yearly account set up by the county to help cover- rolls over every year) or to go with my present subsidized plan (about $230 a month which includes dental).

I don't have a lot of cash for repairs. My roof is fairly new. The house is in very good condition at this time. Perhaps I would consider a HELOC if I need repairs? Or maybe just a conventional loan to cover expenses. I will be debt free when I retire, other than my mortgage...

The list of questions are good ones! Thank you for your time to answer my post!

If the high deductible plan is HSA eligible, it can save you a bunch in taxes and you never pay taxes on it as long as you use it for medical,dental or eye care.

 

[38Chevy454]

Good that you have the low cost insurance option. Seems the high deductible with the rollover savings is the way to go if you are healthy.

As you know, the key is do you have your budget understood fully? You know the pension income, but do you have all of your expenses known and good understanding? I agree it is a big change from the steady paycheck of working, you have it good with 75% of that paycheck still coming in. Being a county job, are you eligible for social security? If so, that is another source of income in 5 or more years out.

As long as you are accepting that some work income will be needed to supplement the pension, then have fun - assuming you know your expenses and budget requirements.

 

[Walt34]

I don't have a lot of cash for repairs. My roof is fairly new. The house is in very good condition at this time. Perhaps I would consider a HELOC if I need repairs? Or maybe just a conventional loan to cover expenses.

This answer makes me squirm a bit. When you have to turn to loans to pay for things that are inevitable but you don't know when they will happen, like needing a new furnace, how do you know the loan will be available and what the interest rates will be?

Further, your future options and opportunities are made more limited by the loan and the interest you've obligated yourself to pay. This means that maybe after the furnace goes, and then the A/C goes, you're going to have to make do with window fans. And then when the transmission on your car falls out onto the pavement you'll be in good physical condition from riding your used bicycle. Too bad the grocery store is 20 miles away. Are you going to be able to do that when you're 68 years old?

Where I'm going with this is that I can very easily envision scenarios where you've financially boxed yourself in with few or no options out other than selling the house. I've seen relatives do that to themselves. You really need to have the emergency stash available, so try to establish a way to get that going even if it's only $20 a week, or month. Back in the 1980's a $10-a-paycheck savings plan saved my butt. I needed $200 for a chimney repair for the house up for sale in my divorce, and fortunately I had it because of those savings.

Eventually and inevitably, sure as tomorrow's sunrise but hopefully not so soon, you're going to need a large wad of cash to get something fixed. It's part of owning a house.

 

[MichaelB]

Drumgal, welcome to the forum. Here are a few things you should consider as you plan your retirement. http://www.early-retirement.org/for...-answer-before-asking-can-i-retire-69999.html

 

[broadway]

Maybe you can get that HELOC now while you are still employed?
Always nice to have that in your back pocket in case you need it.

 

[pb4uski]

I will have health insurance when I retire. Still trying to decide between high deductible (no monthly payment, $2500 deductible with a $2000 yearly account set up by the county to help cover- rolls over every year) or to go with my present subsidized plan (about $230 a month which includes dental).

I don't have a lot of cash for repairs. My roof is fairly new. The house is in very good condition at this time. Perhaps I would consider a HELOC if I need repairs? Or maybe just a conventional loan to cover expenses. I will be debt free when I retire, other than my mortgage...

The list of questions are good ones! Thank you for your time to answer my post!

IMO, if you are healthy and have not had a lot in claims recently, then high deductible is the way to go and yours is a slam dunk... no monthly payment and they put $2,000 a year in a HSA for you vs paying $2,760/year. If you have no claims then that is a $4,760/year difference! Am I misinterpreting what you said?

+1 with others... get the HELOC now while you are working assuming that the cost of the HELOC is minimal.... I had one once and it just sat there and I never needed it but it was nice knowing that it was there.

 

[drumgal]

This is wonderful! All these comments really help! I DO have about $10,000 saved. It's in a tax deferred account that I can draw on after I retire. This is my emergency stash that I plan to add to with every spare penny I make! I know it's not much, but it's SOMEthing...Sure, I would like to avoid a loan for repairs. I have homeowners insurance that I can upgrade to include heating/ac. (?!) That would be another monthly expense.*sigh*

 

[broadway]

This is wonderful! All these comments really help! I DO have about $10,000 saved. It's in a tax deferred account that I can draw on after I retire. This is my emergency stash that I plan to add to with every spare penny I make! I know it's not much, but it's SOMEthing...Sure, I would like to avoid a loan for repairs. I have homeowners insurance that I can upgrade to include heating/ac. (?!) That would be another monthly expense.*sigh*

So, you don't have any tax-deferred accounts other than the $10,000?

 

[youbet]

Drumgal......

You should feel fortunate. Only 20 years on the job and you'll receive a pension you can live on and retiree medical. That's a pretty good deal!

 

[Sunset]

OP - I think you are going to regret this early retirement.

You have stated you have no savings, and are in debt. Plus you over the past years have gone on great vacations, but from now on will NOT for the rest of your life.

You don't even have enough pension to pay for your living and the house, because repairs are simply a cost of ownership, not something you take out a loan to pay, because then it means the next 3 years you have LESS money for living and house repairs, and you are on the debt treadmill with no way off.

How are you going to buy a new car in 10 years ?

Are you even eligible for SS, you could be short since you have not worked long from what you said.

I wish you the best, but fear the worst, or at least reading a story of being homeless.

Posts crossed, but 10K savings is next to nothing anyhow..

 

[drumgal]

IMO, if you are healthy and have not had a lot in claims recently, then high deductible is the way to go and yours is a slam dunk... no monthly payment and they put $2,000 a year in a HSA for you vs paying $2,760/year. If you have no claims then that is a $4,760/year difference! Am I misinterpreting what you said?

+1 with others... get the HELOC now while you are working assuming that the cost of the HELOC is minimal.... I had one once and it just sat there and I never needed it but it was nice knowing that it was there.

I am getting more info on this high deductible plan. It's brand new, and the HR rep was very excited about it...I need to know exactly what is covered before I make my choice. I know that I will have to pay extra for dental. It sounds like a no-brainer tho!

Perhaps I will at least inquire about the HELOC before I retire. I only have to use it if I need it, right? Of course, depends on the cost...

 

[pb4uski]

I am getting more info on this high deductible plan. It's brand new, and the HR rep was very excited about it...I need to know exactly what is covered before I make my choice. I know that I will have to pay extra for dental. It sounds like a no-brainer tho!

Perhaps I will at least inquire about the HELOC before I retire. I only have to use it if I need it, right? Of course, depends on the cost...

Our dental is modest... about $250/year each for a checkup and two cleanings... besides the benefits of most dental plans are pretty paltry unless you have some major event that needs to be covered and even then coverage is limited. Unless you have some chronic health issues then I think it is a no-brainer.

Yes, a HELOC typically doesn't cost anything unless you use it and you do not have to use it.

 

[drumgal]

So, you don't have any tax-deferred accounts other than the $10,000?

No. This is my only point of concern, really. I understand that things could (should) be better, but this is what I have, and I NEED to get out of that library job! I do make a fair amount playing music, AND I did just get hired to this part-time data-entry job! This will be between 600-800 extra per month.

 

[Walt34]

No. This is my only point of concern, really. I understand that things could (should) be better, but this is what I have, and I NEED to get out of that library job! I do make a fair amount playing music, AND I did just get hired to this part-time data-entry job! This will be between 600-800 extra per month.

Well, there is the minor little detail of maintaining one's sanity, else what good is a full pension?

Like Sunset, I have serious doubt that this will work out well for you. However, one member here has a "Plan C" that involves living in an RV in the New Mexico desert. You may be his neighbor, but I suppose that's better than losing your mind.

 

[drumgal]

OP - I think you are going to regret this early retirement.

You have stated you have no savings, and are in debt. Plus you over the past years have gone on great vacations, but from now on will NOT for the rest of your life.

You don't even have enough pension to pay for your living and the house, because repairs are simply a cost of ownership, not something you take out a loan to pay, because then it means the next 3 years you have LESS money for living and house repairs, and you are on the debt treadmill with no way off.

How are you going to buy a new car in 10 years ?

Are you even eligible for SS, you could be short since you have not worked long from what you said.

I wish you the best, but fear the worst, or at least reading a story of being homeless.

Posts crossed, but 10K savings is next to nothing anyhow..

Wow! That's depressing, as you state it. I don't have any debt, other than a pretty low mortgage payment. I do have enough credits to claim SS later when I am a bit older (62?) I will get cost-of-living increases with my pension. I have never (nor will I ) buy a NEW car. I have visited many other continents and don't feel the need to travel abroad any longer...give me a tent and a National Park! (cheap...) I will have two part-time jobs when I retire. Anyway, if you knew what I go through at this present job, you'd likely quit too!

 

[Calico]

OP - I think you are going to regret this early retirement.

You have stated you have no savings, and are in debt. Plus you over the past years have gone on great vacations, but from now on will NOT for the rest of your life.

You don't even have enough pension to pay for your living and the house, because repairs are simply a cost of ownership, not something you take out a loan to pay, because then it means the next 3 years you have LESS money for living and house repairs, and you are on the debt treadmill with no way off.

How are you going to buy a new car in 10 years ?

Are you even eligible for SS, you could be short since you have not worked long from what you said.

I wish you the best, but fear the worst, or at least reading a story of being homeless.

Posts crossed, but 10K savings is next to nothing anyhow..

This sums up my thoughts as well. I wouldn't retire if the plan is to "take out a loan" to pay for future home repairs, a replacement car, etc.

At your age, $10,000 is nowhere near a sufficient cushion to handle the expenses which will come with home ownership, unexpected medical expenses, etc. Personally I would not be comfortable living as close to the edge as you could easily find yourself.

Best of luck to you whatever you decide.

 

[MichaelB]

drumgal, will you be eligible for Social Security?

 

[Calico]

<snip> I am buying a home (have refinanced to lower the monthly payment) and I am nearly debt free otherwise...<snip>

Wow! That's depressing, as you state it. I don't have any debt, other than a pretty low mortgage payment. <snip>

Both cannot be accurate. What does the "nearly" consist of?

I sincerely hope you are being realistic with yourself about your financial situation, and your anticipated expenses going forward.

While I agree that you can't put a price on sanity, the reality is that almost everything else in life does have a cost, and oftentimes it is these unexpected costs that crop up at the most inconvenient of times.

I am glad to read that you will be receiving social security eventually in addition to the pension.

 

[Sunset]

Wow! That's depressing, as you state it. I don't have any debt, other than a pretty low mortgage payment. I do have enough credits to claim SS later when I am a bit older (62?) I will get cost-of-living increases with my pension. I have never (nor will I ) buy a NEW car. I have visited many other continents and don't feel the need to travel abroad any longer...give me a tent and a National Park! (cheap...) I will have two part-time jobs when I retire. Anyway, if you knew what I go through at this present job, you'd likely quit too!

Just trying to explain how I see it. With only 10K in savings, I myself would continue working in the Salt Mines (because living in a tent when 70 really sucks), 1 more year of work will raise the Pension, get more SS (if eligible), and have 1 less year to pay retirement, and 1 more year of mortgage paid off.

When I said new car, I meant even just new to you, around here $8,000 will buy you a well used car, but those need repairs and just that would suck up most of your $10K reserve.

The Social Security could help, and you are sure you are not subject to WEP or refusal of SS due to your County job ?

Can you plan to hold off SS until at least 66.x to get the full amount ?

Your plan which I think is shaky at best, will completely explode in your face if SS refuses you, so you better be 100% sure you will get it, as some folks don't even with decades of work, or they get WEP'd which cuts the SS payment.

 

[Philliefan33]

It sounds like you will be living on the edge in terms of your budget. One remedy may be to look at this as a career / job change rather than retirement. You need to leave your current job to save your sanity ( many on this forum can commiserate), but do you have to stop working? Taking another job, even at lower pay, would allow you to build up your savings and bridge the gap until your income stream improves (SS).

If I were you I would get another job and save all of that income while living solely on the pension. If I was able to do that for a couple of years then I would consider full retirement. It will be easier to work a few extra years now than to try to go back to work at age 60 because your budget isn't working.