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Should I do it?
Old 06-04-2009, 11:35 PM   #1
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Should I do it?

Hello,

This is a great forum. I've been lurking a few months now. I am thinking of going part-time now, and have to work longer (15-20 more yrs) vs continuing full-time work (7-8 more yrs) and retiring fully. I know only my family and I can know the right answer, and we have to figure it out, but I am interested in others' comments, wisdom, experiences, and advice.

I am 43, married to DW, children ages 12 and 10. We have saved 1.1 million in stocks/bonds/cash, have about 1.0 million in real estate equity, 400K in retirement plans, and about 500-600K in company equity, which would be paid to me over 10 years with interest when I leave the company. Our debt includes 170K on our primary home, 270K on a second home. We plan on paying these off in 4-5 years whether I go part-time or not. We also want to provide for our kids' educations, even private schools if that's where they choose to go.

I realize my family and I are very fortunate, so I hope I don't sound to whiney or spoiled. Like many folks, I love parts of my job, but hate more and more of it with time. I no longer like getting up and going to work. In fact, sometimes I just dread it. I lose a lot of sleep worrying about work. I work long, hard stressful days, but have reasonable weekend time and vacation to spend quality time with my family. I just want more of it. I've seen too many people in their 40's and 50's die of some terrible cancer or heart attack, while working their butts off for "someday it will pay off".

So the decision I have been struggling with is whether to work full-time for the next 7-8 yrs then retire completely, vs. going part-time now knowing I would probably need to work for 15-20 more years. My hope would be that working part-time, I would enjoy it more, and have to deal less with the aspects of work that are dreadful. Working part-time, I still would be able to pay for kids' educations, pay the mortgage down quickly, and maintain our current lifestyle. I just don't have the guts to make that move.

Thanks for listening.
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Old 06-05-2009, 02:54 AM   #2
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it is difficult to give financial advice when you provide so little financial data. from your post it is not clear whether "400K in retirement plans, and about 500-600K in company equity" is a part of "1.1 million in stocks/bonds/cash" or not. also your current yearly expenses and savings would be necessary info. will you require the same expense level in retirement as now? any expected pensions and what is your expected SS? etc.
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Old 06-05-2009, 09:02 AM   #3
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Hi Paddler, and welcome to the forum!

You present an interesting scenario -- one that I don't recall seeing before. We often have discussions about gong part-time as a lead-in to retirement, but 15 or 20 years of part-time is unusual.

Are you in a career where you can reasonably expect to work part-time for that long? Or would you be doing some kind of self-employment.? And would you have access to health insurance?

You might really benefit by reading Robert Clyatt's Work Less, Live More.

Good luck as you contemplate this interesting alternative!

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Old 06-05-2009, 07:48 PM   #4
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jdw, the 400K in retirement plans and 500-600K in company equity is not part of the 1.1 million. Our living expenses average 10-11K/month, and I would expect that to continue for at least another 10-12 years, until our kids were on their own. I take home after taxes about 33K/month, steadily now for the last 4-5 years, and I would anticipate that to remain the same or go up a bit. Most of the money I take home is invested in stocks/mutual funds/bonds or goes toward paying down our mortgages.

Coach, I can be in part-time work for 15 years or more, if not with the company I am with, as an idependent contractor. If I stayed part-time with my company, I would still get health benefits.

I have read Clyatt's book, which inspired me to start thinking about part-time.
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Old 06-05-2009, 08:12 PM   #5
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Paddler,

Welcome to the forum!
Not used to being in the tax bracket where deductions are prohibited so my input would be of little financial value. In 15-20 years, a lot can happen, both good and bad. Right now, you seem financially good. Everything hinges on the company.

I am also interested in hearing about your paddling.

Free to canoe
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Old 06-05-2009, 11:03 PM   #6
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jdw, the 400K in retirement plans and 500-600K in company equity is not part of the 1.1 million. Our living expenses average 10-11K/month, and I would expect that to continue for at least another 10-12 years, until our kids were on their own. I take home after taxes about 33K/month, steadily now for the last 4-5 years, and I would anticipate that to remain the same or go up a bit. Most of the money I take home is invested in stocks/mutual funds/bonds or goes toward paying down our mortgages.

Coach, I can be in part-time work for 15 years or more, if not with the company I am with, as an idependent contractor. If I stayed part-time with my company, I would still get health benefits.

I have read Clyatt's book, which inspired me to start thinking about part-time.
so, at 11k/mo plus the taxes you'd have to pay to clear that, the 4% rule says you will need at least $4.5 - $5 mil in retirement assets to FIRE. and some people think using 4% isnt safe enough. if you start working part time how much do you think you will be able to add to your retirement savings
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Old 06-06-2009, 01:59 PM   #7
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so, at 11k/mo plus the taxes you'd have to pay to clear that, the 4% rule says you will need at least $4.5 - $5 mil in retirement assets to FIRE. and some people think using 4% isnt safe enough. if you start working part time how much do you think you will be able to add to your retirement savings
That's why if I go part-time I estimate I will have to work quite a while-- I've already figured out my take home would be approx. 19K/month after taxes, and if we keep spending the way we do, I would be able to save 8K/month after expenses.
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Old 06-06-2009, 02:03 PM   #8
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Paddler,

I am also interested in hearing about your paddling.

Free to canoe
I like being on the water, in any human powered way. Last couple of years my favorite way has been on a standup paddleboard.... mostly flat water, but I am just starting to venture out into 3-4 foot surf. Great core work-out!
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Old 06-10-2009, 08:18 AM   #9
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jdw, the 400K in retirement plans and 500-600K in company equity is not part of the 1.1 million. Our living expenses average 10-11K/month, and I would expect that to continue for at least another 10-12 years, until our kids were on their own.<snip>.
paddler -- what do you expect your living expenses to be in 10 yrs once you no longer have mortgages and your kids are "on their own"? If I was you I would focus on answering this question before making any decisions...

The way I see it, you have about $2M today and are planning to grow that at $8k/month while working part time. I did not run numbers or make any complicated assumptions, but seems that today you can generate about 45% of your income needs and it seems likely that in 10 yrs you may be able to support about 2/3 of your current lifestyle needs. Would that be enough? If so, you can work part time until your kids are established. Alternatively, you may find out that your long term income needs are not as large as originally thought and you can bail out in 5 yrs if you work full time (this would assume larger outlays in the first few years than later on).

Again, I don't know your personal situation or plans, but it may be something worth exploring...
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Old 06-10-2009, 09:13 AM   #10
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Paddler, welcome. You've done a great job of saving and investing.

Under the right circumstances and assuming expenses are not extreme, it sounds like you might be OK. You can use FIrecalc to run various scenarios.

By way of caution, I would run it without including your real estate investments - they will surely pay off some day, but for now are pretty locked up in a terrible market -highly illiquid at best. Then there's tuition if your kids are college-bound. Maybe I missed it, but I didn't see your health insurance strategy, another peak expense if not provided for you after retirement.

At your age and with inflation predicted by many, I like the idea of semi-retirement to retain not only some income, but also a foot in the door if future "fuller" employment becomes adviseable. A lot can happen in 25 years that is out of your control, so the safety net is nice. But if you read Clyatt, you know that already.

So, overall, your picture sounds optimistic to me, with caution.

Good luck.
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As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
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Old 06-10-2009, 11:39 AM   #11
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I like being on the water, in any human powered way. Last couple of years my favorite way has been on a standup paddleboard.... mostly flat water, but I am just starting to venture out into 3-4 foot surf. Great core work-out!
That sounds like a good work out! Canoe for me with branching out to a kayak maybe next year. Paddleboard probably would not be good in these parts unless you can get one with an ice breaker on the front.

Free to canoe
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Old 06-12-2009, 03:54 PM   #12
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jdw, the 400K in retirement plans and 500-600K in company equity is not part of the 1.1 million. Our living expenses average 10-11K/month, and I would expect that to continue for at least another 10-12 years, until our kids were on their own. I take home after taxes about 33K/month, steadily now for the last 4-5 years, and I would anticipate that to remain the same or go up a bit. Most of the money I take home is invested in stocks/mutual funds/bonds or goes toward paying down our mortgages.

Coach, I can be in part-time work for 15 years or more, if not with the company I am with, as an idependent contractor. If I stayed part-time with my company, I would still get health benefits.

I have read Clyatt's book, which inspired me to start thinking about part-time.

Wow! 33k a month after taxes! I cant even fathom making that kind of dough. I dont know what your job is, but Id stay at it full time for the next 8 years or so regardless. Then retire fully. Youve earned it. If you need motivation...think about people making 33k a year hauling bricks.
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Old 06-13-2009, 04:07 PM   #13
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paddler -- what do you expect your living expenses to be in 10 yrs once you no longer have mortgages and your kids are "on their own"? If I was you I would focus on answering this question before making any decisions...

The way I see it, you have about $2M today and are planning to grow that at $8k/month while working part time. I did not run numbers or make any complicated assumptions, but seems that today you can generate about 45% of your income needs and it seems likely that in 10 yrs you may be able to support about 2/3 of your current lifestyle needs. Would that be enough? If so, you can work part time until your kids are established. Alternatively, you may find out that your long term income needs are not as large as originally thought and you can bail out in 5 yrs if you work full time (this would assume larger outlays in the first few years than later on).

Again, I don't know your personal situation or plans, but it may be something worth exploring...
Yes, my gut feeling is that our expenses will go down, especially once kids' school is paid for and mortgages are gone. Being very conservative, though, I have not wanted to count on being able to cut back, so I've estimated for my self 15 years in part time work, thinking if I could get out completely before then it would be a nice bonus, rather than expectation. I am also somewhat worried about the long term prospects of this economy and being in retirement, even though the firecalc estimates under even my most conservative assumptions suggest we would be fine.
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Old 06-13-2009, 04:36 PM   #14
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Wow! 33k a month after taxes! I cant even fathom making that kind of dough. I dont know what your job is, but Id stay at it full time for the next 8 years or so regardless. Then retire fully. Youve earned it. If you need motivation...think about people making 33k a year hauling bricks.
Thanks for that perspective. I worked most of my 20's making 30K(20 years ago)/year. I was single then, so that was plenty for me. I would have thought back then that 33K/month after taxes is a lot of money, and it is, but it is amazing that we don't really feel wealthy-- Our primary home is worth $1 million, and it is very nice, but certainly not fancy or opulent in anyway. It is just the part of the country we live in (and hopefully would stay in retirement) and us wanting to be in a safe neighborhood with good public schools for the kids. We have a weekend home, which maybe our one splurge, but the family time we spend there makes it worthwhile. We take nice vacations, but don't stay in spas or 5 star resorts, maybe a modest mid-priced condo when we go, or even Best Westerns. We don't eat out a lot, and when we do, it is usually PF Chang's or Macaroni Grill. We drive a Subaru and a Honda. I compare prices in the supermarket aisles. I often wonder how much money one has to make to actually feel wealthy in an unlimited way.
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Old 06-17-2009, 10:29 AM   #15
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Hi Paddler,

Being similar to you in terms of age and finances, give or take some, I too have been asking basically the same questions. From my own experience, the level of job stress is the determining factor whether or not I want to continue in my profession.

I am in a situation at work right now which I can more or less control the amount of stress (or BS factor) that I have to deal with. It has not always been this way, but due to some changes beyond my control, it ended up like this. Initially, I was actually not quite happy with the management change, but after a while, I started to see a silver lining in this. I am at a point in my career where I am not insecure, have the necessary experience and expertise to be highly desired. So I said, well, if I just focus on the work part, and stay away from the BS and politics (which is usually the source of stress in most jobs I believe), then I'll continue for at least the next 2-3 years.

With a stable income outlook and some good possibilty of making 20% - 40% more in the next 2-5 years, I believe my decision makes even more sense. On the other hand, I am not putting all my eggs in one basket. I am also exploring some alternative business which could keep me busy should my current situation change.

Do you think you can reduce the stress level at work even if that means you somehow change your current role? This might sound hard at first, but don't forget your ultimate goal, which is to spend quality time with your family and save for FIRE.

As for your last question about how much is needed to feel "rich", if the definition of rich is in the material sense, then you're rich as long as you can afford your material needs. I think people (myself included) tend loose sight of this simple fact and equate happiness with material abundance. Of course we all want to be able to feed our children, send them to good schools, be able to afford health care insurance, and live in dignity when we are old and unable. But if we travel abroad especially to less wealthy places in the world, you will find people who are much happier living day to day with much less than Americans. Our society conditions us to think and believe that we need more and more materialistically in order to be happy. And "rich" in this country is defined by $ period. If this is the pursuit, then no amount of money will make a person feel "rich". Sorry for the blabbing...

Cheers,

laison612
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Old 06-23-2009, 09:54 PM   #16
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Hi Paddler,

Being similar to you in terms of age and finances, give or take some, I too have been asking basically the same questions. From my own experience, the level of job stress is the determining factor whether or not I want to continue in my profession.

I am in a situation at work right now which I can more or less control the amount of stress (or BS factor) that I have to deal with. It has not always been this way, but due to some changes beyond my control, it ended up like this. Initially, I was actually not quite happy with the management change, but after a while, I started to see a silver lining in this. I am at a point in my career where I am not insecure, have the necessary experience and expertise to be highly desired. So I said, well, if I just focus on the work part, and stay away from the BS and politics (which is usually the source of stress in most jobs I believe), then I'll continue for at least the next 2-3 years......


laison612
You are right, I think we are in almost identical situations at work.... I too, have gained enough seniority with enough significant accomplishments where I am very secure and have a lot of specialized expertise in what I do. I do think the BS/bureaucracy/politics gets worse and worse as one gains seniority. Sorting out the BS from what I like to do is something I need to learn how to do. My thought on going part-time is that it would be easier to leave the BS. It is something I have to work on, as I have always tended to be the "pleaser" type, not one to piss others off. I suspect that is my main problem and source of stress.
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Old 06-24-2009, 01:19 AM   #17
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If you can go the independent contractor or part time route, you might enjoy that and not even mind working anymore. Personally, I find there is no comparison between being self employed and working with set hours for a big corporation.

If I could go back in time I would have tried starting my own business or at least looked into contracting much earlier in my life than I did.
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Old 07-02-2009, 07:41 PM   #18
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Old 07-02-2009, 08:13 PM   #19
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Interesting thread and interesting scenarios possible. Again, "by the numbers" seems as if you might be ok. Have you ever thought of going to 1 home or a downsize scenario when the family situation changes? If you could manage a nice gain on some of the homes, perhaps all else stable, and just a bit of monthly savings on expenses should never need to look back. Now, as others have suggested if you can "stand the pain" and the income flow is what it is now and your health is good maybe several more years of earnings are worth it while your family is the age they are at and then you will better judge the future with a bit more put away. When looking at something so significant as to stay full time or go part time or hang it up one needs to reflect carefully which it seems you are doing. Good luck on your choice!
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Old 07-03-2009, 05:47 PM   #20
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What if your health has a major problem? You are living high on the hog now with two homes and a nice lifestyle but since you make so much a cut to a smaller amount would hurt you more than most.

I would work full time until the last child leaves home so if you were to have a stroke or something your expenses would be reduced. Then you could move to the vacation home and sell the family home if you can't afford both.

Part time would be kinda scary because you would be putting off earnings into years where you might not be able. Also part time doesn't always get you the same respect and opportunities as full time. If you reduce the worry and stress you might not be worth as much.
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