Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Thinking daily about it now
Old 10-19-2006, 07:13 PM   #1
Recycles dryer sheets
 
Join Date: Apr 2006
Location: SW Ohio
Posts: 57
Thinking daily about it now

Hello folks! Made my first post a few minutes ago and have been roaming the board for a few months.

I'm 52 with a good paying job ($160/yr + some 5 figure bonuses) which is becoming intolerable. I've been with this company for a little over 30 years which qualifies me for retirement and retirement medical until they decide to take that away.

If I consider my pension as a lump sum, my total financial assets total around $1.1MM, with about $330M being the lump sum. The rest is in IRA's, an annuity, 401K, and around $120M in a brokerage account. My home is paid for and is valued around $270M.

I have two children in their early 20's. One is graduating college in Dec. with a good job and is grubstaked. The other has college covered in a separate account, plus a smaller grubstake. Each will graduate with 5 figures in the bank and no debt. Much better than what I had at that age.

Here's my issue: I've always been a big believer in tax-defered savings. I maxed out everything and then started an annuity to sock away even more. Now, when considering ER, I face the task of getting from 52 to 59 1/2 to be able to tap the tax deferred accounts.

I currently save around $80,000 a year, so my net worth is growing fast making ER look stupid, but the job is taking too big a toll anymore. I have calculated I could live on around $45,000/yr without a lot change (lower taxes and expenses). As mentioned above, I only have around $120M liquid. I could take the pension as an annuity which would get me around $29,000/yr. That would make my $120M last around 7 years, maybe.

How do I look? Any suggestions or direction changes to take? I'm still taking the job a day at a time, so no hurry. But, I do not like the look of what is happening to the pension lump sum calculations in the near future. Significant hit if I would choose that option........

Thanks for any replies and suggestions!!! Bet I post more frequently in the future.
__________________

__________________
Retired 8/12/2011
zaqxsw is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Thinking daily about it now
Old 10-19-2006, 07:25 PM   #2
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,563
Re: Thinking daily about it now

Welcome to the board, Zaq. It looks like you're there... even if the home equity is already counted as part of that $1.1M.

If you don't care about the job anymore, then perhaps it's worth looking at what pays more money: the lump sum now, the lump sum later, the annuity now, or the annuity later.

As for the tax-deferred investments, have you looked at a 72(t) withdrawal plan?
__________________

__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Re: Thinking daily about it now
Old 10-19-2006, 07:26 PM   #3
Moderator Emeritus
Rich_by_the_Bay's Avatar
 
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
Re: Thinking daily about it now

Welcome to the board.

For clarity, I am going to assume that by "M" you meant thousands, or K. Not knowing if your home equity is included in your 1.1mm number I'd guess that with your very low expenses and paid medical, FIRECalc will say you are good to go.

At a safe withdrawal rate of 4% and a sensible portfolio you can take out $44K per year, more than you apparently need.

Now the trick is to diversify and allocate your assets sensibly. Lots of good threads and books about how to do that. So, keep reading, play with FireCalc like crazy, and dive in. Sounds like you've earned it.
__________________
Rich
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

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.
Rich_by_the_Bay is offline   Reply With Quote
Re: Thinking daily about it now
Old 10-19-2006, 07:42 PM   #4
Recycles dryer sheets
 
Join Date: Apr 2006
Location: SW Ohio
Posts: 57
Re: Thinking daily about it now

Thanks for the feedback! My home equity is excluded from the $1.1MM financial assets and "M" does mean thousands, MM millions (something from work).
__________________
Retired 8/12/2011
zaqxsw is offline   Reply With Quote
Re: Thinking daily about it now
Old 10-20-2006, 07:12 AM   #5
Dryer sheet wannabe
 
Join Date: Oct 2006
Posts: 15
Re: Thinking daily about it now

Color me jealous.

Bein' just a youngun', I know nothing about the 72(t) withdrawal plan, but it's sure worth looking into.

If the job is really taking too heavy a toll on you, then I say find a way to go for it. You've accomplished a lot. It stands to reason you'll accomplish this too.
__________________
Southpaw is offline   Reply With Quote
Re: Thinking daily about it now
Old 10-20-2006, 07:23 AM   #6
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,211
Re: Thinking daily about it now

You could roll the 401k into an IRA. IRAs allow early distributions without penalty if you follow the 72t rules on substantially equal payments. Here is a link that explains what you can do: http://www.retireearlyhomepage.com/wdraw59.html

__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Re: Thinking daily about it now
Old 10-20-2006, 07:33 AM   #7
Thinks s/he gets paid by the post
 
Join Date: Jul 2003
Location: Pasadena CA
Posts: 2,673
Re: Thinking daily about it now

Hey zaqxsw, STOP IT!

You have been daydreaming too much and productivity is way down. Back to work guy.


Your boss
__________________
T.S. Eliot:
Old men ought to be explorers
yakers is online now   Reply With Quote
Re: Thinking daily about it now
Old 10-20-2006, 09:54 AM   #8
Thinks s/he gets paid by the post
 
Join Date: Aug 2005
Posts: 1,375
Re: Thinking daily about it now

I would ditch the "intolerable" job. Then, after a few months or maybe a year of R&R, exercise, and restoring your health sanity, consider the possibilities. Perhaps a low-key semi-retirement job would suit you better than complete retirement. Or volunteer work. It isn;t just full-time stressful job vs complete retirement.

When my job was becoming a drag, I switched to part-time for 3 years and then fully retired. My husband switched from a stressful job (he was laid off--Silicon Valley in 2002) to more suitable work as a college instructor. We're both happy with our choices.

Ooh--gotta run. DH is home (just one class on Friday mornings this semester). We're going out to lunch
__________________
You can't always get what you want, but if you try sometimes, you might find you get what you need.
astromeria is offline   Reply With Quote
Re: Thinking daily about it now
Old 10-20-2006, 06:23 PM   #9
Recycles dryer sheets
 
Join Date: Apr 2006
Location: SW Ohio
Posts: 57
Re: Thinking daily about it now

Funny yakers.

I like this board already.

Thanks for all of the input. Big decision, as you all know.

__________________
Retired 8/12/2011
zaqxsw is offline   Reply With Quote
Re: Thinking daily about it now
Old 10-20-2006, 06:44 PM   #10
Recycles dryer sheets
 
Join Date: Apr 2006
Location: SW Ohio
Posts: 57
Re: Thinking daily about it now

Martha, thanks for the link. I'm going to study up on the 72t rules this weekend.

My wife is getting nervous............ : P

She might have to go back to work.... We agreed she should quit in 1984 with the the first kid. I was making enough. 2nd kid 20 mos. later. Kind of thought she would go back to work from boredom after the kids were older. Boy, was I wrong. She had already discovered ER and wasn't giving it up!!!!

Hard working lady who I am very lucky to have and know it. More the handyman around here than I am, and I'm good. I always wanted a partner instead of a dependant, and she is a partner.

Just wish she had a pension............... ; )
__________________
Retired 8/12/2011
zaqxsw is offline   Reply With Quote
Re: Thinking daily about it now
Old 10-20-2006, 07:47 PM   #11
Full time employment: Posting here.
 
Join Date: Jan 2006
Posts: 899
Re: Thinking daily about it now

ZAQCSW,

It sounds like the problem that you have is how to get through the next 7 years to 591/2 on an after tax portfolio that is a small fraction of your overall portfolio with minimal impact.

1-First I would suggest running FIRECALC with your aftertax porfolio and options like those that Nords suggested with the 7 year time horizon and see what happens.

Quote:
Originally Posted by Nords
If you don't care about the job anymore, then perhaps it's worth looking at what pays more money: the lump sum now, the lump sum later, the annuity now, or the annuity later.

As for the tax-deferred investments, have you looked at a 72(t) withdrawal plan?
2-Second, if you are serious about ERing now and haven't already done so I would immediately cut back before tax savings to just enough to get the 401k match and save the rest after tax.

3-Third, you seem like a good candidate for part-time ER. What if you could make $29k/year working part time rather than annuitize the pension? Is that an attractive option?

4-Another option (maybe the last resort ) is working just one or two more years. For example of you saved $80k after taxes for two additional additional years you would have $280k which would give you $56k/year for the remaining five years to age 591/2.

Good luck,

MB

MB
__________________
mb is offline   Reply With Quote
Re: Thinking daily about it now
Old 10-22-2006, 07:38 PM   #12
Recycles dryer sheets
 
Join Date: Apr 2006
Location: SW Ohio
Posts: 57
Re: Thinking daily about it now

Thanks MB, good advice.

Yes, I've already cut way back on tax-deferred savings and may take it to zero.
__________________

__________________
Retired 8/12/2011
zaqxsw is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Banks with low daily atm limit. Lakewood90712 FIRE and Money 7 08-30-2006 09:36 PM
Just retired and thinking of retirement in Florida greek1949 Hi, I am... 3 08-02-2006 04:13 PM
Thinking of RE Surfs_Up Hi, I am... 38 09-26-2004 11:48 AM
Thinking of of Pulling the ER Trigger...... Bill Gates FIRE and Money 10 09-02-2004 08:00 AM

 

 
All times are GMT -6. The time now is 02:39 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.