Can My Husband and I Retire?

[QueenM]

Hello Everyone!

I'm new to these boards. Found FIRE by being a frequent lurker on the Bogleheads boards. Need some advice from the good people here.

My husband and I are 42 and 44 years old, respectively. We are both tired (exasperated) with our jobs for different reasons. My (large company) employer has downsized due to the economy. My job is not in jeopardy, but my workload has effectively double while my salary has stayed the same. The job was already stressful but now with the added workload it has become unbearable.

My husband can stand his job but there is no love there. His gripe is the 45 minute commute downtown (each way) and back. This weekend we actually discussed how miserable these situations make us and were wondering if an early retirement is even possible? And if so, when?

Here's our financial situation:

-We owe about 90K on our home

-No other debt to speak of

-We have one child who is turning twelve next month, but have set the college $$ aside and that won't be a problem

-We have about a million and a half in savings ($1M outside of 401ks another 500K inside 401K), we are frugal savers and don't have a very expensive lifestyle

-I believe we could live on a budget of $70-75K a year, maybe less if we payoff the house first ($1200 month payment right now).

We were considering ER in the next 3 to 5 years, maybe after paying off the house. With 401Ks and outside savings, we could put away $50K a year if we bite the bullet. Is this doable? Thoughts?

 

[JustMeUC]

we are frugal savers and don't have a very expensive lifestyle

-I believe we could live on a budget of $70-75K a year, maybe less if we payoff the house first ($1200 month payment right now).

I guess everyone has a different idea of frugal. Personally, if I was spending anywhere close to 75K a year, I would be trying to figure out where the heck I was bleeding all the money...

I say at your ages, you would be better off to work a few more years at a less stressful job to save a bit more and have company health-insurance.

JMHO

 

[mickeyd]

We are both tired (exasperated) with our jobs for different reasons.

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my workload has effectively double while my salary has stayed the same. The job was already stressful but now with the added workload it has become unbearable

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His gripe is the 45 minute commute downtown (each way) and back

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We were considering ER in the next 3 to 5 years, maybe after paying off the house.

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You seem to have the frustration level and insight (plus knowing how to live off your savings and live below your means) to certainly consider bailing out of the rat race and become knowledgable about a loafer being more than a shoe. If you get my drift...

Keep in mind that you both may live for another 50-60 years and will/may need health insurance. That's a long time for that stash of cash to stretch. Just sayin...

 

[ziggy29]

My husband and I are 42 and 44 years old, respectively.

My wife could have posted this exact same thing, except with the ages reversed.

I think $75,000 a year on a $1.5M nest egg is rather optimistic, unfortunately; that represents a 5% annual drawdown of assets. If you could pay off the mortgage first, that would represent $10-15K less you should need, but even then it's cutting it a little close.

Does that $75,000 income goal include health insurance, and have you factored in the inflation for it? If not, I don't think you're there yet. Having said that, I think "semi-retirement" is definitely doable in your situation once the house is paid off (based on what you've told us). I'd feel comfortable with taking about $50K a year from a $1.5M portfolio with an appropriate asset allocation (say 60/40 stocks and bonds), but that would still leave a little extra income need that perhaps a part time job or two could take care of. Either that or a lower paying, less stressful job that either of you might enjoy (preferably with health insurance) for a few years.

So really it comes down to your stress and frustration level with your current jobs. If you can take it for another 5 years, I'd do that. If you can't, you may have the ability to escape it, but probably not the working world completely -- not yet.

 

[Dawg52]

I would try to work another 5 years. You should have 2 mil by then. And a 75k budget would lower your w/d rate to just under 4%, which is the magic rate for many. Of course if you can lower your budget, maybe sooner. Just my opinion though.

Best of luck.

 

[Bestwifeever]

Run your numbers through FireCalc (link at bottom of page).

The longer you work, not only will you be beefing up the nest egg, but you'll also have fewer years to be living off your retirement assets.

 

[wanaberetiree]

... and have company health-insurance.

Do you have suggestions how to do this?

 

[JustMeUC]

Do you mean how to find a job with a company that offers health insurance?

 

[wanaberetiree]

yes

 

[JustMeUC]

yes

Is this a trick question??






I assume that most employers are still offering health insurance? I know that many (used) to pay 100%, and luckily mine still does. Perhaps this may not be the case anymore for many? most? companies. But... most do still offer group insurance right?? And pay at least 50%? or am I out of touch?

I haven't been on the job hunt for more than 10 years but surely things haven't changed that much? right ?

 

[LOL!]

...
His gripe is the 45 minute commute downtown (each way) and back. This weekend we actually discussed how miserable these situations make us and were wondering if an early retirement is even possible? And if so, when?
...

-I believe we could live on a budget of $70-75K a year, maybe less if we payoff the house first ($1200 month payment right now).
...
Thoughts?

I would not wait another month to cure the commuting gripe. I hate commuting, so I live close to work. Why not either (a) move closer to job or (b) move job closer to home? Basically, stop whining about it. He may have to switch employers, but so if he doesn't try, he will never know.

You wrote "could live", so does that mean you are living on that now? I would suggest you use the next year to demonstrate that you can live on less than that. That is, practice as if you are retired right now, don't wait.

You may also find that you can work part-time. That's what I did. I had a talk with my boss and they accommodated my wishes. Indeed, I started a trend. A few people around me switched to part-time as well.

 

[Rich_by_the_Bay]

Is this a trick question??
I assume that most employers are still offering health insurance? I know that many (used) to pay 100%, and luckily mine still does. Perhaps this may not be the case anymore for many? most? companies. But... most do still offer group insurance right?? And pay at least 50%? or am I out of touch?

I think what he's getting at is that many, I daresay most, companies do not offer retiree insurance even if you are willing to pick up the whole tab. You could be left high and dry if you haven't planned for this. The individual/private market is available to many who have no pre-existing conditions but the policy could be dropped for your market any year.

Hopefully your current employer will allow you to continue it on your own indefinitely. Government jobs sometimes have that policy.

 

[harley]

I've been seeing a fair number of "Can we/I retire" threads and have been struck by something. Most of the ones who are looking to get out without a strong 4% or smaller SWR are tired and frustrated with their j*bs. I certainly understand that, but it seems to me that most of the successful ERs were focused on what they would do if they didn't have to w*rk vs. I need to quit this crappy j*b. I suspect if you are just trying to escape a bad situation you can do that more safely and easily by changing jobs than by prematurely retiring. If you focus on life after w*rk it often makes the last few years more bearable, having a goal and realizing that soon you will be FI and that many of the situations that make the job suck will no longer matter. Just a thought I have had recently.

Regarding the OP, I agree with most. I don't think you're there yet. Do the reading and Firecalc stuff, seriously think about your lifestyle (before and after ER), and spend a LOT of time on how to make the remaining years before FIRE pleasant or at least bearable.

 

[JustMeUC]

I think what he's getting at is that many, I daresay most, companies do not offer retiree insurance even if you are willing to pick up the whole tab. You could be left high and dry if you haven't planned for this. The individual/private market is available to many who have no pre-existing conditions but the policy could be dropped for your market any year.

Hopefully your current employer will allow you to continue it on your own indefinitely. Government jobs sometimes have that policy.

ahh... sorry I was saying to the OP that by working a few more years with a company that had health insurance that they could save on paying for private health insurance if should they retire now.

Unfortunately, my company will drop my health insurance the day I leave. I have glanced briefly at the new high-risk pool for my state, and due to a automatically qualifying condition I should be able to get in the pool with a $4500 deductible for about 1/3 the current single premium my company is paying for me right now.

I really need to be a bit more in depth research into this. I have the financial means to retire right now (thanks to an inheritance) but for the health insurance issues. However, I am lucky in that I actually like my job and it doesn't pay much but the stress is next to zero. I chose that over money and have not regretted it for a second.

 

[tsturbo]

We are both tired (exasperated) with our jobs for different reasons. My (large company) employer has downsized due to the economy. My job is not in jeopardy, but my workload has effectively double while my salary has stayed the same. The job was already stressful but now with the added workload it has become unbearable.

My husband can stand his job but there is no love there. His gripe is the 45 minute commute downtown (each way)Thoughts?

Yeah I have some thoughts. Welcome to the real world. You are not a government worker, so yes, workloads can and do increase and you need to constanly produce results, so quit whining and work harder. A 45 minute commute? Are you kidding me? That is a piece of cake, quit complaining.

 

[ziggy29]

Yeah I have some thoughts. Welcome to the real world. You are not a government worker, so yes, workloads can and do increase and you need to constanly produce results, so quit whining and work harder. A 45 minute commute? Are you kidding me? That is a piece of cake, quit complaining.

I see you haven't read Dale Carnegie....

 

[haha]

Yeah I have some thoughts. Welcome to the real world. You are not a government worker, so yes, workloads can and do increase and you need to constanly produce results, so quit whining and work harder. A 45 minute commute? Are you kidding me? That is a piece of cake, quit complaining.

I see you have accepted the task of changing the ïnsufficiently harsh tone of this board.

Doubt it will work, we are mostly softies.

Ha

 

[plex]

You are about 75% of the way there, with the budget you posted. You can either cut the budget (in realistic ways), or work until you get $2M. Social security is still too far off to calculate in, it begins becoming a significant factor when it is 10 years or less away.

That said, both of your problems can be easily fixed by switching jobs, and your husbands can alternatively be fixed by moving (but since this may only be for 4-5 years, this may be impractical). So, polish up the resumes and start sending them out, companies certainly are not offering retention benefits of any type these days. Go ahead, get an appropriate replacement for your needs, your employer certainly would not hesitate to do so.

 

[walkinwood]

To add to the great suggestions above, including the harsh commentary from tsturbo.

ER doesn't have to be an either/or situation. You can always work at a less stressful job and make just enough to meet your needs, but let your portfolio grow. Lots of permutations & combinations are possible.

I found this interesting post yesterday about careers - it may have been on this board - can't remember. One thing stood out. It says that a lot of people are unhappy with their current work environment, not their profession.

http://www.nytimes.com/2010/07/18/jobs/18search.html

Also read Work Less, Live More for some ideas.

 

[Rich_by_the_Bay]

I have the financial means to retire right now (thanks to an inheritance) but for the health insurance issues .

Yup, that's one of the many major flaws in the current system. I hope you find a way to leapfrog the insurance dilemma and do what you want.

Eventually, it looks like that issue will be addressed with the recent reform.

 

[traineeinvestor]

Having been in a situation where my job was very stale and unstimulating, I concluded that I wasn't (financially) ready for retirement and opted to switch jobs. While the job hasn't changed that much and I still have no desire to extend my working career any longer than I have to, the change was a good thing - a new environment, new colleagues etc have all combined to give me a bit more stimulation.

If you are not quite there in terms of finances, think about a change in job.

Some companies offer sabaticals for long serving employees which may provide a welcome respite from the daily grind.

For OP's husband, is telecommuting (for even one day a week) an option?

 

[QueenM]

Thanks for all the advice, except for TSTurbo, obviously he or she has issues that are beyond this board to solve.

I actually have private insurance (my small employer buys policies for each employee) and my child is on it so I can continue to pay for it after I leave (and it covers my son until he is 30 if I keep paying, it's BC/BS). However, I have seen projections that show an increase of 80% for private insurance. So my payments would go way north of the $300 a month I'm paying now.

My husband is stuck with downtown unless he wants to quit. That is why we are giving it serious consideration. But we could probably suck it up for the $2 mil if that would do it. If we pay off the mortgage the budget would drop about $12K a year.

The toughest part as a parent is the child factor. My son is the joy of my life and the best decision we ever made. With that being said, if it was my husband and I we could retire today and make ends meet, no doubt. Time for coupon clipping, happy hours for dinner out, board games (our favorite hobby), netflix, etc. But with a child you have alot of knowable and unknowable expenses (trumpet lesson, golf lessons, swimming lesson, soccer annual fees, eventually weddings, grad school, etc.). That puts extra pressure on to build the nest egg.

 

[ral3210]

4% rule

I'm amazed at how so many on this board adhere to this rule of dumb (as Kotlikoff calls it). Taking 5% or less will take care of your needs. If inflation is high you will lose out. But, won't people who work lose out? The data I've seen from the 1970s do not indicate that wages increased 10% in one year when we had 10% inflation. One must adjust to the situation. According to Stanley from the Millionaire books, fewer than 5 out of 100 households in the US have $1,000,000 of investable assets. Congratulations on accumulating such a large sum at such an early age! Of course you can retire with this sum and live a good life.

 

[plex]

The rule of thumb is 4%, and that is for someone in their late 50s-late 60s. 5% has a very low chance of sustainability, even 4% is somewhat borderline, for someone in their late 40s. That is why they are not quite there yet.

As for wage income growth not keeping up with inflation, perhaps that may occur, but how is that relevant to the OP. There has been deflation for the past couple years and there is still some deflation even now. In addition, the OP only has 4-5 years of work left, so inflation outpacing wage increases will make a negligible difference. Hyperinflation would need to occur, right now, and for the next few years, for there to be a significant impact.

 

[traineeinvestor]

I'm amazed at how so many on this board adhere to this rule of dumb (as Kotlikoff calls it). Taking 5% or less will take care of your needs. If inflation is high you will lose out. But, won't people who work lose out? The data I've seen from the 1970s do not indicate that wages increased 10% in one year when we had 10% inflation. One must adjust to the situation. According to Stanley from the Millionaire books, fewer than 5 out of 100 households in the US have $1,000,000 of investable assets. Congratulations on accumulating such a large sum at such an early age! Of course you can retire with this sum and live a good life.

Yes, absolutely a lot (most) people do retire with a lot less than than OP has managed to save BUT:

1. many of them rely on SS, pensions or similar to support themselves. Without these you need a lot more; and

2. how much you need depends on (primarily) life expectancy and expenses. The younger you retire and the higher your expenses the more you need;

3. the longer your time horizon, the greater the uncertainty - which is another way of saying that more is needed to give an adequate margin of safety.