Looking for Advice on our Situation

[Teacher Terry]

I have been semi-retired for 5 years and love it. I work about 10 hours/week from home when I feel like it. So I think going p.t. is a great way to ease into retirement.

 

[rodi]

It sounds like you have the financial pieces in place.
It was suggested by Marko that you see a CPA or FA to get a review... depending on where you have your funds - this could be a free service. Prior to pulling the plug, myself, I had our Schwab rep run our numbers through her retirement readiness calculator. It was another set of eyes - and a software package that was a bit different than the ones I had access to. She also asked some good questions I hadn't thought of (how often do we replace cars? budget for upgrades (vs maintenance) on our house?).

It also helped convince DH that we were ready. I'd been telling him we were... but I think he wanted a "professional" to concur. Like you, my spouse is not involved in the investments/numbers... that's my thing... and since this was a big decision - he needed the reassurance.

Going part time as a way to ease into retirement is a good plan. Especially if you can get healthcare as a part timer. Healthcare is the hardest thing to predict these days.

 

[Hopeful]

Thanks to everyone for their advice. We both are feeling more comfortable with the idea of stopping our squirreling away of money. We do want to see were the planned home improvements figures fall out too before making any changes, but we both are feeling better that we are in a good spot.

It helps to hear the positive experiences of others in similar situations who went through similar decisions that worked out fine. It is hard for me not to over-analyze when I read some forums/blogs talking about such low expected returns going forward and sub 3% WR in the future.

I do have a CPA/CFP/RICP in the area that is fee only, and does reviews/plans for a one time fee. I may look into that.

 

[imoldernu]

Great to hear a success story. No advice as what to do, but FWIW, our humble, happy retirement @ age 53, in 1989, was funded by a mere fraction of your current assets.
I think the basis for our planning was always based on:

1. The ability to return to the workforce during the first 10 years, if necessary.
and,
2. Always calculating the lowest amount that we could live on, if things ever turned really bad.

You don't need to hear our life story, 'cuz we're in a totally different wealth class, but those two mind cushions allowed us to sleep soundly for the past 28 years.

Whatever you decide... enjoy!...

 

[Camellia]

Here is a question: if you cut back on saving each year, won't your annual spend go well above the 90-100k? So if you get used to that level you might have to consider a higher WR.

 

[Hopeful]

Here is a question: if you cut back on saving each year, won't your annual spend go well above the 90-100k? So if you get used to that level you might have to consider a higher WR.

No. The reduction in saving would offset the reduction in income from going part time to keep our spend levels the same.

 

[Hopeful]

Update!!

Just wanted to give an update since last checking in. We decided to sit down with a financial planner to go over things. She was an hourly based CFP and CPA. I was pretty confident in things, but I figured this would help my DW become comfortable with the idea of easing into retirement by going part time.

Well, we had our meeting and DW now feels comfortable going part time. Plan is to reduce 403b contributions to minimum for company matches to offset some of the lost income. It was good to get a second opinion, and gave me some confidence that I have been doing things right. Picked up a few pointers, and gained some insight into our pensions and SS. Like all things in retirement, our plan is flexible. Our plan is to give this a go for about 5 years to ease into retirement. Advisor saw no holes in that plan.

Now we just have to hope her employer allows her to reduce her hours. She has a meeting with her boss next week.

 

[MBAustin]

Excellent news, Hopeful! Thanks for the update and hope the meeting with her boss goes well. This just reinforces the value of having a non-interested and competent person provide advice and perspective, even if they don't say anything you haven't already said. Good move!

 

[Whisper66]

Thx for the update Hopeful!

 

[iloveyoga]

One thing I see clearly now that I did not see when I was working FT in financial services. I could have taken a PT job with health insurance some years ago and we would have been just fine. Getting your head wrapped around all of this is not easy and it goes against many cultural norms.

 

[flintnational]

Excellent news and congratulations! One of the things we appreciate most about FI is choice. You can do what you want, especially relating to w*rk. I cut back my work schedule and the DW worked from home for a few years before we FIRED. Since you do not have to w*rk, it probably makes it easier to negotiate these types of deals. In our cases it did. What are they going to do fire us?

FN

 

[Hopeful]

Thanks everyone. It certainly is hard to wrap our heads around reducing savings. I guess that is what leads to so many people doing the OMY thing. Keeping my fingers crossed her work lets her reduce her hours.

 

[Koolau]

Thanks everyone. It certainly is hard to wrap our heads around reducing savings. I guess that is what leads to so many people doing the OMY thing. Keeping my fingers crossed her work lets her reduce her hours.

Just wait until you fully retire (NO savings) AND begin drawing from your savings! That's a tougher one to wrap your mind around. But you will do it because you have to. YMMV

 

[Perryinva]

I must be really missing something here. The OPs current spending is $100k a year, and they have no debt. Just their pensions are $281k. So all they have to do is make it 10 years until his DW can collect pension PLUS SS. So why are rhey still working with those assets? Do they expect to need $300k in retirement?

 

[Exrook]

I must be really missing something here. The OPs current spending is $100k a year, and they have no debt. Just their pensions are $281k. So all they have to do is make it 10 years until his DW can collect pension PLUS SS. So why are rhey still working with those assets? Do they expect to need $300k in retirement?

The $281K looks like a lump sum PV, as just after that OP says:

Both pensions that have been frozen, and have the option of taking as a lump sum what we quit or annuity. DW’s would be the only one that may be worth annualizing. It does not have COLA and currently are quoted at age 65 with 100% joint benefit of $2,982 per month.

Looks like their pension income will be just under $36k, leaving $64k to be covered by other means.

 

[Hopeful]

The $281K looks like a lump sum PV, as just after that OP says:



Looks like their pension income will be just under $36k, leaving $64k to be covered by other means.

Exrook has it correct. The $281K would be a lump sum. If our pensions were $281K per year we would have quit long ago.

 

[stephenson]

Hopeful,

I have read lots of these sorts of posts with questions much like yours.

Never have I read one with such a clear answer.

Do what you want - you are financially set.

 

[Perryinva]

Doh! Yes, of course! I knew I was missing something. Thanks! Still, $230k seems an awful low lump sum for a $2900/mo pension. I'd take the annuity in a heartbeat. Unless the lump sum is age 55 and no option to collect monthly pension until 65, then it's another consideration. Private pensions are usually allowed (reduced) at 55. Bottom line though is I agree with everyone else, y'all are ready to FIRE now. Part time easement is just a security blanket and comfort realization. Very nice job!

 

[stephenson]

Still sounds a bit off ...3900/mo seems way high for that lump sum option.

 

[Hopeful]

The lump sum amount is frozen and will not grow much since it pays a fixed rate less than 1%. The monthly NON Cola option is correct for DW is $2900 month joint life. She has been there long enough to be grandfathered into a better plan. As with all pensions they could change the terms, so the lump sum is probably the only thing I will count on when deciding on ER. If the annuity terms are the same at 65 we obviously would go that route.