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RE and forgoing pension income
Old 08-06-2011, 10:56 AM   #1
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RE and forgoing pension income

My very conservative calculations tell me that DW and I will be FI by end of 2014, and with the current plan I will RE by end of 2014 at age of 50. DW who is a year younger than I thinks she will continue working at least for a few more years past that, but with the comfort of awareness that also she could RE any time after 2014.

For the first 10 years of RE our income source will first be initially DW salary which easily covers all our expenses and beyond, and after that our taxable investments. Around the age of 60 we will also start withdrawing from our 401(k) accounts, and at the age of 65 we both have some pensions waiting for us. The pensions combined with our 401(k) savings will provide more than plenty of income even if we ended up with zero SS at that point. The "big secret" to make all this come together is the fact that we have always been relatively well compensated DINKs living LBOM (and I mean ways below).

Now, while I am very comfortable with this plan right now, there is one detail that keeps me wondering how am I really going to feel in 25 or so months when I need to announce the retirement from the megacorp: With retirement age of 50 my pension will be about $28k per year when I start taking it as planned at 65. If I for some insane reason continued to work until FRA of 65, the pension would be about $100k (PV) per year. The pension is not corrected for any index, so the practical difference for working for another 15 years would obviously be much much more than the present value difference. Heavy penalties for pulling the pension money out earlier as a lump sum make that option practically useless.

I am perhaps slightly surprised myself about how little regret I feel at this point for forgoing potential for major pension income. While it's money we clearly don't need, it is still money (irrational greed??). I'm sure though that whatever will happen in the world between now and my RE date may still change how I feel.

I know many of the early retirees here with defined pension plans have made similar decisions prior to RE. Just curious to know what was your thought process back then, and if you ever had any reason to regret?
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Old 08-06-2011, 12:44 PM   #2
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The "big secret" to make all this come together is the fact that we have always been relatively well compensated DINKs living LBOM (and I mean ways below).


I know many of the early retirees here with defined pension plans have made similar decisions prior to RE. Just curious to know what was your thought process back then, and if you ever had any reason to regret?
It is less difficult to LBYM and FIRE if you do not have the expense of children.

DW and I have never had any regrets about pulling the plug.

You have to know when "enough is enough" for the accumulation of money. However, the present world economy can unsettle a persons stomach.
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Old 08-06-2011, 02:23 PM   #3
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I FIRE'd at 47. Didn't reach the magic number of 50 (higher pension, megacorp retiree benefits).

My partial pension (rolled over my lump sum from pension and 401K into my IRA, and used a portion of that for living expenses) serves its purpose and I love my HSA.

No regrets about chosing to make the move when I did. I was honest to my principles and the time was right for me to call it a career. Looking back, I wouldn't change a thing.
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Old 08-06-2011, 03:45 PM   #4
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I worked up until 55 for full pension and retiree health care. However, I pulled the plug in August 2010 one month after I hit age 55.

Had I worked until December 1st, I would have vested a set of options worth maybe $100K. Had I worked until Jan 1, 2011 I would have received 5 weeks of vacation pay worth $15K.

Not perhaps the magnitude of what you are leaving on the table but then I only needed to work another few months vs a decade and a half.

I have no regrets, in the one year since I left I have lost 25 pounds, my MD took me off Hyzaar for blood pressure and omeprazole for GERD and I have enjoyed myself immensely. You can't put a price on your health (physical and mental).

PS google "utility theory" in the study of economics. The value (utility) of "money you don't need" is quite low....
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Old 08-07-2011, 09:12 AM   #5
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to the original OP, i think you'll find that those 15 years of life to be lived as you want to live it are priceless and well worth the foregone funds.

as others have mentioned, our health has improved dramatically after RE, we lost all the stress, and our outlook became perpetually sunny. we had toyed with the idea of working "a few more years" to add to the money pile. we are so glad now that we didn't. this time feels precious and we wouldn't trade it for the bucks.
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Old 08-07-2011, 10:08 AM   #6
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Originally Posted by Grainiac View Post
With retirement age of 50 my pension will be about $28k per year when I start taking it as planned at 65. If I for some insane reason continued to work until FRA of 65, the pension would be about $100k (PV) per year. The pension is not corrected for any index, so the practical difference for working for another 15 years would obviously be much much more than the present value difference.
I am perhaps slightly surprised myself about how little regret I feel at this point for forgoing potential for major pension income. While it's money we clearly don't need, it is still money (irrational greed??).
I know many of the early retirees here with defined pension plans have made similar decisions prior to RE. Just curious to know what was your thought process back then, and if you ever had any reason to regret?
"Your Money or Your Life".

Or, "Pfffft... it's only money".

I value the last nine years of ER far more than a $100K/year job or even a tripled pension.

As ERs have noted all the way back to board founder Dory36, when you're FI you have very little tolerance for the workplace BS. I think it makes a career even more stressful than it is before FI.
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Old 08-07-2011, 10:34 AM   #7
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[QUOTE=Nords;1097799 when you're FI you have very little tolerance for the workplace BS. I think it makes a career even more stressful than it is before FI.[/QUOTE]

+1 This is the primary reason why both DW and I pulled the plug when we did.
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Old 08-08-2011, 09:46 PM   #8
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Thanks for all the encouragement to stay with my plan. Not that I really expected to find anyone with great regrets related to RE from this forum anyway.
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