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Retire in two years?
Old 11-12-2013, 09:59 AM   #1
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Retire in two years?

Well, my DH told me the other day that he wants to retire at 55. Thatís only a couple of years away. Yikes. Iíve always been in charge of investing/finances, so Iím trying to see if maybe itís possible.

I ran firecalc and we have a 92% chance of success based on current (modest) spending. However, about a third of the assets we have are my retirement accounts which I canít access for another 17 years or so, unless we withdraw the money using 72t. I think Iíd rather wait though and let those grow since I am younger than DH. We do have enough in taxable assets to bridge the gap until DH turns 59Ĺ though.

When I ran firecalc I did not include or our SS income or a small pension that DH will receive, so that makes the numbers look better.

I think itís possible, but Iím concerned about the unknown. We have a young child. Iím concerned about expenses. We have about 30K put away for college in a 529 plan. Is that going to be enough in 13 years? What if she gets wants to get involved in some kind of traveling sports team when she is older? Do we tell her no? Something like that is definitely not in the retirement budget. What if she needs braces? It seems really easy to succumb to one (two, threeÖ) more year syndrome. Of course, Iím not the one working (I currently stay home to take care of said child).

That said, another possibility is for me to go back to work. I have no real in-demand marketable skills, but maybe I could make 25-30K a year? Is that too optimistic? Would anyone want to hire someone in her mid-40ís with stale skills that has been out of the workforce for years? I honestly wouldnít mind it, but Iím not sure thatís a good financial plan. Iíd appreciate any stories of older people who were hired after years of being out of the workforce. Iíd prefer not to go back to school. I just donít think the ROI is there, given my age.

Iím sorry if this seems a little disorganized. To be honest, I feel a little disorganized. I like things in black and white, and retirement planning seems very gray. I would still have to sit down and try to figure out withdrawal strategies, tax implications, health insurance, SS/pension income, survivor benefits, setting aside money for a couple of home maintenance projects (roof, furnace, etc.), etc., etc.

For those of you retired, how close did your actual budget match what you projected? How many of you retired with young children? How expensive are they really? So far, she has been pretty cheap. We pay about $100/mo. for activities, but will we need more as she gets older?
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Old 11-12-2013, 10:48 AM   #2
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That said, another possibility is for me to go back to work. I have no real in-demand marketable skills, but maybe I could make 25-30K a year? Is that too optimistic? Would anyone want to hire someone in her mid-40’s with stale skills that has been out of the workforce for years? I honestly wouldn’t mind it, but I’m not sure that’s a good financial plan. I’d appreciate any stories of older people who were hired after years of being out of the workforce. I’d prefer not to go back to school. I just don’t think the ROI is there, given my age.
I went back to school for bleeding edge tech classes when the kids were little. I had no trouble getting a consulting job and then DH and I set up a couple of little businesses after that. If you do something where you can set up a portfolio of your own projects or volunteer work, that can be a big plus over candidates with only academic experience. I won a contract with a Fortune 50 company with zero work experience because I had an actual portfolio of what they wanted done and my competitors had salesmen with power point presentation of what they could do.

I am not sure if I would get a job without going back to school again now that I am older and my tech skills are much less unique. If I wanted a regular job these days I would learn something difficult in very high demand with limited applicants so the choice for hiring managers wouldn't be me or one of fifty twenty somethings, but the choice of me or no one.

Or I would go to school for something with specific certifications that led to a job or self employment, like accumulating Microsoft certifications or becoming an enrolled agent for taxes. Our local community college has some health care AA degrees that would also probably lead to employment. I probably wouldn't do something like a generic marketing AA degree, especially with not being a younger worker.
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Old 11-12-2013, 11:12 AM   #3
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Back in the old days there used to be a lot of temp office work. I'm not sure if that's still available. I honestly think I'm too old for tech work. I'd probably hire a twenty-something too.

On paper I think we have enough, but I'm just not sure the cushion is there. DH might be willing to go another couple of years, especially if I go to work and he has to start getting up earlier to take DD to school. He may prefer to go to his job. It's a job he likes, btw, I think he's been kind of stressed out and hasn't been able to take any vacation days in a long time.

I really need to get everything mapped out in detail, get precise $ amounts, health insurance quotes, etc. and on paper so I can show him all the numbers.
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Old 11-12-2013, 11:31 AM   #4
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There is still plenty of temporary office work out there. You probably won't get hired day one but you'll find something eventually and get back skills very quickly. It's very common to see people come back to work after being off for a long period of time.
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Old 11-12-2013, 12:13 PM   #5
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I really need to get everything mapped out in detail, get precise $ amounts, health insurance quotes, etc. and on paper so I can show him all the numbers.
Yes, that is a great idea. In our case DH's salary was in addition to the business income, so a good chunk of that he made was going to taxes.

After accounting for taking early pensions, paying less in taxes, eliminating work and commute costs, cutting expenses from having DH home, and now qualifying for college financial aid, health care subsidies, reduced tuition and tax credits, we actually very close to breaking even financially from when he had a day job taking up 60+ work and commute hours a week. Today DH is off with his hiking group.

I think the book Your Money or Your Life has a section on figuring out your real hourly wage after taxes, commute costs, work expenses, etc. We should have done that years earlier.
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Old 11-12-2013, 12:53 PM   #6
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There is still plenty of temporary office work out there. You probably won't get hired day one but you'll find something eventually and get back skills very quickly. It's very common to see people come back to work after being off for a long period of time.
Yes, I think maybe I read too much into the news stories that say older workers are completely unemployable. I don't know. I personally know 50+ people and it took them 1-2 yrs to find employment. I've also known a couple SAHMs that jumped right back into the workforce.
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Old 11-12-2013, 12:57 PM   #7
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I think the book Your Money or Your Life has a section on figuring out your real hourly wage after taxes, commute costs, work expenses, etc. We should have done that years earlier.
Yes, I did that exercise several times when I was a working parent. I didn't think about that with DH. Thanks for the reminder. He doesn't have a whole lot except for automotive expenses (wear and tear, gas). It's worth noting though. I think we might be able to whack about $100/mo off our budget at least.
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Old 11-12-2013, 01:08 PM   #8
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Yes, I did that exercise several times when I was a working parent. I didn't think about that with DH. Thanks for the reminder. He doesn't have a whole lot except for automotive expenses (wear and tear, gas). It's worth noting though. I think we might be able to whack about $100/mo off our budget at least.
We got interested in sustainable and simple living and that has really decreased the budget by a huge amount over the span of our retirement. Home made cleaners, cloth instead of paper towels, LED bulbs, low flow shower heads, etc. Every $10 a month savings means almost $5K less in retirement funding needed. It really adds up.

We made our own healthy chocolate bars this weekend. It was fun and I was surprised how easy it was and how well they turned out.

If you aren't focused on those kind of actions now but your DH wants to retire sooner rather than later that is another potential source of making your retirement numbers work out better.
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Old 11-12-2013, 01:18 PM   #9
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Kids get more expensive as they get older. Sports, cars, hobbies, significant others, etc. etc.

I hate to say it, but I don't think $30K is enough for college. In-state tuition is something like $80K including room and board, and private school tuition is more like $250K.

Tuition is going to go up with inflation over the next 13 years, too.

Assuming you get a 6% after-CPI return on a stock heavy portfolio until your daughter hits high school, and then you scale back her freshman year and get 0% afterwards, I get that you need something more like $50K in savings; $150K for private school. (Hint: tell her she is going in-state.)
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Old 11-12-2013, 01:31 PM   #10
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I hate to say it, but I don't think $30K is enough for college. In-state tuition is something like $80K including room and board, and private school tuition is more like $250K.

Tuition is going to go up with inflation over the next 13 years, too.

Assuming you get a 6% after-CPI return on a stock heavy portfolio until your daughter hits high school, and then you scale back her freshman year and get 0% afterwards, I get that you need something more like $50K in savings; $150K for private school. (Hint: tell her she is going in-state.)
Yes, our state schools run anywhere from 16K-20K with room and board. I think she will pay for some of it, but I'm afraid of falling short and not having options. We do contribute an additional $100/mo to her college fund and will continue to do so. Still not sure if that's enough though.
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Old 11-12-2013, 01:41 PM   #11
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In California students can get a degree from an in state, public school for a pretty reasonable amount. Two years of community college is inexpensive + the new middle class scholarships put tuition at the 4 years public schools for just $3.2K a year in tuition.

A student living at home or getting financial aid or a paid internship to help with housing costs could get a STEM degree from a state school with a nice average starting salary for under $30K parental contribution.
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Old 11-12-2013, 01:44 PM   #12
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Yes, our state schools run anywhere from 16K-20K with room and board. I think she will pay for some of it, but I'm afraid of falling short and not having options. We do contribute an additional $100/mo to her college fund and will continue to do so. Still not sure if that's enough though.
If your husband isn't working and your assets are in exempt classes your daughter may qualify for financial aid. There are a lot of books and web sites on how to do this.
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Old 11-12-2013, 03:20 PM   #13
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I would suggest two things for you. First is sit down and do a good, through analysis of your expenses for the last 2 years and use that as a basis for a budget for once your DH retires. Then incorporate that in a retirement planning analysis using Quicken Lifetime Planner (embedded in Quicken Deluxe and higher).

As others have mentioned, $30k will not be enough for college, but your income may be low enough for you to qualify for financial aid.

The other critical thing to cover off before DH retires is that you may have enough, but if something were to happen to DH and he were to die after any impact on his pension and your SS and expenses would you still have enough?
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Old 11-13-2013, 11:00 AM   #14
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If your husband isn't working and your assets are in exempt classes your daughter may qualify for financial aid. There are a lot of books and web sites on how to do this.
I did the EFC calculators on a few college websites and for private schools we were responsible for about 20K/yr. I don't think our budget/savings can handle that. That's a definite concern. A lot can change until then too. Maybe the formulas will include a larger percentage of assets. Who knows?

DD could go to community college, then a 4 year and we could pay for that, but just a year or two more of work would put her in a better place. DH and I had great college experiences away from home. I would like the same for her.
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Old 11-13-2013, 11:13 AM   #15
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I would suggest two things for you. First is sit down and do a good, through analysis of your expenses for the last 2 years and use that as a basis for a budget for once your DH retires. Then incorporate that in a retirement planning analysis using Quicken Lifetime Planner (embedded in Quicken Deluxe and higher).

As others have mentioned, $30k will not be enough for college, but your income may be low enough for you to qualify for financial aid.

The other critical thing to cover off before DH retires is that you may have enough, but if something were to happen to DH and he were to die after any impact on his pension and your SS and expenses would you still have enough?
I do keep detailed expenses on a spreadsheet. If we went the barebones route, we could retire today- assuming healthcare expenses aren't astronomical. I need to seriously check into that. It's the unknown that makes me nervous (future kid expenses, etc.).

I do need to check into survivor's benefits. I'm not sure how to evaluate SS for me, since it's a good 20 years away. Will things change?

I'll have to check into the survivor's benefits for DH's pension. I think it's available if we take a reduced amount. Given our age difference and the age of our kiddo, it might be prudent. DH was also considering taking it at 55 instead of 65. That would reduce the amount significantly (about a 1/3 I think). If we took the survivor's pension at 55, it may only be a small amount- not even worth considering, if it's even an option.

There are quite a few items to get squared away though. In some ways, I just looked at the pension as gravy. Maybe just using the money for extras- vacations, home repairs, etc. I should pin down how much we are actually dealing with though.
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Old 11-13-2013, 11:13 AM   #16
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Does your DH have the option to go less than "full time" in his current job? With a 92% success rate excluding SS, you (he) has got a lot of leverage -- the threat of something like half-time or I'm out isn't a bluff. Or at least have him take some real vacation time off.
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Old 11-13-2013, 11:40 AM   #17
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I did the EFC calculators on a few college websites and for private schools we were responsible for about 20K/yr. I don't think our budget/savings can handle that. That's a definite concern. A lot can change until then too. Maybe the formulas will include a larger percentage of assets. Who knows?

DD could go to community college, then a 4 year and we could pay for that, but just a year or two more of work would put her in a better place. DH and I had great college experiences away from home. I would like the same for her.
Does it have to be private schools? We showed our kids the starting / median salaries from Payscale for all colleges and pointed out the in state, public schools at the top of the list and told them we'd pay for up to 4 years at one of those schools or the equivalent costs somewhere else and that was it. We didn't see the ROI of paying any more than that.

We also printed out the salaries by major and told them to consider the ones near the top.
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Old 11-13-2013, 12:44 PM   #18
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Does it have to be private schools? We showed our kids the starting / median salaries from Payscale for all colleges and pointed out the in state, public schools at the top of the list and told them we'd pay for up to 4 years at one of those schools or the equivalent costs somewhere else and that was it. We didn't see the ROI of paying any more than that.

We also printed out the salaries by major and told them to consider the ones near the top.
No, it doesn't have to be private school. The net prices for the in-state schools (assuming she stays on campus) are pretty similar though, at least the net price (i.e. 16k vs. 20k). I only compared a couple places though. The private usually require more loans for her though.

Of course, I have no idea about what kind of student she'll be. She's pretty bright thus far though. I suppose it doesn't hurt to start looking at this stuff. The last five years have flown by. I imagine the next 10 will even be faster.
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