Retire or look for another job?

[mtbikelover]

I was let go end of Sept from the job I planned to retire in 3 years from. It was totally unexpected and was pretty difficult emotionally. 2 months into it, I am learning that I am loving being a home maker. I have saved us a lot of money by doing the cleaning myself, cooking dinner every night, and taking care of the dog (used to use daycare and dogwalkers). Plus, my 2 hour commute is gone so I am saving gas money. I am shocked at how busy I am just taking care of the house and family. I am also way less stressed. I did love my job but didn't realize how crunched for time I really was being gone from 7am to 6pm 5 days a week.

I would love to "retire" now and not go back to work but my husband is freaked out. I have run the firecalc and only show 2% failure but was hoping others would take a look to see if I did it right. Here are our current numbers:

IRA's/401k's amount $2,300,000
Cash and after tax accounts $600,000 (1/2 invested, 1/2 money market account)
One time $35,000 pension in 2034
Social security of $30,000 in 2040 for me (I'm currently 48)
Social security of $20,000 in 2038 for husband (he's currently 50)
Total annual budgeted expenses of $167,000 in retirement starting 2023

We also have a whole life policy that we will use for cash. So from years 2043-2053, we will get an income of $110,000 per year (10 years) tax free. This is difficult to put into firecalc since I only have 3 slots to use for additional income.

Since husband will keep working for another 3 years, he will put in an additional $50k/year into our retirement account. I won't be adding anything but I won't need to take money out as I got a great severance package as well as will get my stock payout every year for the next 3 years.

Our budget includes health insurance and both kids college is already paid for with a 529.

Does it seem realistic that I could stay home and retire now?

One other thing that is not in our numbers it that my husband is going to get a very large inheritance when his parents pass. He doesn't want to include any of that in our planning but it will be significant (7 figures) so if something were to happen and we did run out of money when we are 75, we do have a safety net.

[davebarnes]

You have $3M. Relax.
Find a job you like. Short commute. Do not focus on pay.
Figure out to reduce the $167K/year.

[Spanky]

98% success is good enough. Tell your DH to relax.

[mrfeh]

Not enough info. Do you have a mortgage? If yes, when will it be paid off?

Why is your annual spend so high?

I suggest you put together a detailed budget and find ways to reduce how much you spend.

[Aerides]

I agree with your DH not to even think about that inheritance. Long term care can blow through that pretty easily. I would look at that budget though - if that's for once the kids are out it seems a bit high for most areas, but maybe not in a HCOL area. That would typically be closer to a fat-fire budget, but it does sound like you are both type A high earners till now, so not surprising.

Your plan was to work (together) for 3 more years, so putting that burden fully on DH... eh yeah it's understandable he's freaking, no matter how good the package. In your shoes I'd probably say, let's get through the holidays (no one is hiring this time of year anyway), and then consider options in January. A local job that gives you a decent income with a tiny commute might be a "get over the hump" option for a year-ish while you both continue to run the numbers and examine that budget.

[mtbikelover]

Quote:

Originally Posted by mrfeh Not enough info. Do you have a mortgage? If yes, when will it be paid off? Why is your annual spend so high? I suggest you put together a detailed budget and find ways to reduce how much you spend.

I have a very detailed budget. We are not wanting to reduce our budget. There is a lot of money in there for travel which is very important for us as well as some toys (a camper with a tow vehicle). While those toys will get paid off, we then plan to live in a very high cost of living area about 4 years after we are done traveling the US and will have a mortgage. We have rental properties that will be sold and used to purchase the new property doing a 1031 exchange. But because the house will be expensive, it won’t pay for it completely. That is all in the budget. We assume we will have a mortgage until 85 so basically the rest of our life.

[mrfeh]

Quote:

Originally Posted by mtbikelover I have a very detailed budget. We are not wanting to reduce our budget. There is a lot of money in there for travel which is very important for us as well as some toys (a camper with a tow vehicle). While those toys will get paid off, we then plan to live in a very high cost of living area about 4 years after we are done traveling the US and will have a mortgage. We have rental properties that will be sold and used to purchase the new property doing a 1031 exchange. But because the house will be expensive, it won’t pay for it completely. That is all in the budget. We assume we will have a mortgage until 85 so basically the rest of our life.

This response illustrates that us readers do not have enough info to provide a useful opinion.

Sounds like you have a good handle on things. Only you and your spouse (with the help of firecalc, etc) can decide if you have enough.

[cooch96]

I wouldn’t worry at all, but everything is relative. I suspect Darling Husband is simply accustomed to two paychecks and a big change like this is unnerving.

You staying at home has cut commuting, dogcare, and home cleaning costs. Will other costs be reduced when DH retires? Is your $167k budgeted expense conservative? If needed, could you cut back on a big ticket item for a year or two for additional leeway?

98% is very safe. It seems most on this forum shoot for 95%+, but anything over 80% means you’re more likely to expire in an accident, natural disaster, or illness than run out of money.

[mtbikelover]

Quote:

Originally Posted by cooch96 I wouldn’t worry at all, but everything is relative. I suspect Darling Husband is simply accustomed to two paychecks and a big change like this is unnerving. You staying at home has cut commuting, dogcare, and home cleaning costs. Will other costs be reduced when DH retires? Is your $167k budgeted expense conservative? If needed, could you cut back on a big ticket item for a year or two for additional leeway? 98% is very safe. It seems most on this forum shoot for 95%+, but anything over 80% means you’re more likely to expire in an accident, natural disaster, or illness than run out of money.

Yes...we absolutely could cut costs from our budget if we needed to. Our 10 pay life insurance payments will be finished in 5 years so budget wouldn’t be able to be cut until then. After 5 years, we could reduce our travel significantly if we needed to.

We also have the benefit of being able to “borrow” from the life insurance if market is very bad so we don’t pull money out in a down market. Then we pay ourselves back when market starts going back up.

[mtbikelover]

Quote:

Originally Posted by Aerides I agree with your DH not to even think about that inheritance. Long term care can blow through that pretty easily. I would look at that budget though - if that's for once the kids are out it seems a bit high for most areas, but maybe not in a HCOL area. That would typically be closer to a fat-fire budget, but it does sound like you are both type A high earners till now, so not surprising. Your plan was to work (together) for 3 more years, so putting that burden fully on DH... eh yeah it's understandable he's freaking, no matter how good the package. In your shoes I'd probably say, let's get through the holidays (no one is hiring this time of year anyway), and then consider options in January. A local job that gives you a decent income with a tiny commute might be a "get over the hump" option for a year-ish while you both continue to run the numbers and examine that budget.

You are 100% correct in everything. We are planning a fat fire retirement. And husband is used to 2 incomes.

I have been looking locally but the significant pay cut I would take to have a less stressful job may not cover the contingency severance I get if I don’t find a job. Plus, expenses go back up considerably if I am working as we are back to eating out a lot, paying for cleaning, dog care, etc.

I may have an interview next week which is what is making me question is it the right thing to do.

[Dtail]

I put your numbers in Firecalc and received a 89% success rate with a maximum spending of 155k yearly if you wish to achieve a 95% success rate.
Some parameters I used:
1)40 year retirement with 167k spending at 2.9mm portfolio (Firecalc defaults to 30 years)
2)For the 110k payment for 10 years, it can be modeled as follows - in the "Other Income Section" under Pensions, one puts in Pension Income of 110k starting in 2043, then it the next line one puts in 110k expense starting in the year 2053. For both lines, one does NOT check the inflation adj box.
3) Under the "Not Retired" section, I put 2023 as your retirement year and added 50k per year to the portfolio.
4) Under the "Your Portfolio" section, I put 75% stocks, since you are in that neighborhood now. Not sure you wish to keep that allocation.
5) Under "Portfolio Changes", I added your one time Pension.

Not sure I captured everything correctly.

[Perryinva]

You are set, IMHO. Sounds like you were the larger earner, so that is what is freaking him out. But , really, why be a slave when you have already won. When DW asked me if she could retire 10 yeas ago after my income had risen to eclipse what our combined income was 10 years earlier, I was all for it. I had zero interest in retirement before 60, and as long as she understood what that meant to our retirement income, I didn’t care. As it turned out, with the great market and another promotion, our income is far higher than we ever planned 10 years ago. You are still young and that income level is not high at all for your well thought out plan, and can easily be altered if need be, either the amount, or income supplement from either or both of you. Is $167k considered Fat Fire if a significant percentage is discretionary?

[street]

I feel you are in great shape. If it was me I would find a PT job or just retire fully. I do know that inheritance shouldn't be included but it is something you do have in your back pocket. You will be fine with out it so it looks like a change is all you have to worry about.

Let us know what inspires.

[kgtest]

Yes, it makes sense to keep doing what makes you happy. SORR is really minimized a bit with DH still working, and as long as you can cover your healthcare you are golden.

Sounds like even with DH working another 3 years you will increase that nest egg by 150k plus whatever the market giveth.

Keep in mind your expenses will go down without paying FICA/income tax on DH income in 3 years.

Plus in 20 years when SS gives you a raise, you will decrease spending again...and again with that one time pension. Might think of Roth Converting a bit more now that the income has been reduced in the HH.

I am a fee only adviser, and you get what you paid for my advice

[mtbikelover]

Quote:

Originally Posted by Dtail 2)For the 110k payment for 10 years, it can be modeled as follows - in the "Other Income Section" under Pensions, one puts in Pension Income of 110k starting in 2043, then it the next line one puts in 110k expense starting in the year 2053. For both lines, one does NOT check the inflation adj box.

Thank you!!! I couldn't figure out how to capture that correctly so was just adding it to the other income tab in 3 installments. This is perfect!

[mtbikelover]

Quote:

Originally Posted by kgtest Might think of Roth Converting a bit more now that the income has been reduced in the HH.

Unfortunately (or fortunately I guess) husband makes a significant income and I am getting stock options for the next 3 years so our income now is still greater than it will be in retirement. We do a back door roth every year with his after tax IRA contribution but are planning to save the roth conversions for after we retire.

[Aerides]

Quote:

Originally Posted by mtbikelover I may have an interview next week which is what is making me question is it the right thing to do.

That's why I think waiting till January to think more earnestly about it might be good. Give you both a bit of time to separate from the shock, and really figure the numbers. Plus gives DH more time to adjust to you being home if that's still the preference. He may well still be in knee-jerk mode.

And if your severance dictates that no job is better than a "meh" job, then that makes even more sense to wait it out. A gap of a few months on a resume, at the year end, isn't going to be an issue with most employers, if you do decide to go back to work in the new year.

[Dtail]

Quote:

Originally Posted by mtbikelover Thank you!!! I couldn't figure out how to capture that correctly so was just adding it to the other income tab in 3 installments. This is perfect!

I am guessing that is why your success rate was higher than mine, since with your concept the income would be assumed to being earned for your whole retirement instead of only 10 years, since there is no "stop date" in the Income section, so it must be artificially manipulated.

[Unpaintedhuffhines]

mtbikelover, sounds like you are in an enviable situation. Continuing to vest your stock over the next three years sounds truly amazing - if I were given a package like that, I'd be gone in an instant.

I know what it's like to be RIF'ed - even if you were expecting it (I was when it happened in 2004), it's still a punch to the gut. Sounds like you are enjoying yourself once you worked through the shock.

You've won the game, and unless you want to achieve more at work, I'd hang it up. My DW is set to receive a significant inheritance that would probably triple our current holdings. We have a trust that is ready to accept that if it does happen, but we definitely don't factor that into our plan (but I will admit, I did plug it into firecalc once just to see the impact. The numbers do get a little silly).

We have a high spend like you (ours is $150K/year). And yes, we could cut down on that, but like you, we definitely don't want to. If you've gotten 98% in firecalc, then I'd pull the trigger for sure. If you run into problems it's not like it would happen overnight - you'd see a trend that you could deal with.

Good luck in your decision.

[gwraigty]

Quote:

Originally Posted by Aerides In your shoes I'd probably say, let's get through the holidays (no one is hiring this time of year anyway), and then consider options in January. A local job that gives you a decent income with a tiny commute might be a "get over the hump" option for a year-ish while you both continue to run the numbers and examine that budget.

It may depend on the job and location, but there are many jobs going unfilled in food service and seasonal retail in our area. My daughter just got a job this month (year-round food service). DH's employer (commercial vehicle mfg. industry) has open jobs posted now.