The longer I work, the higher the pension - what did others do about OMY temptation?

[howdidigetthisold]

My j*b s*cks and I want out (like everyone else on this forum). But, the longer I stay, the higher the pension gets. My COLA pension offers three payout date options: 1) 55 years - eligible to take the pension but at a reduced rate; 2) 57 yr and 8 months - 30-years of service increases pension by $6000/year; 3) 58 y and 10 mo - "Rule of 90" pays full retirement benefits, which is another $6000/year more than what I would get at the 30-year mark.

When I hit 55, there was no way I could survive my j*b for another 4 years to get that full benefit. So, I decided to wait until I hit my 30-year mark where the pension increases by $6000/year. But, now that I'm a few months from that goal, I've realized that I'm alot closer to the full pension "rule of 90" than I realized (13 more months for another $6000/year, COLA for life). It's hard to leave that much money on the table when it's just OMY of my life in exchange for the cash.

Right now, we're FI and we can easily meet our expenses after RE (including health insurance) with less than a 2% WR. But, our future plans are uncertain and could involve a major move, which could cost alot of money.

I know this forum has a boatload of "one more year" threads. But, Jacob at ERE identified "comfort" as the cause of the OMY syndrome in a recent article (» One more year before comfort Early Retirement Extreme: — a combination of simple living, anticonsumerism, DIY ethics, self-reliance, and applied capitalism). Comfort was defined as "being free from physiological (mental and physical) pressures or stresses," or the more subjective "contentment and general life satisfaction."

For those of you who were trapped in the OMY cycle before you RE, did the extra money you earned make that much of a difference? Especially when compared to the year of your life lost to your j*b? If you already had enough but worked OMY, did the extra cash make you feel better about spending more or did it give you a better sense of security? Or did you regret losing that year of your life in exchange for $?

 

[2B]

I am hopefully in my last OMY so I can't say how I will feel when I actually retire. I will say my several OMYs spent building assets makes my FireCalc and ORP runs very safe with spending levels above what I think I'll want to spend. I'm basically protecting myself from another 2008 that doesn't come back as quickly or building up money for my grandkids. Neither outcome is bad. I should add that my level of stress should be less when the paycheck stops but I can't be sure.

Everyone has to manage their own life. You have your ticket and have to ride it to the end. You can change trains whenever you want but the end will come. Only you can decide how much you will need or feel comfortable with to actually retire.

There are more than a few posters here that put their numbers out and ask if they are ready to retire when they haven't considered taxes or health insurance. The rest of their assets barely cover their current living expenses with no reserve. It sounds like you've looked at your situation more closely and you aren't one of these people.

My job actually doesn't suck. I'm just ready to call it a career and find out the answer to the question, "What do you do all day?"

 

[travelover]

Just remember that your pension is higher because you will collect for one year less - i.e., you will be dead.

 

[razztazz]

I could have stayed at least another 4 yrs at my job. I said "Eff off" and just left. Then I returned to what I had been doing before I was so rudely interrupted

 

[Another Reader]

I would probably stick it out, unless I had something much better to do with my time. If I had a deferred comp plan available, I would max that out as well. Let that money percolate another 11 years.

However, I would also start "practicing" for retirement that last year. Use any vacation or personal leave that you can't cash out. See if there are any conferences in vacation locales you can be paid to attend. Look for easy projects to work on with end dates before your retirement date. Coast out the door into retirement.

 

[Brett_Cameron]

My OMY did not last even a year beyond my first eligibility. I decided I had enough $ and retired. No use regretting the decision since there is no do-over.

 

[Mulligan]

Just remember that your pension is higher because you will collect for one year less - i.e, you will be dead.

I worked in a field that has nice pensions and I swear many do not factor that in at all. Many of my friends think the only difference between 55 and 75 is a few more wrinkles. It you cannot afford to retire or retire to the lifestyle you want, well the point is moot. But if you do, those years count as they more than likely are the best retirement years you are forgoing. We generally aren't bottles of wine concerning the aspect of aging. I think of it the opposite way. Every year I delayed retirement that was a significant amount of "free money" I gave up to continue working. For example. If your pension was $50,000 , but if you worked one more year, it would be $55,000, it would take approximately 10 years of retirement to make up for the $50k you passed on to continue working. FWIW, I retired 2 years prior to what was considered full retirement of 30 years and forego $10k in more pension. But I only spend about 60% of my pension, so I have enough and do not need more. Yes, I would certainly like to have the money, but I do not regret not working the additional 2 years, nor would I go back in time to change what I did.


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[nun]

Just remember that your pension is higher because you will collect for one year less - i.e, you will be dead.

+1, you only live once (unless your a Hindu or Buddhist of course). If you have enough to retire I would not keep working for cumulative gains like a bit of extra pension.

 

[Bikerdude]

A picture worth a 1000 words:

 

[Andre1969]

Just remember, it's later than you think...

 

[David1961]

A picture worth a 1000 words:

+1. You will never get that year back.

 

[Masquernom]

We've had several buyouts and layoffs the past few years. A big majority of the guys that left are all back working as contractors at the same jobs, or doing something similar for another company. Has really made me take a pause in my retirement plans.

 

[RockyMtn]

See if you can work enough part time hours to get to the next pension level. If not jump of the diving board and see what the water is like!

 

[Animorph]

Thirteen more months sounds good to me. But certainly you are foregoing that period of pension payments you could have received and the company will have one less year of payments to make.

But at 2% WR you really don't need this. If you don't think you can enhance your retirement with the extra $6k I would skip it and retire now.

 

[howdidigetthisold]

You guys are the best! Such great advice from all of you. Thank you so much.

It really is about time vs money, isn't it?

Thank you for the reminders and sage advice about time. I laughed a long time when I read this quote -- it's funny but so true:

Just remember that your pension is higher because you will collect for one year less - i.e, you will be dead.

 

[woodguy00]

I was voting for 'wait the extra 13 months' until I read about a 2% SWR. With that kind of assets in place, I'd have a hard timebelieving the extra cash is worth more than the extra year of retirement

 

[RetireAge50]

Right now you have 30 years of life and 50 years money. Wait a year and have 29 years of life and 52 years money.

What is making this is a difficult decision? It is only going to get more out of balance and your retired life will be shorter.

 

[Midpack]

For those of you who were trapped in the OMY cycle before you RE, did the extra money you earned make that much of a difference? Especially when compared to the year of your life lost to your j*b? If you already had enough but worked OMY, did the extra cash make you feel better about spending more or did it give you a better sense of security? Or did you regret losing that year of your life in exchange for $?

Of course you'll get answers from folks whose retirement is 'in progress' (mostly in their early retirement years), they and you will only know if the extra cash 'made a difference' when your retirement ends hopefully many, many years from now. I did OMY for 1-2 years, but I've only been retired for 3 years, so 'worth it' would be speculation at best. I wonder if there are any members here who've been retired for 30-40 years? They might provide the most meaningful answers.

If you want to be talked into staying for the extra cash, we can probably talk you into it. And if you want to be talked into bolting sooner, you're asking a self selected community of bolters so you're guaranteed to get that POV (already have above). Sorta like joining a Chevy forum and asking - Chevy or Ford?

It really comes down to how YOUR unique BS bucket compares to your FI status/risk tolerance, not what others may have chosen. Only you will know when your balance has shifted to favor retiring. And you're the one who has to live with the decision for the rest of your years, not anyone here...

 

[Throwdownmyaceinthehole]

6000 less 15% tax divided by 52 weeks = 98 bucks a week or 14 bucks a day. Do you need it?

 

[eta2020]

I will deal with it by knowing:

"People live like as if they will never die, and die as if they had never lived."

Look at life and death of famous composers. See what they composed in final years of their lifes. Like Chopin Prelude No. 4.

 

[bikeknit]

I'd be tempted to stick it out for that much money - but do whatever you can to start enjoying yourself - pay someone to mow your lawn, take all of your vacation time, avoid overtime wherever possible - and enjoy that time. though if you have enough to comfortably fund your lifestyle, why not gain the year.

And while I admire Jacob at ERE, I doubt many of us would want to live as cheaply as he does. Find your own comfort level.

 

[Car-Guy]

When I was 50, I can remember seriously saying I would retire at 55. At that point my numbers looked good enough for a 100K withdrawal rate for life, which was my target. Once I was there, I started figuring how much I could have by staying on to 57, then 58, then 59 then finally 60. (= Greed) If I remember correctly, I more than doubled my net worth from age 55 to 60 so in effect, I traded 5 "more" years of my life to be able to double my withdrawal rate. However the last five years was the easiest work years in my life. I had a lot more free time, flexibility and authority than ever before but I really wasn't enjoying the work anymore. The growing BS seemed to be the worst part of it.

Looking back, I was actually easing into retirement those last five years and I'm not sorry about my extended transition to full retirement (or the extra money)

Let's face it, we are all selling our "time" for $$$. We just need to find that "balance".

 

[Midpack]

When I was 50, I can remember seriously saying I would retire at 55. At that point my numbers looked good enough for a 100K withdrawal rate for life, which was my target. Once I was there, I started figuring how much I could have by staying on to 57, then 58, then 59 then finally 60. (= Greed) If I remember correctly, I more than doubled my net worth from age 55 to 60 so in effect, I traded 5 "more" years of my life to be able to double my withdrawal rate. However the last five years was the easiest work years in my life. I had a lot more free time, flexibility and authority than ever before but I really wasn't enjoying the work anymore. The growing BS seemed to be the worst part of it.

Looking back, I was actually easing into retirement those last five years and I'm not sorry about my extended transition to full retirement (or the extra money)

I'm glad it worked out well for you (really), but you could have also worked another 5 years and ended with a lower net worth. Might have changed your POV, and induced you to work even longer! Hindsight is a wonderful thing...

Let's face it, we are all selling our "time" for $$$. We just need to find that "balance".

And live with the outcome come what may...

 

[Car-Guy]

I'm glad it worked out well for you (really), but you could have also worked another 5 years and ended with a lower net worth. Might have changed your POV, and induced you to work even longer! Hindsight is a wonderful thing...

.

True enough, anything is possible but with my job stability and very low risk investment strategy I wasn't worried about going in the wrong direction (financially speaking) - Just my story....

 

[Chuckanut]

I balanced that with the thought that the longer I work the less healthy years of retirement I have. So which is more valuable to a person; their money or their time and health?