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Old 08-05-2007, 05:16 AM   #21
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TG - This is my gut opinion. Take it or leave. It is based on the parents living in the 90's and that you may do the same. And it assumes that you do not stand to inherit a lot of money when the parent passes.

You need to do a financial plan (both expenses and assets/income sources).

A rough assessment is that you own $400k in assets and a house.

Plus you have some insurance expenses in addition to your normal living expenses.

Sorry to be the party pooper, but I think you are pulling the plug a bit too early. Again, my opinion.

The portfolio is invested to conservatively.

17k of income is low (that amount helps plus it is COLAd). I would be planning on returning to work once the parent passes or recuperates. It is likely that after the break from work, you will feel a little better about work. My goal would be to boost the pension. Plus, it will boost SS some as well.

I might even need to plan to work until full retirement at 65. Trading the annoyance of a job for the uncertainty of living standards (above a certain minimum) would not leave me with better peace of mind... It would just be trading one problem/worry for another.

If you are one of those people that do not want to take alot of market risk, then consider waiting to take SS untill your are 70. If you retired at 65, you could use the $400k and pension to fill the gap. Essentially @ 70 you could recieve aprox 75% more than retiring at 62. You would need to get on the SS site to verify the actual amount closer to $30k. That would make your SS around (COLAd pension from Gov). That plus your 17 k from your pension (both COlad) will give you a reasonable guaranteed income (or as close as a guarantee can be).

You can have the same income for 65 - 70 by drawing the 30k from your portfolio. That would mean that you would use approx $150k from the portfolio to fill the 5 year gap.

I would invest the remaining portfolio in a more aggressive portfolio (60/40 mix) of low cost index mutual funds like VG. This will grow and could provide an extra 4% per year of spending ($10k/year) or fund extraordinary expenses that occur from time to time and/or emergency money.

I would congratulate you on achieving what you have achieved. Plus bless you for looking after your parent. Consider using HOSPICE if you think the parent is dying. Medicare will pay for in-home HOSPICE care. Depending on the parent's situation, they may be eligible for other moeny and services in your local area. Contact a Social Worker. It will take much of the burden off of you. Just give them a call in your local area.


I can understand your feelings about work. But realistically, you need to boost your reliable income sources. You are almost there, just hang in there a little longer.
It seems to me that TG should be all set and should not have to go back to a job she hates.

With an estimated annual expense of 24K and 6K for insurance. Her 26k pension along with a 4% withdrawal from her pertfolio would generate 40K of income which should be enough in my opinion.

TG,

I am not sure if you used Firecalc but you can plug in your SS benefits at 62, 65 and 70 and compare the results.

Good luck in your retirement.
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Old 08-05-2007, 07:22 AM   #22
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Tex

I Erd at the early part of this year at 51 said the commute and work in an inner city high school was just no fun anymore. The large mortgage seemed like one entire paycheck was just for mortgage and taxes. So instead of staying another 5 years for an additional 12K in my pension I sold the house just before the housing turn down LUCKY ME moved to a much less expesive part of the country, NC and took my 32K pension. Have really no great savings so I decided to Substitute Teach for 100 dollars a day and coach a high school track team, so far this year I have made 12K PART TIME , it really does not feel like working!! Some will say I am not ERd I would tend to disagree with them.
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Old 08-05-2007, 07:41 AM   #23
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I think you will be fine. One big advantage you have is that you are single. Being single you can control your expenses more easily. You won't have to worry if you are disappointing your mate, or feel guilty about reducing expenditures.
Contrary to most everyone here, I would suggest you stick with the investments you are most comfortable with. Remember it was your investment and living philosophy that allowed you into the very elite "early retirement" club - - - even with the significant hurdles you have had to overcome.
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Old 08-05-2007, 08:30 AM   #24
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Chinaco,
I didn't have any choice about retiring. I had to do it because I knew that I was going to be off work indefinitely taking care of mother and I absolutely had to have income. I sought advice from all of my retirement planning and benefit people at the company as well as partners in the business. They all agreed, this was the only way to do it. I do have a choice about returning to work and I have an open invitation to come back any time in the next 2-3 yrs. I can collect both pension and salary and then my pension will be readjusted after my next "retirement" to include more time worked.

I guess my mother is an example to me. My family has always lived extremely frugally. She & dad lived from age 62 to 90 entirely on s/s. At the time they retired at age 62 they had $50K in savings. Today mother still has $36K and she has never contributed another dime to it. It is in a local money market at 2%.

My aunt, who is 10 yrs younger than mother, has about twice the income mother does and at least twice the savings. She loans money to everyone in her family. Twice mother's income and assets is still extremely low. This woman told me her living expenses are about $800/month. She saves money regularly.

Once I carve out and get rid of some more expenses, there is no way that I am going to spend more than $1,000-$1,300 per month to live. I am following the example set by my entire family, not just these 2 older women. I am completely happy doing that.

I know things have changed, I know about inflation, I know about taxes, and I understand why you are being so cautious. Yours is good solid advice, and I certainly will consider it as part of the whole picture. It is the kind of advice I would expect a FA to give me.

Part of the picture includes the fact that I am so burned out from working 60 hrs a week for 24 yrs. I am disgusted with corporate America, and I hated every second of every minute of my life before I allowed myself to think about not returning to work. Honestly, my father's illness gave me the "legal" excuse I needed to reduce my hours and then ultimate to take a leave of absence. Once I was free of work, I found that taking care of dying family was better the the hump busting grind. I am burned out. I am done.
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Old 08-05-2007, 08:34 AM   #25
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Chinaco, I just typed a long response to you. It just disappeared. Don't know if it will show up here or not. Anyway, it was cut off and I didn't get to finish it. I was on a roll. bummer. Thanks for your input.
Tex
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Old 08-05-2007, 08:39 AM   #26
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Originally Posted by Corporateburnout View Post
It seems to me that TG should be all set and should not have to go back to a job she hates.

With an estimated annual expense of 24K and 6K for insurance. Her 26k pension along with a 4% withdrawal from her pertfolio would generate 40K of income which should be enough in my opinion.

TG,

I am not sure if you used Firecalc but you can plug in your SS benefits at 62, 65 and 70 and compare the results.

Good luck in your retirement.
Hmmm. She's asking for opinions. I am not opposed to a differing points of view.

You shared your opinion and I shared mine.


Of course, each of us is looking at the problem for our individual perspective which shades our opinions.

IMHO it is not about wanting to work vs retirement, rather about securing a viable financial position before retiring. That is fine if you have other resources to fill the gap. In my opinion, her plan is a little weak and the resources are a bit lean if one considers that she is funding a retirement for the next 35 years (possibly). [No offense TG, you are in pretty good financial shape... But the plan seems to need work!]

CBO - I am inclined to agree, it can probably work as long as expenses are managed aggressively (this of course depends on expected expenses as one ages).

There is usually a sizable penalty for early retirement. It sounds like she is valued where she worked (or they would not take her back). There is probably something positive in the mix. Going back for a few years might help.

Could some of the plan's weakness be shored up with a different portfolio strategy? Perhaps. But if she seems market risk averse, working to add to the savings and growing the pensions seems reasonable.

Yes, it is about taking a risk. One's health could fail or they could die. On the other hand they could live into their nineties and we could hit a high inflationary period.

All in all, one rock solid piece of advice that no one should dispute: Do a financial plan (i.e., projection)!

I can see where one's disgust with work could push them into a decision that might not be the best balanced decision. I am struggling with similar issues. I think we all do. I could pull the plug now. I am sitting in a fairly good position. But if I wait another 4 years, I am in rock solid shape. So my decision point is 4 years of work versus going with a workable yet perhaps less solid foundation.

Peace.
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Old 08-05-2007, 08:46 AM   #27
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Chinaco,
I didn't have any choice about retiring. ...

I understand. My comments are not about questioning your personal decision in the sense that you are flawed or made a mistake. Whether things work out or not will depend on a number of factors. And lets face it, in the end it is a personal decision that we all make.

I shared my personal opinion about what I read from your original post to give some additional perspective... not just cheer you on because you decide to pull the plug.


I sincerely hope things work out well and that my conservative opinion is wrong.
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Old 08-05-2007, 10:57 AM   #28
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Chinaco, I really appreciate your counsel. It is mature, conservative and frankly, exactly what I expected to receive from many of the successful ER's on this forum. I like diverse opinions and good discussion so thanks for adding your perspective. I don't disagree with one thing you have said. Your basic advice was actually my plan until my life went to hell this year and I had to face some new realities and think of new possibilities.

I have a financial analyst friend, CPA, corporate burnout himself, who actually has about $10M and he is still working "just one more year". He is single, no debt, no mortgage, very frugal lifestyle. He lives his life based on "what ifs" and he will probably work for years and years (he is 50 now and wants every contingency to be covered). He lives on about $24-30K per year and sticks every dime of his large 6-figure salary beyond that into investments. He and I sat down and talked multiple times over the last 2 months. He said exactly the same thing you did, and challenged me at every turn. I expected him to say what he did because it is solid advice. Painful (like yours) but solid.

However, as we talked more, he began to see that I am well and truly DONE. Working was making me physically ill and even he ultimately agreed that I should get out of the rat race grind of 60 hr weeks (24 yrs of it) and a job that makes me hate every minute and second of every day of my life. I have not been living, I have been existing . . . just to get to the finish line . . . just to get that fatter pension and s/s and more money socked away. I've sucked it up and gone the distance all of my life (42 yrs of working). But I can't do it any longer. You said that maybe I would feel differently after mother dies. You might be right. I'll evaluate then. This has been a very stressful time for me!

However, unless I change my mind in the next couple of years about working, the challenge for me is how to make it on what I have. Your advice about more aggressive investments is a consideration. I have a lot to learn and I want to hang in here and continue to get those diverse opinions and money management ideas.

Other than using retirement calculators, including FIREcalc and ORP, I have not done a financial plan. All of those calculators say that I am ok, but I will only KNOW that I am ok after years of really living in retirement. I wonder if ORP is up to date and if I can rely on it at all. Someone else here mentioned that it was not.

In FIREcalc I entered $38K pre-tax income (isn't it inflation adjusted?) for 30 yrs to cover taxes because I don't need that in net $$ to support my lifestyle (I need $24K which includes medical ins). I set inflation at 5%. I unchecked the box so that my pension would be non-COLA, and I included s/s starting at 62. I tied my investments to 5-Yr treasury which seemed really conservative (10% of the total in stocks). Result 98% success. It will be close, no doubt about it. How much can I rely on FIREcalc to give me a solid idea of what is possible based on what I know today?

Thanks again for a great discussion and keep those thoughts coming! It doesn't matter how painful it is to hear some of it, it is something I need to consider. This forum is just amazing!

Best regards,
Tex
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Old 08-05-2007, 11:11 AM   #29
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I know this is small potatoes to so many of you,
but do these numbers look sufficient for my modest
lifestyle?

Don't let all those multi-million dollar topics fool you.
If one is out of debt and lives modestly, one can
retire on much less.

My financial situation is similar to yours. I live in the
Dallas area, retired at age 55, live a modest lifestyle,
care for my handicapped son, and life is good.

One word of caution... don't become car poor...
buy a good used car... with cash, if possible...
ala, Dave Ramsey.
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Old 08-05-2007, 11:49 AM   #30
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Helena Hi!

I was born and raised in Dallas. Just moved to the piney woods of East Texas last fall when my company allowed me to telecommute and then decided to stay here permanently because I have lots of family here. I am glad to know that I am not the only non-millionaire (or non multi-millionaire) on this forum .

I want to be sure that I attend to all of the aspects of retirement, not just the financial part. There is a book titled "GET A LIFE: You don't have to have a million to retire" and it helped me think about some things I had not thought about. Financial health is very important and certainly a key part of retirement but still only one part.

I will buy a car in 2-3 years and it will definitely be a used car. Might be only 1 yr old, but it will NOT be new. Why should I take a huge depreciation when I roll off the showroom floor for the first time? Let someone else take that hit and then I'll be interested. I'm driving a 1997 car now and like to drive them until the wheels fall off. I paid cash for it back in 97 and I plan to get all of the mileage out of it that I can.

Glad to hear all is well with you! Congrats on ER.
Cheers!
Tex
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Old 08-05-2007, 11:49 AM   #31
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TexasGal, I wish you well and do not see any problems with your new lifestyle and future plans. I think the folks who are concerned have not lived at a low income level in a long time and have not seen how inexpensive it can be ... especially in a Texas town away from the big city.

I just visited my mid-70's-year-old mom who seems to be in the same income situation as you. My mom has a small pension, SS, and barely 6-figure in investable assets, yet she has no financial worries even though she still has a mortgage to pay. She told me she has bought her last car, a Honda Accord. Since she can live off of her pension and SS she feels that she can invest her liquid assets aggressively and showed me a portfolio of 50% growth stocks and 50% international funds.

You mentioned your conservative investments and your desire to go slow with changing anything there. I think that is a wise outlook.

Have fun!
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Old 08-05-2007, 11:53 AM   #32
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Lol!

Kudos to your mom! 50% growth & 50% international?! Maybe I need to ask her if she will tutor me! I admire her "grit" as we say in Texas and I know I am going to have to become more aggressive myself.

Thanks for your response. Have a great day!
Regards,
Tex
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Old 08-05-2007, 05:36 PM   #33
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TexasGal,
Going back to your original post, asking for opinions about your $$$ health, I think you may be perfectly fine or not, depending on how well you manage your spending. Regardless of what you start out with, if you can keep that spending down where it needs to be you'll be fine. The question is, do you have the discipline and interest to really keep track of your spending, and cut back when necessary? The unexpected, and impulse spending, can really add up. It's a different mentality when you are used to having a paycheck coming in, I know from experience.
About your investment mix, I agree with you that you should go slowly until you learn about investing. One of my friends jumps in and out of the stock market, buying high and selling low, just about the worst thing to do. You need to learn more, but take six months or a year to do so, so you are comfortable with the allocation you decide upon, and aren't tempted to jump in and out.
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Old 08-05-2007, 09:33 PM   #34
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Life is short,
It is apparent in your postings that you are done with work. It is mental fear that is preventing you from continuing on the course your heart is telling you is corrrect. I say listen to your heart. At your income for the long term will be in my book:

Pension $13,000 (use 1/2 value over long term)
Social Security: $13,250 (I plan on a 25% cut in future for SS)
401K: $12,000

Total 38,250 B4 Tax $4,250 = 34,000 in currrent money.

This is a very conservative estimate of what your long term income could be. So at 62 I would budget that amount of spending and continue to increase with inflation as long as your investments maintain a rate of return of 3% over inflation and inflation is not averaging more than 3-4 % which would render the pension estimate as too aggressive. This would also allow you to maintain your other $80,000 as an emergency fund for home and health concerns.

$8,000 per year is an additional 665 per month. Until Social Security is cut you will have an additional $3,750 per year which will cover your medical premium needs in the short term.

Enjoy your retirement
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Old 08-06-2007, 12:53 PM   #35
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Hi texasgal,
I am very touched from your story. I am really admire you to give up everything to care for mom. Please keep us posted of how you are doing so it can be a good example for someone like me to take early retirement. You will be doing fine. Nothing can replace mom. Be with her as long as you can.
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Old 08-07-2007, 07:01 AM   #36
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Your postings were a little unclear about one thing. Will you drop the employer health insurance when medicare kicks in? If so, you need to verse yourself on what medicare covers (subject to change.)
My FIL recently died and we had stacks of bills that we had to go through so I learned way more than I ever wanted to know. There is a deductible and co-pay as well as medicare is not free. You have to pay a premium for the Part B (MD visits) and D (prescription). The part A is basically a major medical but most get that without a fee. You should look at the handbook at Medicare.gov - The Official U.S. Government Site for People with Medicare closely. Also, my MIL had a cost of living increase for her social security this year and it was eaten up by the increase in medicare fees.
That being said when I left work a big part of the reason was we were trying to keep FIL out of a nursing home during the last year of his life. It almost killed us but we did it. We had four of us sharing the load and many long nights but I think in the long run it was a much better choice than me having a new car in the driveway or new clothes in the closet.
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Medicare & Gap coverage
Old 08-07-2007, 07:49 AM   #37
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Medicare & Gap coverage

52andout,

I may continue some kind of Medigap coverage when I hit 65 and have Medicare. I will still have access to retiree benefits and I'll see what it costs. I haven't decided what I will do about that yet. Have hardly had time to research the subject so I guess I'd be interested if there is anyone on this forum who has such coverage along with Medicare and what their suggestions would be.

I have been taking care of my parents for so long that I know exactly how Medicare works (unfortunately). Strangely enough, while we have to pay the big deductible for each hospital stay, the doctors mostly write off the 20% copay. Mother paid $350/mo for gap coverage for 20 yrs and never collected more than $200/yr (they were not hospitalized often) so she dropped it and has been fine without it for the last 5 yrs.

You will never regret giving up the acquisition of things and some of your time to take care of a sick parent. I will not place mother in a nursing home until there is absolutely no way that I can provide the medical care she needs at home. As with most of us, I hope she just goes to sleep one night and doesn't wake up when her time comes (without suffering). But if the nursing home is required due to the amount of round-the-clock medical care she needs then I will be there with her. It is grim to say the least, and after having been through it with my dad, I honestly wish I never had to see the inside of another institution, but this too shall pass.

Thanks for the counsel. If I had not already been so knowledgeable about Medicare, I would have added your suggestion to my list.

Best regards,
Tex
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Old 08-07-2007, 02:10 PM   #38
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Good to hear you are aware of the truth about Medicare. Most people who post here know about such things. I actually had a relative who told me once he turned 65 he would get free healthcare so his expenses would go down. He had no idea there was a premium and copays associated with medicare.
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Old 08-09-2007, 08:31 PM   #39
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Tex Gal

Texas Gal thank you for welcoming me to this forum/site.

It appears that you have your affairs in order. You are truly blessed.

Texas Gal and others who have left their jobs, retired early and are taking care of your parents while holding a job and juggling family life - you guys and ladies are a big inspiration and are a great role models for those who come after us.

In March 2006, I retired early to come back to TEXAS to take care of my terminally ill mother but unfortunately she passed away the die the morning that I left NJ to move to TEXAS. But she was not alone because my sister was by her bedside and her children were there with her in spirit. Mama and I would talk on the phone daily and during my visits to TX she would prepare me for her death and we would talk about GOD. As a Mama's boy I cherish the talks and the time that I had with Mama. But now that she has passed I am taking care of my grandmother who is 89 and my father who is 82 and has cancer.

By reading your post Texas Gal your priorities are in the right place. One's parents and grandparents are a wealth of knowledge, love and comfort to us all. I truly believe that GOD will bless us many times over for taking care of our parents. Continue to take care of your loved ones and treat every minute and moment as it is your last with them because once they are gone that is it they are not coming back and the only things that are left our the memories and the love that we shared with them.

GOD BLESS
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