3 years of Semi-ER to end?

[Katsmeow]

It has been 3 years since I semi-retired ...and that period may be ending soon to become ER.

It has been in a lot of ways a wild 3 years. Three years ago I embarked on semi-retirement and then DH fully retired in June, 2010. Since that time I've worked 1 or 2 days a week.

The past 3 years have been a bit of a wild journey. When we started out we planned to sell our very large, expensive to maintain house with a plan to downsize, having already bought the house we planned to remodel and move into.

Well -- best laid plans and all that. Our house took a long time to sell (at a loss even). Then, the house we were planning to remodel needed so much more work than we anticipated - to the point that we decided to demolish and build new. And, after further looking at that we realized it would be much cheaper to buy an existing house. Finally a year ago we got settled into the house that we bought and then later in the year sold the other property (the one we had been going to build on). The whole thing was an overall negative financially. Still - we have been in our current house for over a year now and we really like it (and the sellers sold it for us for less than they paid for it so at least that worked out for us).

The bright spot in all that was that my part-time work arrangement worked out well. When I started I was going to work 1 day a week. Over time, that gradually crept up to 2 days a week. I think that I would have been much more berserk about the real estate stuff except for the fact that the financial losses from that were covered by my part-time work. My work was very well paid and basically has worked out to about $225k over the 3 year period, which ended up making a huge difference.

I always said I would work as long as I enjoyed it. The things that were great about the work was that it was the fun part of my work and I could do some of it from home.

At the beginning of this year I had no set plan to fully retire at any particular time. I was actually thinking of continuing to work for another couple of years. My thought was that it wasn't too onerous, continuing to work would lessen our withdrawals from the portfolio for the next few years, and my working was a little bit of a hedge against any market downturn that might occur in the next few years.

I've been told a number of times over the last 3 years that I could come back full-time and I've been offered the opportunity to work more hours. So, it has been ...comforting...to know that if there was a large market downturn or other urgency I could always go back and work full-time for a good salary.

Also we have a son in college with a couple of more years to go (he is attending a state university within driving distance from our home). Daughter is soon to graduate high school and will probably do a 2 year CC program. So our expenses will be more expensive the next 2 to 3 years and then will go down markedly about the time that I turn 62 and could take SS. So continuing to work part-time smooths that out.

On the other hand.....

Work has become not fun. Our current house is about twice as far from the office (about 60 miles one way now) so going to the office a couple times a week is tedious. Also, I realized recently that the nature of my work has changed some so that I'm now doing more of the kinds of things that I don't really like doing.

There is also no pressing financial need to keep work. I've run Firecalc and Fidelity retirement planner multiple times with different scenarios. On the scenario run with our actual portfolio, we get a 99.1% chance of success. I've run variations (using only 90% of the portfolio, lengthening the years, changing spending, etc.) and the realistic scenarios are still 95% or better.

We've been in the new house for over a year now so I think I know our expenses now and how they will change when the kids are gone. We will have a high withdrawal rate for the next 2 to 3 years and that will cause the portfolio to go down. However, that has all been anticipated and is accounted for in Firecalc and the Fidelity planner.

DH (who has heard about this forum from me) says that I have One More Year syndrome. He thinks that an 85% or so chance of success is fine and pretty much thinks that I shouldn't be worrying when I have a 99.1% in Firecalc (and I can get it to 100% fairly easily with some very minor changes) and Fidelity planner says we're fine.

I think the hardest part for me is that when I fully retire...it really is burning bridges. That is, at my age (just turned 59) no one a year or two from now is going to hire me and pay me anything remotely close to what I could make working full-time now. DH says he doesn't know what is worse for me - the angst I have from working now when I am not enjoying work any more or the anxiety I will have when I quit work and know that I don't have that well paid job as a backstop. But, I also see the time passing and there are things I want to do that it is hard to do while working even part-time.

Anyway -- I am about 95% sure that I am going to fully retire in the very near future. Maybe 99%.

 

[heeyy_joe]

I agree with your DH.

 

[eytonxav]

Watch out, you could end up like me (retiring at 63) and while I basically still enjoyed my job, I hated the commute. I'm still in the same boat as you with the kido in college, with DD graduating this month, but is going to grad school at a private in the Fall on my dime. Regarding your burning bridges concern, even at my age, my company would like me to come back as a consultant, so I'm not sure your value to your company or the market will deteriorate significantly if you had the right skills/experience, unless you stay retired for more than a couple of years.

That said, I am sure the class of 2013 would welcome you with open arms.

 

[walkinwood]

When I read the title, I thought you were going back to work full time. This is much better news!

 

[Katsmeow]

When I read the title, I thought you were going back to work full time. This is much better news!

Well, I considered it at one point. We had sold our big house for a loss, realized we needed to demolish the smaller house we had bought and that it was going to be expensive to build a new house on the lot. So, I thought about going back and working full time for a year or so.

But then I realized that we would end up about $100k better off if we sold the lot instead of building on it and just went ahead and bought an already built house.

And, that worked out well. We bought a great house (and it was a good deal since the sellers sold it at a loss) and then we sold the lot for full price very quickly when we listed it.

So - I just never did go back full time. I did increase my hours from working about 10 hours a week originally to working about 15 hours a week.

My work was very stressful and very long hours when I was full time and nothing would make me go back to that except the most extreme of conditions.

 

[Moemg]

It is really hard to leave a position that you might not love but the money is good . I wrestled with this myself and I ended up doing the one more year . It was awful but when I finally did retire one year later I knew I was 100% ready .So maybe give it another six months and see if that strengthens your decision.

 

[Katsmeow]

So maybe give it another six months and see if that strengthens your decision.

I think I may be more ready than I thought I was. I read the above sentence and literally winced. It is hard for me to imagine tolerating it for very much longer, let alone 6 months.

I guess the possibility exists that when I go in to quit entirely I was made some offer to stay that is too good to refuse. I am not thinking that would actually happen. But, it is barely possible.

 

[someguy]

Any chance you can:
1) negotiate fully remote working to avoid the commute issue; or
2) find someone else (either a smart, young person coming up or an older person who wants a non FT job) who will work for less than your current hourly bill rate to your company (or equiv. if you are W2) and you can keep an eye on their work and sit back and collect the spread?

Even so, sounds like you're good to pull the trigger at will.

 

[gardenfun]

I think I may be more ready than I thought I was. I read the above sentence and literally winced. It is hard for me to imagine tolerating it for very much longer, let alone 6 months.

I guess the possibility exists that when I go in to quit entirely I was made some offer to stay that is too good to refuse. I am not thinking that would actually happen. But, it is barely possible.

Wow, when you literally wince at the thought of working there 6 more months, I think your body (and heart and mind) are trying to tell you something.

I think maybe you should listen to them.

 

[daylatedollarshort]

Since you think you might miss the money, can you find something closer / a work at home job / or telecommute?

I think we will always work at least part time, but it will be stuff we can do from a lap top in some desirable location with no commuting. We have a long backlog of ideas on work at home stuff if the current businesses came to an end.

 

[Katsmeow]

Finding a different job in the same field that would be extremely part-time is really not likely at all and, frankly, holds no interest for me.

As far as working from home - I probably could swing that if I pushed it. The truth is that about 99% of the work that I want to do can be done from home. When I originally started doing the ESR thing I was to go into the office 1 day a week and then I did another half day or so from home. This moved to 2 days about a year and a half after I left.

The thing is that the person that I basically work for (we've worked together for over 30 years), acknowledges that I can do my work from home but just likes it better when I come to the office and can go in his office to talk about various things he wants feedback on.

The reality is that I can do that just fine from house using the phone. However, if I end up staying at the house to work he often will tend to never get around to calling me unless it is something super urgent. That is, when I go in and I'm in the office next to him he thinks to ask me to look at X or to confer with him on Y. If I'm at home and X or Y comes in, then he doesn't really think to talk to me unless it is something that I already am working on.

That said - one option I do have is to say that I want to work online from home except on very rare instances and to be more firm as to the type of work that I want to do. I think there is a decent chance he would agree to this. And this would at least get rid of the 3 hours round trip commute two days a week.

However, the thing is that I'm not sure that would solve the other issues. My field is very high stress. I'm not sure that anything can make it where there is no stress involved. Further, if I did work from home there wouldn't be a way to realistically confine it to one day a week. It would be more a situation that I would be called upon sort of whenever. Financially I would be very well paid for it. However, it is really starting to interfere with my life. I get calls when I am just about to leave or I'm out and about and am thrown into long conference calls or I'm asked to do something on very short notice that is needed that day, etc. While I'm not working all that many hours, I always feel like I can get called upon by work at any minute so my time is never really my own. Due to the nature of my work, I can't really say I'll only do work on Wednesday or whatever.

Again, if I really needed to money then I would put up with it. But having the money is not really needed at this time. More money is always a nice to have, of course, but I can't really say that the money is a necessity in this situation. That is, my anxiety about retiring fully isn't really based upon a true financial need.

 

[someguy]

Then I would quit and set a reminder and promise yourself to evaluate finances one year later (while your skills are still pretty fresh).

 

[Brett_Cameron]

As far as problems dilemmas go, yours is a fine one to have! Best wishes!

 

[daylatedollarshort]

I don't think I will stop working as long as I can make a professional level income at an interesting job working from home, or any income really if it is at something that is like a hobby anyway.

But a 60 mile commute and a high stress job sound tough. Have you figured out how much you are really making per hour after you subtract your commute hours, commute costs, taxes, work clothes, etc.? If you have not, the Your Money or Your Life book has a good section on how to do that.

 

[FreeAtLast]

Sixty miles is quite a distance. I would try out the work from home option.

 

[Katsmeow]

But a 60 mile commute and a high stress job sound tough. Have you figured out how much you are really making per hour after you subtract your commute hours, commute costs, taxes, work clothes, etc.? If you have not, the Your Money or Your Life book has a good section on how to do that.

Let me see. The main variable there would be 6 hours a week a spend in a car. It is actually a little less since some weeks I only go once a week.

Commute costs not that much. Strangely enough I haven't had to buy any work clothes since I left. Well, one jacket which I also use for non-work. The rest of it are nice suits that I already had and since I don't wear them often I haven't had to replace. Some cleaning costs, but not a lot.

Taxes are sort of interesting. I would deduct from my pay the medicare taxes since I have already qualified for medicare. On the other hand, I would deduct SS taxes since working does at least marginally increase my later SS income.

Deducting income taxes is more of an issue. Theoretically, of course I deduct the tax to get the net benefit from my pay. However, right now all of my pay is spent on the high expenses we have now due to kids in high school and college. So, in a world where I don't work, I still have to withdraw the same amount from the IRA and still have to pay the same income taxes. That is, last year for example, I earned about $85k in taxable income (there was also a 401k employer contribution but I'll leave that aside). We spent all of that with some of it going to income taxes.

Now if I hadn't of worked last year, since most of our money is in tax-deferred accounts I would still have withdrawn the same $85k (well a little less since I wouldn't have the commute costs) and still paid the same income tax. So I wouldn't in this situation I would not deduct income taxes.

Doing all that - I'm actually making $78 an hour.

 

[daylatedollarshort]

Doing all that - I'm actually making $78 an hour.

If you were home more would you save any money to offset the $78 an hour? Like less meals out, cleaning your own house, more meals from scratch, using the library instead of buying books, going around the house with a Kill A Watt, installing low flow shower heads, putting in a permaculture yard, or whatever interest you?

Doing things that lower your annual household expenses down to the nubbins can sometimes be more lucrative after taxes than working an extra year or two. I don't mean riding your bike to the grocery store during a snowstorm, but things that actually might save money and not impact your quality of life, like putting up solar lights outside and LED bulbs inside.

Every $1K a year in annual expenses you can cut off a 30 year retirement plan means needing $30K less in the nest egg. So doing enjoyable things around the house that knock off $3K a year from your annual expenses might mean needing $90K less in after tax savings over the rest of your retirement years. The money you save, dollar for dollar, generally means more than the money you earn because you have to pay taxes on the money you earn. Saving $1K a year on energy bills usually is worth more than earning $1K in W2 or 1099 income because you usually have to pay taxes on the $1K you earn.

Somebody has a blog on how to collect a million airline miles in a month, so figuring out how to collect at least a subset of miles like that is on my to do list. If you replaced working with some activity like that it is one other way to make your numbers come out better in favor of ditching the high stress job.

Also, are you sure your commute costs are not that much? When we added up car repairs, gas costs and depreciation on our cars our mileage came out pretty close the IRS allowances. At our house we use 50 cents a mile, or $1 round trip per mile for our budget considerations. If you are driving 120 miles round trip, that would really add up over time.

As for taxes, wouldn't you have Social Security and Medicare taxes on the money you earn but not the retirement draw down?

 

[RockyMtn]

just cut the cord and move on! You are clearly ready.

 

[Katsmeow]

If you were home more would you save any money to offset the $78 an hour? Like less meals out, cleaning your own house, more meals from scratch, using the library instead of buying books, going around the house with a Kill A Watt, installing low flow shower heads, putting in a permaculture yard, or whatever interest you?

I have hope that if I am home more we will save some on food. Not so much less meals out (I take my lunch to work) but I am hoping to do more cooking from scratch and plan to make reducing the grocery bill a project. I've started on it and cut the bill some already but hope to cut it another $50 to $100 a month once I fully retire.

We actually just decided to get rid of our cleaning service which cut $247 a month from the budget. It was nice to have and the primary impetus to stopping it wasn't financial (although that is a good bonus). We have been trying to get more activity in our lives and with living in a 1 story house it is sometimes hard to get enough activity. We felt that one way we could up the activity was by doing our own house cleaning.

Also, are you sure your commute costs are not that much? When we added up car repairs, gas costs and depreciation on our cars our mileage came out pretty close the IRS allowances. At our house we use 50 cents a mile, or $1 round trip per mile for our budget considerations. If you are driving 120 miles round trip, that would really add up over time.

Well if I make it 50 cents a mile then that cuts down the $78 an hour to about $75. However, the main thing cutting my pay down from my hourly rate is adding in the time I spend sitting in the car. If it wasn't for that, my hourly rate after deducting for the out of pocket stuff (but not adding for the extra time sitting in the car) would be about $101.

Interesting exercise though.

 

[walkinwood]

Think of all the extra time you'd have to spend on this forum! That itself should sell you on retiring now.

 

[ChocoKitty]

I think I may be more ready than I thought I was. I read the above sentence and literally winced. It is hard for me to imagine tolerating it for very much longer, let alone 6 months.

That tells you a lot. I know the feeling, though -- it's harder to walk away when the money is really good. But yeah, you're ready.

 

[Mulligan]

Kat, we are on the same path. I have been semi retired three years, and am packing it in for good this month. I also worked 15 hours a week but not nearly the salary ($30,000). I learned the cruel math of a part time job salary stacked on top of a nice pension. After all taxes, gasoline, loss of state tax exemption because salary put me over the income limit, and moving to higher tax bracket, I am making somewhere between 33-35 cents on the dollar. Not worth it, so I am packing it in!

 

[Katsmeow]

It is sort of funny how it can work so well for so long and then just reach a tipping point and not be worth it any more. I still do well with it financially (I have no pension), but there comes a point where the money by itself isn't enough.

I felt like last week I was explaining that to everyone.

I told a couple of relatives (in their 80s) that I was thinking about quitting entirely soon. One was concerned about me quitting before Medicare availability and I was able to explain DH has retiree coverage. Then the other was my mother and she just has trouble wrapping her head about the idea of retiring before full SS retirement age. She commented not long ago that I wasn't of the age to retire yet.

Then a couple of days after that my 19 year old son asked me how much I made at my final salary before I semi-retired. I told him and he was totally shocked. He commented that if I only continued working for full time for X years then I would have X dollars. And, of course, he is right.

People just seem to have trouble with the concept of having enough and then stopping at that point even though you could perhaps have a lot more if you worked for longer.

What I ended up telling my son is that you can almost always get more money or spend less money, but you can't ever get more time....

 

[NanoSour]

Great thread Cat. I'm leaving a very lucrative job that I love because I hit that tipping point and we want to relocate to a place we love. I don't think people quite understand retiring so young and I'm sure there is financial risk in the decision. But bottom line is people adjust to their financial situation quite easily.

You'll do great in ER and from the tea leafs I'm reading...it is time!