when ER too early

[rw86347]

I think if I play my cards correctly I will be able to retire at 40 years old. But part of me wonders if I am simply giving up. Then again I love staying at home working on my projects.

Has anyone else retired this early?

Do you regret it?

Should I stay at work longer and keep saving more?

Still 40 seems like a million years away. Maybe by then I really will be willing to do anything in order to jump ship.

[Nords]

Quote:

Originally Posted by rw86347 Has anyone else retired this early?* Do you regret it? Should I stay at work longer and keep saving more? Still 40 seems like a million years away.* Maybe by then I really will be willing to do anything in order to jump ship.

1. Nah, I screwed around and missed the deadline by a year.

2. No!

3. Not if you think you have the numbers figured out. The worst that'll happen in your 40s is having to tweak the plan, and if things completely fall apart then you still remember how to find a job.

4. Yup. You'll certainly be motivated to LBYM, find affordable health insurance, and design a retirement portfolio to take care of you for 60-70 years...

[audreyh1]

Quote:

Originally Posted by rw86347 I think if I play my cards correctly I will be able to retire at 40 years old.* But part of me wonders if I am simply giving up.*

What are you giving up by continuing to work?* Work is not free, you know.* It does cost - maybe not in terms of money, but in many other precious life commodities.

Audrey

P.S.* I retired just before my 40th.* Regrets?* No!* Of course there were a million things I wanted to do, and work was keeping me from that!

Make sure you have ample resources for retiring if you try to retire that young - or be willing to go back to work later if necessary.

In the meantime, try to enjoy your life now and not focus on a distant future.* We never know what might happen - best to live as well as we can today.

[rw86347]

Audrey,

Was you retirement money in 401k/IRA? I am guessing the 4% thing has worked for you.

I am hoping by then to have $450,000 in my 401k, which I plan to leave untouched untill I am 60.

I am also hoping to have all of my realestate paid off by then. Rent payments should pay all of my bills, and nothing more.

I also am a partial owner in a couple carwashes. I hope this will replace the income from my job. Then when I am tired of the carwashes I will sell them and move the equity into stock and bonds.

The downside is that I believe the carwash will take about 10 hours of my time per week.

RW

[Leonidas]

Could have gone at 40, but stayed til 45 to make one last career goal and take advantage of money they were just throwing at me (and into my retirement pkg).

Quote:

Originally Posted by rw86347 I think if I play my cards correctly I will be able to retire at 40 years old. But part of me wonders if I am simply giving up. Then again I love staying at home working on my projects

Right up to the last couple of years I loved what I did and figured that while I wasn't saving the world I was making pieces of it better. I didn't work just for the money. By the end I realized I had moved so far up that all I was doing was directing the people who managed the people who supervised the people who were making the world better. Job satisfaction dropped to the basement. The only reason I was staying was because of the money, and when I realized that I could retire and maintain and even improve my financial status I ran for the door.

The way I see it, I had conquered the goals in the working part of my life and it was now time to go accomplish some new things in my "real life."

I take inspiration from the words of Chesty Puller when he found his regiment surrounded by a zillion Chinese at Chosin Reservoir. Unable to continue the attack north he had to turn back toward the south to join back up with the rest of the forces. Of course he had to fight his way through numerically superior enemy forces to do that. When somebody in the media asked about the retreat he retorted "Retreat? Hell, I'm just attacking in a new direction!"

[Rich_by_the_Bay]

Quote:

Originally Posted by Leonidas when I realized that I could retire and maintain and even improve my financial status I ran for the door.

Just curious: how did retiring improve your financial status (easy to see how it might improve your life). Did you have very high expenses related to work itself?

One of the best and most obvious points I gleaned from this forum is that it is meaningless to defer retirement because it is financially better to wait. Heck, it's always financially better to wait - right up til the day you die on the job.

In your case, it sounds like it was not only personally better, but financially better to FIRE. Slam, dunk.

[audreyh1]

Quote:

Originally Posted by rw86347 Audrey, Was you retirement money in 401k/IRA?* I am guessing the 4% thing has worked for you. I am hoping by then to have $450,000 in my 401k, which I plan to leave untouched untill I am 60.* I am also hoping to have all of my realestate paid off by then.* Rent payments should pay all of my bills, and nothing more.* I also am a partial owner in a couple carwashes.* I hope this will replace the income from my job.* Then when I am tired of the carwashes I will sell them and move the equity into stock and bonds. The downside is that I believe the carwash will take about 10 hours of my time per week.* RW

No - my retirement money is not all in 401Ks. Usually if you retire by 40, it's due to some type of windfall (like selling a business or major assets), and that money goes into taxable accounts.

10 hours per week is not very demanding at all for owning your own business!!

Audrey

[Leonidas]

Quote:

Originally Posted by Rich_in_Tampa Just curious: how did retiring improve your financial status (easy to see how it might improve your life). Did you have very high expenses related to work itself? One of the best and most obvious points I gleaned from this forum is that it is meaningless to defer retirement because it is financially better to wait. Heck, it's always financially better to wait - right up til the day you die on the job. In your case, it sounds like it was not only personally better, but financially better to FIRE. Slam, dunk.

It’s a little complicated, but I’ll simplify it for brevity. You’re right that I would make more money if I stayed until I died (or gosh darn near it), but if I had stayed one day more (literally) it would have cost me money on the retirement side that I never could have made up.

My employer was (is – I’ll explain later) one of the top ten largest municipal governments in the country, which means our compensation (directly) and retirement packages (indirectly) were under the control of elected officials. Occasionally our pay or retirement became a political football to be booted around on the public stage depending on the state of services we provided or the fiscal state of the city.

When I came here the only places I could have gone and made more for the same kind of work were Los Angeles or Anchorage. I’d rather set myself on fire than live in LA and the Anchorage thing was an illusion soon clarified by the cost of living. A decade later the local economic situation and political situation had greatly eroded that through force reductions and pay cuts. The next decade saw a slightly different picture in which the pay began to improve slightly, but the friendlier administration delayed their costs by pushing most of the raises to the later years of the contract. They also overcompensated for the meager raises in the front, and tried to protect themselves from a huge retirement age bubble, by doing some wonderful things for us on the pension side.

They asked us to renegotiate a couple of times and the result was we let them keep pushing the big bucks farther back while they gave us small and medium raises. The quid pro quo was further building a lot of pensions to the point where people started to get giddy in anticipation of retiring. For a lot of reasons it all became sort of Byzantine – my paycheck stubs look like menus from Chinese restaurants. Eight or more categories of pay and five or six different categories of leave – all depending on the pay cycle, time of year, etc.

The result was a lot of people like me sitting on huge lump sum payments and vastly increased pensions. Most of my raises had already been factored in because of promotions and personal initiative (language pay, hazardous duty, shift differentials, acting promotion pay, etc., etc.) that had doubled my salary and pension in the last few years.

With a final “temporary for an indefinite period” promotion I started seriously considering retirement. That spreadsheet had 27 rows and went to column “DL”

Then the new administration came in and immediately declared there was not enough money in the till to pay the pending raises and their contribution to the pension system. Intense renegotiations took place. A dozen different scenarios were possible, none of them as attractive as what was already in place. At the same time my temporary promotion (and all that extra pay) was ending at the same time that I got two great job offers followed rapidly by orders to take a horrible one. The good jobs kept most of my extra pays but the bad one allowed only one.

The final contract was presented for a vote and it took away a lot on the pension side for more on the salary side (that was again pushed off into the future) while preserving most of the already promised immediate raises. The pension changes were also phased in. What that meant for everyone eligible to retire was leave now, real soon, or stay for a decade or more. Anything else resulted in huge losses on the pension and associated payouts.

It was “fish or cut bait” time for a lot of people.

I built another spreadsheet looking at all the scenarios and calculating both present values and total anticipated future payments (using age 72 life expectancy). If I stayed one year longer I would retire at a greatly reduced pension and lose almost $600K in future payments. My salary would eventually recover to where it was then but that would take eight years. My pension payments would not be equal to what they would be if I left in 2004, and those figures are before adjusting for inflation. My pension is adjusted for inflation based on the local CPI. No realistic future pay raises were going to get my pension back to where it is right now or where it will be based on minimum COLAs using the historic rates of inflation.

A second clincher was that I had a one time guarantee that if I left right then I could take all of my accumulated vacation and leave and go on a long term “vacation” while still collecting almost full salary. If I didn’t grab it then I might have a later shot, but might not. The alternative was to take a lump sum payment of the cash value of all that time as it was accumulated at a much lower salary. The difference between the two choices was roughly $150K before taxes. So, I’ve been on paid vacation for almost two years and have about another year to go. At the end of my “vacation” I can opt to leave some of the value there and let it fund five additional years of health insurance at active employee rates.

The last decision point was the fate of a lump sum payment that is associated with my pension. It will be between $360 and 400K at the time my “vacation” ends. It would be the same amount if I kept working. It is in a tax-deferred account and I will roll it over into an IRA. If I kept working I would continue to add to that amount by payroll deduction. However, it’s a very tempting target for the bean counters at city hall and as long as I was working it was at risk for disappearing in some as yet unspecified way. The day I really retire it is all zooming off to the IRA far away from here. Besides, the new contract had already butchered that so much that I could stick it all in munis or treasuries and do as well.

Sure, I could keep working forever (I’d rather throw myself in front of a bus) and the more money I made in salary vs. pension would eventually exceed the value of the benefits that I have locked in now. But I got tired of adding columns to my spreadsheet before I ever got to that point in my planning.

The personal side is all gravy. 20% of the workforce left when I did and it really sucks to still be there. I’ve spent almost two years just enjoying the heck out of my family and that’s something money could never buy

[REWahoo]

Quote:

Originally Posted by Leonidas It’s a little complicated, but I’ll simplify it for brevity.

Jeez, if this is the Cliff Notes version, how big is the unabridged explanation?

[FI@35]

So they basically paid you to RE. How cool is that?

[Leonidas]

Quote:

Originally Posted by REWahoo! Jeez, if this is the Cliff Notes version, how big is the unabridged explanation?

Contract between MBA and city fills a two inch binder. Pension system contract with the city runs about ten pages. Pension rules are published - in part - in a half inch booklet. Applicable state civil service and pension laws are fifty pages or so. Attorney General Opinions, City Legal Opinions, Department Legal Opinions, Special Orders, General Orders, and Acting Promotion Orders. Of course you have to have all the old versions too because many of the latter ones stipulate amendments to "Section IV part (A)(1)(b)(iii) of the 2001-2003 agreement of which all other parts remain intact".

And everything was written by halfass attorneys, political hacks, union guys and CPAs. All of whom had nests to feather, kingdoms to build and butts to smooch.

And don't forget the Tax Code which is frequently referenced.

It's a government thing - if you can understand it they have to go back and "fix it". Last month's pension board minutes were full of discussions about all the different points that the City is still not getting right in administering the "new contract" that was ratified in August 2004.

You just get to see the brief version and laugh at the insanity. I had to figure it out and make what the contract calls "An Irrevocable Decision". And then worry if I was going to be okay or would I wind up eating puppy chow under the freeway.

Quote:

Originally Posted by FI@35 So they basically paid you to RE. How cool is that?

I giggle a lot when I think about it.

[cute fuzzy bunny]

Quote:

Originally Posted by rw86347 Has anyone else retired this early?

39.

Quote:

Do you regret it?

Not at all. But I feel like I achieved enough in my professional life to know what I was capable of, and feel very fulfilled in what I accomplished.

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Should I stay at work longer and keep saving more?

Only if you want to or have to.

Sometime when you're in "the vicinity", take a 3 month sabbatical or similar. Try it out. I figured I'd get bored and go back. I was quite pleasantly surprised to be very wrong

[mickeyd]

Quote:

carwash will take about 10 hours of my time per week.

*

...out of curiosity, what would take 10 hours a week to do at a car wash?

[F-One]

10 hours a week at car wash*

my BIL spends twice that at the one he has after "retirement" and he has a part time person "running" it. just can't stop working

[Rich_by_the_Bay]

Quote:

Originally Posted by Leonidas It’s a little complicated, but I’ll simplify it for brevity.

Wow. Glad it all worked out.

[katfish]

Our pension in N.J. is not diffucult to understand. Takes a few minutes to work
through the formula. Problem is the system is broke .Our ex gov. lost a big part
of it in the last bear market...

[sgeeeee]

Quote:

Originally Posted by mickeyd Quote: carwash will take about 10 hours of my time per week. * ...out of curiosity, what would take 10 hours a week to do at a car wash?

Really good detailing.

[rw86347]

Quote:

Originally Posted by mickeyd Quote: carwash will take about 10 hours of my time per week. ...out of curiosity, what would take 10 hours a week to do at a car wash?

By then I hope to have someone else cleaning and restocking. I will be picking up the cash, and making deposites. I figure that will need to happen 3 times a week.

[IHateCNBC]

Checked out at age 31. Do not regret it one bit.

[azanon]

Quote:

I think if I play my cards correctly I will be able to retire at 40 years old.

Sweet, you're going to have at least 2 mil by then or the income power of 2 mil?* Awesome man, gratz!

If not, .... you're insane.* There are a lot of recklass people here; beware.* There are also a lot of people here trying to make themselves feel better about their dumb move of pulling the trigger too early by suckering someone else into doing it.

I dunno about you, but i plan on making at least 85 as a health nut.* *85-40 is a LONG time and I wouldnt risk that retirement timeframe without a huge wad of cash.

Azanon