When the idea of early retirement becomes real

[Indigo Mule]

The thread (and article) about when spouses decide to retire spurred me to compel my spouse to sit down and talk about the subject. He's heard me say for awhile now that I plan to retire at age 55 (October 2017), but he seems to think I'll get bored and go back to work within a year. I don't think that will be an issue.

What amazed me was when I asked him at what age he wanted to retire, and he said, "I never really thought I could retire before 62 or 65".

I've known for years that I want to retire from this job as soon as I am eligible for the (capped) employer-paid retiree health benefits. But gathering the information to share with my husband brought it home to me. I can REALLY DO THIS.

I looked at my last 18 months of expenditures and was appalled at how much money I fritter away to pacify myself and relieve the work-related stresses. While I live at or below my means, I could be saving a LOT more than I currently do. So I am giving a zero-based cash-in-the-envelope budget system a three-month trial. Aside from work-related expenses (some lunches and commuting), I'm going to live within my post-retirement budget and bank the rest.

A powerful motivator was seeing in the spreadsheet that for every month I meet my savings goal, my husband could potentially retire one month sooner. And while he has a dream job in a posh environment, I suspect that within a year or two of my retirement, he's going to be less interested in going off to work each day.

Yes, he has his 401K, but, as mentioned in the beginning, he doesn't really believe that early retirement is something he could do. Now that we've had the first deep discussion, I'm letting it simmer on his backbrain. We'll revisit the effects of my new budget on our lifestyle at the end of June.

So, really, I'm just bemused that even though I knew retirement at 55 was my plan, that it is only after the discussion with my spouse, and laying out the numbers and scenarios, that it became REAL to me. That I can retire from the work force (not just retire from the high-pressure job to a lower-paying lower-pressure job).

That's a powerful motivator to stick to my budget!

So...at what point did everyone else have that moment of realization that this is FOR REAL--not just a goal or a nice idea, but something that you will achieve (complete with a timeline)?

 

[Lazarus]

Its real for me. I filed for my retirement at 55 which is just a few months away. I get a lot of blank stares about it. A lot of people can't believe it. But I have been planning for 30 years, and saving! Controlling costs also. Perhaps something will happen that I may have to go back to work at a later date. But I am working now so whats the loss?

 

[Lisa99]

We're not yet retired (date is 9/1/2016), but it became real when I found FireCalc and started running scenarios.

Understanding the scenarios, combined with firing our financial advisor and taking over our investments have made the plan almost bullet proof (I should probably now duck from saying that, but I see no reason why 9/1/2016 won't be real for both of us unless something catastrophic happens to the market).

Congrats! I hope you and your DH end up on the same page.

 

[H2ODude]

The FI materialized big time when I hit 60 and lost the 20% penalty for ER on a decent pension. We've always LBOM not so much to ER, just that our income was well over our needs. I'd had a job where in addition to pension I could max not only a 401k but a 457; deferring ~$42k a year. So retiring will leave us with far more spendable income than....we spend now.

I was tired of my government career, politicians make me, well, let's just say unwell. So I took my retirement, all set. Got some complications though. We care for MIL (86) which crimps travel (what we saved all those bucks for). So we're on hold. So I am working (engineer) again in private sector. Things have not worked out well there, I'm NOT happy, but the money is good. I'm on verge of bailing but being tethered to home with not much travel is not appealing.

So to your point, I'm conflicted as to whether to pull the cord. Like many, I have a hard time visualizing life without ... going to work. Our kids and grandchildren are overseas so the limited travel really hurts. So we're in a very fortunate financial situation, but even if I quit, our options are limited as long as we are the dutiful caregivers of the MIL. And, for us, it's just not an option to park her somewhere other than BIL on occasion. Stepping up to the duty is something I felt we didn't have a choice on, but it sure is not ideal.

It's pretty obvious to me that we're all very different in our circumstances; be they financial, spousal, tolerance and satisfaction with work, or passion to pursue something post our traditional careers. No one can find "our" answer to when and how. I will say that I wish I'd started thinking more about this before I got to this point, but I'm optimistic that in the end it will work out.

 

[Nords]

So...at what point did everyone else have that moment of realization that this is FOR REAL--not just a goal or a nice idea, but something that you will achieve (complete with a timeline)?

When the stock markets reopened on 17 September 2001, we watched the numbers all day and kept updating our spreadsheet. We actually made some buys over the next few weeks.

A week later (when it looked like the worst was over-- ha!) I ran our (much smaller) portfolio and (already small) budget through Financial Engines. It still worked.

My retirement request had already been approved, and I started planning my terminal leave. Only this time I knew it wasn't going to include a resume, let alone a job search.

 

[MBAustin]

Our informal thoughts way back when were that we would aim to retire after getting the kids through college (2013). But DH retired on disability in '06. As I was the primary breadwinner all along, I assumed this would delay my ER but didn't really do much with the numbers. After I discovered ER.org in 2009-10 and read a lot of threads, I realized we needed to run the numbers seriously. Glory, hallelujah, we were FI with room to spare to accommodate DH's disability. When I suggested to DH that I might RE, he was all for it, as Megacorp's toxic climate had taken its toll on me much more than I realized. So glad I pulled the trigger when I did.

 

[Walt34]

It's pretty obvious to me that we're all very different in our circumstances; be they financial, spousal, tolerance and satisfaction with work, or passion to pursue something post our traditional careers.

It is a different environment to be in. The numbers worked for us because of the pension we have, and at the time I had every intention of either never working again or a part time job. As it turns out DW wants/needs the free time to look after her father without the conflicting obligation of a job, and the job I stumbled into here is working out well for us.

The neat thing is having the choice to pull the plug on that job anytime I want, and of course the unplanned-for income is nice too.

And I'm actively exploring photography options, something I never really had the time and funds to do before. So while the job is just that - a job, not a career - it is neither stressful or difficult and does provide the income to explore some interests that I wouldn't otherwise be able to do. In spite of that we're still putting most of the income away for now.

 

[pb4uski]

Its real for me. I filed for my retirement at 55 which is just a few months away. I get a lot of blank stares about it. A lot of people can't believe it. But I have been planning for 30 years, and saving! Controlling costs also. Perhaps something will happen that I may have to go back to work at a later date. But I am working now so whats the loss?

+1 We were at a social event in January when one of my SIL's first learned that I was retiring (she must not have read our Holiday letter I guess ). She exclaimed "But you're too young to retire!!" rather loudly. it was a bit embarrassing.

 

[W2R]

So...at what point did everyone else have that moment of realization that this is FOR REAL--not just a goal or a nice idea, but something that you will achieve (complete with a timeline)?

When I had mapped out a detailed financial plan that I could live with, that would allow me to retire when I did. That was in 2000.

And then a second time, after Hurricane Katrina, once my Katrina-related cash outflow had finally begun to stabilize and I realized that (unike so many) I still had a job and my home. Whether my job would even remain in New Orleans or not was up in the air for about a year after the storm, so we were all living from day to day for a while. As part of my hurricane recovery I was fiercely determined to figure out a way to get back on track to retire as originally planned despite the financial hit. What a rocky time that was. Hugs, tears, extreme physical and mental exhaustion, and more tears. But I did manage to get all the repairs done eventually, and to get back on track financially.

You never know when something unexpected might happen. Sometimes these things can set a person's plans back a few years, but just don't let anything destroy your hopes and dreams and you will get there.

 

[DangerMouse]

For us it was when we actually decided to enter our assets into an Excel spreadsheet. That was the lightbulb moment when we realised how close we were.

 

[KisKis]

I run Monte Carlo scenarios and update extensive spreadsheets on a weekly basis, but I have a long time to go still (28, aiming to retire at 46 with DH retiring at 40). However, the first time I had the eureka moment was when we boosted our savings rate to over 40% with living expenses being only 30% (mortgage is the remaining 30%, but that will be paid off at 35). Knowing that all we have to do is maintain this level of savings, which has not been difficult for us, and Monte Carlo says that gives us a 100% chance of success, is hugely encouraging and makes me an even more aggressive saver before. Now I am trying to figure out if we can retire even earlier.

Only time will tell if I have been completely naive, but I have made a conscious effort to estimate conservatively. I know a lot of things could change. I'll report back in 20 years.

 

[Tree-dweller]

When I saw what my work travel schedule for 2012 would be; when I heard what the (non-existant) raises for 2012 would be; when I knew who my boss would be in 2012 ; when I knew what my pension plus 401k would pay... That's when!

 

[Chelhxi]

When I got married and realized we could live on half our combined income, or less. When I was living alone I was only able to save a few hundred a month, not counting the small amount going into house equity. After marriage I could save around $1000 or more, not counting interest etc.

 

[Brett_Cameron]

I had been monitoring for years (~10) what my future pension and 401k balance would be using employer provided calculators and spreadsheets. My target for retirement was when the DB+DC cash flow would equal my gross salary. It became real when I figured out what my expense needs were PLUS the tax reductions after retirement would be. When the projected post-retirement cash flow exceeded my projected post-retirement expenses, it became real. And then reality.

 

[scrabbler1]

For me the idea that ER was not only real but not toofar away was around 2005-2006 when the first of several pieces of my plan began falling into place or appeare dthey would in a few years. I was already debt-free so my monthly expenses were pretty low. I had just found a corporate bond fund I felt comfortable with to invest the proceeds of my quickly growing company stock. The value of that stock had not reached my desired level to cash it out, but it was approaching it quickly. I had not begun looking for an individual HI policy, as that would come later.

The ER spreadsheet I had designed was starting to take shape and was looking better and better as my own personal savings kept growing (despite working part-time) and the ESOP was nearing my targeted amount.

In 2007, I became surer and surer that by the end of 2008 I would be able to ER. Yes, this was before the 2008 meltdown but I was sure enough to further reduce my weekly hours worked to a point that it might not be reversible (I had become ineligible for my company's group health plan so I went on COBRA for the next 18 months).

In 2008, the company stock value was growing as expected, and I met with a FIDO rep to run my plan through the FIDO software. The rep said I was in good shape (she wasn't trying to sell me anything) so I felt glad I had overlooked anything. I had also found an affordable individual HI policy so I put that into my ER spreadsheet and it fit just fine.

When the company stock hit the targeted value, that was the last piece of the puzzle. I soon gave my notice and left the company. A huge break in my favor was the market meltdown in late 2008 which enabled me to buy 25% more shares of that corporate bond fund than anticipated, further improving my ER spreadsheet.

 

[eyeonFI]

I hadn't played with firecalc in quite a while, but around the start of this year I put my numbers in, and it returned 100% success rate. That made my planned 2016 ER seem a lot more real. And it's had the effect of lowering both my stress and my motivation at w*rk. "Only" 4.5 more years...

 

[walkinwood]

The thread (and article) about when spouses decide to retire spurred me to compel my spouse to sit down and talk about the subject.

This is such an important step. Good for you!

 

[arebelspy]

I hadn't played with firecalc in quite a while, but around the start of this year I put my numbers in, and it returned 100% success rate. That made my planned 2016 ER seem a lot more real. And it's had the effect of lowering both my stress and my motivation at w*rk. "Only" 4.5 more years...

I think I put myself firmly in Nord's camp when I venture to guess your other bucket may fill quicker than you think.

 

[Alexp30092]

When I realized that I work 10 hours, sleep 7, spend 3 more eating and there is only 4 left for my wife, family and myself. I had to come up with the plan at that point.

 

[Midpack]

So...at what point did everyone else have that moment of realization that this is FOR REAL--not just a goal or a nice idea, but something that you will achieve (complete with a timeline)?

We backed into it somewhat...

DW and I came from middle class military families. We were both fortunate in our careers on terms of income, travel and job satisfaction (for the most part). We've always lived below our means probably because we had way more income than our parents. We used to spend significantly more than we do now, so we were saving and planning on pretty high spending in retirement.

DW never had a job with a pension and mine was frozen (ie, almost nothing) in 1994. On retrospect Megacorp did me a favor taking away my pension because at age 40 I decided 'I'm on my own and might as well plan accordingly.' So we saved and invested even more aggressively, I was 100% equities until almost age 50, though I don't recommend it. FI was always an overriding goal for me, RE was an afterthought and should be IMO.

As we grew older, the adage 'the most important things in life aren't things' gained more and more meaning, and our spending dropped naturally. Instead of feeling deprived, we felt liberated. So decades of saving for a grand $ retirement coupled with the realization we really didn't have any desire to live a grand life, meant we found we'd overshot FI by a wide margin. We both kept working but once we reached a realistic 2.5% WR without Soc Sec or Medicare and the first (only?) career had become boring, I retired at 57 last summer. I never let on to anyone except DW, so friends, family and coworkers were shocked, still are.

Who knows what the future will bring, but it's a blessing to have options...

 

[ikubak]

I hadn't played with firecalc in quite a while, but around the start of this year I put my numbers in, and it returned 100% success rate. That made my planned 2016 ER seem a lot more real. And it's had the effect of lowering both my stress and my motivation at w*rk. "Only" 4.5 more years...

My moment was when I hit 100% on firecalc. DW has never been real interested in our finances and has let me manage them since we got married. She had always planned to work at least until her 60s, but took a real interest in RE when I explained that we were getting real close a few years ago. She's on board with the program now and is ready to ditch work and let me keep working.

We sat down last night and went over the plan. I need three more years to get a state pension, which would be nice, but not absolutely necessary. DW could RE right now, but with a son finishing 10th grade we often wonder whether we should keep working until he decides where he will go to college, which is the big unknown piece of the puzzle. We decided she would work through the end of the year and I would keep going to get the pension. Still feel the stress, but I am not nearly as motivated as I was 4 or 5 years ago. Only three more years....

 

[ziggy29]

DW has never been real interested in our finances and has let me manage them since we got married.

Apologies for the slight hijack but do you have a "letter from your dead husband" prepared so she'll know how to handle the money if you can no longer do it? I'm trying to get my wife more involved and interested in our financial planning but it's a long road to hoe and I find myself having to update said letter every few months.

 

[ikubak]

Apologies for the slight hijack but do you have a "letter from your dead husband" prepared so she'll know how to handle the money if you can no longer do it? I'm trying to get my wife more involved and interested in our financial planning but it's a long road to hoe and I find myself having to update said letter every few months.

Actually I do have the note. It's not "letter from your dead husband", but it's a word doc titled, "What to do when ikubak dies". I also update a list of all the accounts we have so she knows where everything is and the value. I should really get her more involved in the finances, but that probably won't happen until she is retired.

 

[2B]

Apologies for the slight hijack but do you have a "letter from your dead husband" prepared so she'll know how to handle the money if you can no longer do it? I'm trying to get my wife more involved and interested in our financial planning but it's a long road to hoe and I find myself having to update said letter every few months.

I have a 5 page letter. It has all of our accounts, insurance policies, bills, asset allocation/investment plan and pensions outlined with contact information. I force her to read it once per year as I update it. I've forced her to sit through the annual rebalancing (hitting the buttons I tell her) but she is not coming up to speed very quickly.

When I finally retire, it will become much simplier since all of the employment stuff goes away. My 15 yr term policy is also about to expire so there won't be any life insurance either.

 

[ikubak]

I have a 5 page letter. It has all of our accounts, insurance policies, bills, asset allocation/investment plan and pensions outlined with contact information. I force her to read it once per year as I update it. I've forced her to sit through the annual rebalancing (hitting the buttons I tell her) but she is not coming up to speed very quickly.

When I finally retire, it will become much simplier since all of the employment stuff goes away. My 15 yr term policy is also about to expire so there won't be any life insurance either.

OK 2B...you raised the bar!! I need a better, more explicit note on what to do when I expire. It's about time for me to update the instructions anyway.