Hi, I'm ReallyReady to go NOW!

[ReallyReady]

Hi. New to the discussion board and would welcome your encouragement (and discouragement too I suppose!).

I'm 50, single, liquid assets of around $650k ($360k in a 457 plan, $110 in Roth, the balance in taxable accounts). Will probably sell my main home with about $300k net proceeds and live in my inherited family home which has no mortgage. So I expect to retire with about $1 million in savings. I will have two small pensions that will provide about $18k annually. No kids to care for...just a spoiled girl dog.

Hoping to retire at 52. I live very simply - generally only spend around $26k annually. I've taken some mini-retirements - Peace Corps, grad school, time away from work to care for my parents at end of life. The move away from employment seems like a slam dunk, but I'm just hesitant to leave work in my prime earning years.

Like many of you, I've burned up every calculator I can find and generally get a 100% success rate. I will receive a health insurance stipend from my employer at retirement (or I can stay with their plan), so that issue is covered. Other than my fear, are there any good reason to believe I'm not already FI? Thanks for you guidance!


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[Onward]

You and I are similar in a lot of ways.

If you also share my repeated dissatisfaction with the corporate experience, then I say jump!

I left four years ago, and my only regret is that I couldn't do it sooner.

I'm even well on my way to being a normal human being again.

 

[freedomatlast]

Looks like you're in great shape, especially with your pension providing over half of your living expenses. Will your pension kick in at 52 when you retire or will there be several years you will need to cover using only investments? Either way, with your low annual expenses you should be good to go!

 

[ReallyReady]

Sorry forgot to provide details on the pensions. The larger of the two will begin at retirement and includes an annual COLA, averaging around 2%. The smaller pension can begin at 55 with no inflation adjustment.

Thanks for your responses so far - I'd love to hear from folks who have taken the leap without a multi -million dollar portfolio.


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[JoeWras]

You have a few things going for you to make this happen:
- you are single
- you have health insurance (but please check those details carefully)
- you have a pension that will cover many of your expenses

Sounds good to me.

I know it is daunting when you see some of us talk about $3M. Many of those cases include the following complicating factors:
- kids in college (or kids in general)
- spouses and partners to share and eventually care for
- high expense areas: property tax load can be significant
- and the biggie: health insurance costs

Sounds like you don't have those.

I know in my case, we have no kids, but we are married. But we want more of a buffer for each of us so that we can care for each other later in life when we may need it. I'm seeing this right now as I care for my father. Couples who need to share assisted living costs can be significant, for example.

 

[ReallyReady]

Thanks for the response JoeWras - all good points to keep in mind. The need to save for college expenses would be a game changer for sure. I honestly don't know how parents manage that!



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[TxGypsy]

I made the leap years ago with less than you have now. I haven't regretted it. Ease into it if you can. Many people have a hard time going cold turkey. They literally don't know what to do with themselves. After 8 years I can honestly say that I have no idea how I'd have time to work a job

 

[rodi]

I retired this year at age 52. My assets were a bit bigger but not by huge amounts. And as JoeWras mentions - I'm still dealing with kids/future college.

My husband has taken mini-retirements along the way, similar to you. Taking gap time between jobs, caring for his elderly parents, etc... It's a good way to work things if you have the cash flow.

Sounds like you've considered the big things (healthcare). Have you also included taxes in your calculations? (That was something I missed when I first started obsessively running retirement calculators.)

There's an excellent FAQ to trigger thinking about the issues associated with early retirement.
http://www.early-retirement.org/forums/f47/some-important-questions-to-answer-before-asking-can-i-retire-69999.html

Good luck, and welcome!!!

 

[Senator]

What are your true annual expenses?

Assuming $18K from the pensions, and perhaps $30K from the $1M portfolio, your expenses should be less than $35K. At most. If you have underestimated your expenses with your $26K, you are going to be in bad shape. $26K could be $40K pretty easily if just a few things turn on you.

Remember to account for taxes, as investment gains are taxed. If you are considering a 4% withdrawal rate, you may have a lot of years left in you and 4% might be a bit much. If you have no car payment, you may have one in the future. If your property taxes go up 15%, will that impact you? What if your dog needed $1500 in vet care?

 

[Unpaintedhuffhines]

You said something that was my main sticking point: "I'm just hesitant to leave work in my prime earning years." So very true. You've worked hard to get to the point where you are probably making more money than you have before, and you could probably do that for another 10 years (or more, perhaps). What kind of crazy person would walk away from that? I did, and while I certainly do miss the gigantic paychecks, I am a happier, more stress free person as a result. This has opened up opportunities for me to be an advisor to local startups, mentor to a couple of up and coming sales people, focus on my health and fitness, and mow the lawn on a Tuesday afternoon. I have more resources than you, but then again, my expenses are much larger than yours, so it's all relative.

I would echo the recommendations to validate that your expenses are what you think they are. I used mint to take a look at every transaction for the past couple of years, and frankly, I was surprised. What I sometimes viewed as a "one time expense" that "shouldn't be counted" was replaced the next month by a similar (but different) "one time expense."

If you think the math works, and you are comfortable that your budget is reasonable (and allows for some unexpected expenditures), then make the leap. It's a wonderful experience.

 

[JoeWras]

I would echo the recommendations to validate that your expenses are what you think they are. I used mint to take a look at every transaction for the past couple of years, and frankly, I was surprised. What I sometimes viewed as a "one time expense" that "shouldn't be counted" was replaced the next month by a similar (but different) "one time expense."

Home maintenance can be insidious like this.

I have a 15 year record of all our expenses with Quicken. We've got a really good pulse on our expenses now. It is amazing how those "one time expenses" come up every year. (Roof, painting, hot water heater, driveway buckles, water leaks, and on and on.) I'm consistently spending thousands each year on the home.

My neighbor, meanwhile, doesn't. Her house is rotting away. I suspect when she passes, the house will be bulldozed. But it is her choice and her frugal way of living. Fortunately, since she won't spend money to cut trees, they hide the eyesore from the neighborhood.

 

[MBAustin]

Welcome! If "ReallyReady" is how you feel, once you've answered the questions some of our neighborhood wise posters have posed and you still feel Ready, then go for it! While I occasionally have a tinge of "what-if" about the w*rkplace, most of the time I am so busy that I don't know how I had time to w*rk. And having so much more freedom to use my time as I choose is wonderful.

Keep us posted!

 

[ReallyReady]

Yep, home repairs are something I know a lot about! I just completed a major renovation of my little family house - almost completely rebuilt with a 40 year metal roof, super energy efficient heating and cooling, pretty much new everything. While this positions me well for the future, it makes measuring actual spending over the past two years challenging - so much of my extra cash went into that project which will definitely not be a recurring expense.

Not sure I said this, but I have no debt other than my mortgage (6 years left), no car payment (never have). I put pretty much everything on a single cash reward credit card, which allows me to track the majority of my expenses.

Thanks again for all for the feedback! I think taxes are probably the biggest weakness in my planning, so thanks for highlighting that. The topic is pretty boring to me, so good to get a better grasp on that.


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[pb4uski]

....Other than my fear, are there any good reason to believe I'm not already FI? ....

Not that I can see. Even ignoring pensions (any SS?) your WR would only be 2.6%. Just make sure that is really all you need - it is on the low side but you did say you live simply.

I would think your taxes will be minimal, but you can get an idea by taking last years tax return, eliminate the earnings from work, add in your pension and incremental investment income from proceeds from the house sale in your taxable accounts, other appropriate adjustments and recalculate. Or use Taxcaster - if you're only income is $18k for pensions and say, $14k dividends from taxable account investments your tax would be about $800 assuming standard deduction.

 

[seraphim]

One thing DW and I considered, and I recommend most people think about, is the difference between living and surviving. We have about $2000 a month in mandatory expenses. Mandatory for us includes a $650 a month 0% truck payment to pull our camper - for a few more years. We have about $3900 a month in after tax after health insurance pensions. We manage to spend about $5200 a month because we love to travel, eat out and live. Yes, we have a portfolio more than sufficient to cover the extra spending. We don't have to spend that much. Are you willing to spend the rest of your life being frugal? It's merely something to think about before you pull the trigger. Figure out the budget you'd LIKE to have, and see if you have the means to afford it. And don't forget the potential 1/4 million in health care the 'experts' say most retirees will face...


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