I'm eligible to retire, but I have bills to pay...

[JennieB]

Hi, All,

I'm so glad I found this site! I am eligible to retire December 2016 with a full pension from a teachers retirement system (60% of my current pay). However, I will only be 51, and I still have a lot of student loans to pay off for myself and my oldest son. I am married, have three sons 24, 20, and 9. The 20 yr old just started college and is still living at home, along with my 9 year old son. I would like to try to get some things paid off, but we seem to be stretched so thin, that it is hard to figure out how to begin. My husband will continue to work for another 10 years or so.

I'm thinking I will probably retire, and get another full time job (although, I sure wish I didn't have to) in order to pay the bills down.

Any advice on where to begin now so that is lightens the load in Dec. 2016?

Thanks, Jenn

 

[robertf57]

Jennie,

It is hard to give any meaningful advice without a clearer understanding of your situation. DOes your pension value continue to grow if you stay in your current position? Can you find a job that pays as well as your current position if you do decide to quit?

Given your statements, you are not currently financially independent and thus you really can't retire; although, you may wish to change jobs while collecting your teacher's retirement. I would be looking at my expenses carefully. I would not risk my golden years for my children's educational debt. You need to consider your financial security first.

Perhaps with more information better advice will be forthcoming.

 

[Meadbh]

Welcome to the forum, Jenn.

Have you calculated your annual expenses in detail? If not, that would be the first step in identifying potential savings now, and in projecting future expenses. What about college funding for your younger children, for example?

Have you calculated your net worth (all assets minus all liabilities) and your investable assets (omitting your home)? The general rule of thumb is that it is probably safe to withdraw 3-4% of your investable assets per year in retirement.

You say you plan to retire when you are eligible and get another full time job. Be aware that finding a job that pays as well as the one you gave now is likely to be difficult. Why not just work a little longer at your current job, unless you hate it?

 

[JennieB]

Thanks, Robert,

At 30 years of service (Dec. '16) I would draw 60% of my current salary. Each year after that would add 2% more maxing out at 70% with 40 years of service. My work situation is not terrible, but I don't enjoy it. The question of could I get another job making what I currently make is a good question. I believe I could with a little time.

 

[Katiek]

I certainly wouldn't quit my current job until I had a better understanding of exactly what my financial needs are. Having a pension is great and gives you a big step up on the road to FIRE, but as others have said, what are your expenses. What will your ongoing expenses be once the 20 year old graduates? How much do you want to contribute to school for the youngest child? All these factors determine how much you really need.

In the meantime, I'd suggest staying with your current job while you explore your options. See what other jobs could you get, and do they (with your pension) exceed your current earnings? Even if there are jobs for which you're qualified, competition for jobs is tough, so I wouldn't retire until I knew I had another job (assuming I still needed money to pay off existing bills).

 

[martyb]

My advice would be to let the son pay his own student loans. At 20, he's an adult.

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[JennieB]

Thanks, All! You have given me good advice.

 

[ivinsfan]

I'm curious how you can be 51 and still have student loans after teaching for 30 years.
Any other job you take at 51+ is not going to be accruing any kind of pension benefit or probably give you the summer off.

What's the plan for college for the 9 year old?

Do you have any money left over after expenses at this point in time? I can see that getting 60% of your salary and then taking a job to try to boost household income might be appealing, but perhaps getting a handle on your expenses and such might be the way to go before you pull the trigger on retirement. If you don't clarify the spending, your "extra" money might not fix any ongoing issues.

 

[LRDave]

Jenn, are you retiring form the TRSGA?

 

[pb4uski]

Jennie, you may want to run your situation though Quicken Lifetime Planner (included in Quicken Deluxe and higher versions) or Firecalc and see what the results are.

I hate to say it, but it doesn't seem like you are ready or will be ready in a few years and that extra 2% a year that your pension grows is significant, not only because of the 2% but also because the total will be based on higher pay assuming that your get raises periodically. You can do some what ifs with QLP or Firecalc to see the impact of working longer and the higher pension.

I agree with Marty that your sons can take some responsibility for the cost of their education and you can help out as you can. How you split it up is a personal decision.

 

[marko]

I'm curious how you can be 51 and still have student loans after teaching for 30 years.

That was my first concern. Doesn't sound like there's strong financial proficiency in place at this time.

You might be confusing a 60% pension with financial independence; two very different things!

I'd spend a bit more time on this and other retirement/financial forums.

Learn a lot more about debt management, LBYM and figure out how to get that 9 year old through college. Get the older kids to pay their way on student loans.

Before jumping to another job, I'd figure out what problem you're trying to solve; going to another job that could pay less and deliver perhaps the same level of dissatisfaction would be a losing formula.

 

[Lakewood90712]

With the little info you have shared, my opinion is: no early retirement for you.

 

[Teacher Terry]

Tough situation. I would be careful before making a leap.

 

[latexman]

For the 20 and 9 year old, I'd recommend living at home and commuting the first 2 years to a Community College. Then, transfer to a State College for the final 2 years. After 4 years total though, it's their dime!

 

[Standard Staples]

The way I see it, you're in one of two spots:

1) Your husband's income + 60% of your current income is enough to get by, but you haven't tracked expenses closely enough to know for sure. This is the better of the two scenarios, and once you gained a clearer understanding, you could pull the trigger on retirement. Of course, you'll also need to consider what kind of pension your husband is in line for, if anything.

2) Your husband's income + 60% of your income isn't enough to get by. This one simple fact is all you would need to know to understand that it would not be wise to retire, yet.

Well before December 2016, you and your husband need to get a firm grip on your expenses and most likely trim them down. That's going to be the key. Think about it this way: let's assume your income is currently half the household income. You're considering cutting your half by 40%, which is 20% of the overall income. Aim to find 20%+ in your budget to trim. That'd put you on the fast track.

 

[samclem]

Jennie,
As you'll appreciate, there's not enough info in your post to do much analysis. Some thoughts:
-- A general rule of thumb is that it takes about $25 in investments to produce $1 of income per year for a 30-40 year retirement. So, for each $1000 you scrape together and invest, you can spend an additional $3.30 per month in retirement. From this you can see that cutting your expenses in retirement pays big dividends. Every $100 you can reduce your monthly spending in retirement reduces your required nest egg by $30,000. So, look for places where you can cut and still maintain a lifestyle you'll enjoy.
-- Your kids' college costs: Let them borrow money to pay them (at least as far as feasible under the crazy FAFSA system). Some rationale:
1) There will be plenty of people wanting to loan them money for college. Nobody is going to loan you money for your retirement.
2) They are (hopefully) going to get an education that allows them to earn more money. Thus, they are investing in themselves, and will pay off the investment using the increased earnings. Just as most of us borrow money so we can buy and enjoy a house while we are paying it off, they will borrow for their education and enjoy the fruits of that education while they pay it off.
3) Sounds like you borrowed for your own education, and are paying it off. Is it reasonable for you to pay for your education AND theirs?
4) You can let them know that you're doing your part by assuring your finances are in order so that you don't become a burden on them. That's a better gift from you than some money for college.

 

[Meadbh]

Jenn, after reading the whole thread so far, I think that while you may be eligible to retire in December 2016, you are not ready. Use that time to really get a handle on your finances. You have received many good suggestions. Implementing them is your job over the next year or so. Then you will know whether you are ready.

 

[daylatedollarshort]

If you are having trouble with paying off the student loans you have now I would be careful not to add in any more debt. If you have schools within commute range look at community college degrees or 2 years of community college followed by transferring to a public school for your two youngest children, in degrees where they can be financially self supporting upon graduation. Look at the financial aid programs in detail if you have not already. Many types of assets and income are exempt from consideration.

As others have suggested I would look at reducing other expenses. Every thousand a year off expenses means needing $30K less in funding over a 30 year retirement.

 

[ivinsfan]

I think is OP was saying she would retire from teaching, Take 60% of income in retirement pay to pay down bills and then get another job to end up with more income in the family. This plan seems to have a lot of moving parts that would have to work out just right and without spending controls might only be a stop-gap plan.

 

[Bamaman]

Jennie: There's been a lot of good dialogue here. As you can tell, complete retirement is not in the cards for you right now. One option would be for you to begin looking for a full time job Spring, 2016--so you could start work when school's out. Maybe over the Summer, you would know if the new career would work out. If not, return to teaching.

You live in a desirable place, and I would think most jobs are in Augusta--the next county over. But I don't know how many new jobs there are for educated people in Augusta--outside of the university. Good luck to you, however.

 

[heeyy_joe]

Become a student loan advisor for your local community college.

 

[Golden sunsets]

Jenny; how much school debt of your own do you have to pay off? I would prioritize that debt to be paid off as quickly as possible. And do you have any other debt aside from your son's school loans? I ask this because if you could stick it out the 5 more years it would take to max out your teachers pension, and if you can pay off your debt other than your son's loans during those 5 years then the reduced income at 70% might be offset by the elimination of debt payments and you would be free to retire permanently. I suspect your problem is a debt problem, not an income problem.

 

[ziggy29]

I think is OP was saying she would retire from teaching, Take 60% of income in retirement pay to pay down bills and then get another job to end up with more income in the family. This plan seems to have a lot of moving parts that would have to work out just right and without spending controls might only be a stop-gap plan.

Agreed. Retiring entirely might not be feasible yet. But if OP wants to keep working at something else for a while, perhaps burned out on teaching, then "double dipping" (collecting a pension while working a different job) very well might be. That assumes, of course, an appropriate job that pays well enough to make it work (and doesn't involve too much stress, drama, or dread about Sunday evenings) is available.

 

[EastWest Gal]

Have you considered becoming a tutor, or tutoring on the side? A certified teacher can charge at least $25/hr and up to $75/hr depending on where you live, grade level, and area of expertise. Of course it won't be a full time job, nor will it pay the same as your work. But add that to your pension and you might be more comfortable financially. And you won't be working full time, which is what you want anyway.


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[Teacher Terry]

If you have a master's degree then you can teach at the college level. Many colleges hire p.t. instructors.