I want to walk, DH worried!

[DustyMom]

Hello,

Another long-time lurker, first-time poster. I have been reading these forums for years as we prepare for early retirement and I trust you all to offer sound and knowledgeable advice.

I am 54, DH is 55.

Original plans were for me to retire in 2017 at 55 and DH to retire in 2018 at 57. However, I am increasingly stressed and aggravated at work after a re-org and want to leave NOW. Leaving now would mean leaving approximately $10,000 a year on the table in my DB pension, starting sometime in the future. Every retirement calculator I have tried, plus 2 FA’s over the last few years, have given enthusiastic thumbs up to our plans, but I am now throwing a monkey wrench into the plans by wanting to walk away 8-9 months early and giving up that extra $10,000. I feel like I am only working now in order to have more money to give to charity
or an ungrateful relative somewhere down the road and it’s not worth it.

DH is uncomfortable that I am changing the plan on him, but he is open to hearing your comments.

Details:

We have 4 DB pensions between us:
· Approximately $8k and $43k (COLA’d) and beginning at DH retirement
· About $26k beginning at my retirement, if I so choose, or increasing about 6% a year if I postpone (no COLA) – this is the one that could be worth $10k more
· Another of $11k beginning at my age 65 (no COLA)
· SS probably at age 70 for both us – I will guess, very conservatively,
about $50k


I believe these 6 income streams would be more than enough to pay for our needs from age 70+.

In addition, we have about $2.5M in taxable and tax-deferred investments and a $500k paid off house that we will sell to move somewhere lower cost.

We are only anticipating a lifestyle requiring about $100k after-tax. I
would expect that to drop as we age. We’ve been living below our means for years and this is more than we spend now. Health insurance will continue at current employee rate through DH. We have no debt, no
children, no desire to leave a legacy.


Have I missed anything important? Can my DH relax or must I put in another miserable 9 months in order to get that measly declining-in-real-value extra $10k per year? No pressure.

Thanks for all of the excellent information I've picked up by reading these forums over the years.

 

[Katiek]

Welcome. You certainly seem well positioned to leave now if you want. The only thing that gives me any pause is your reference to "we are anticipating a lifestyle requiring about 100K after tax". Have you done some real expense tracking to help ensure that number is solid instead of an estimate. Presumably you have during your work with the FA's , but I'd just confirm that's a solid number based on actual expenses and reasonable planned adjustments.

 

[DustyMom]

Thank you for a quick response, Katiek. I have done extensive expense tracking and know what we spend today and what we spend it on. Our retirement lifestyle will be quite different from our life today, but we've researched the heck out of that too and the $100k is probably on the high side, but I'd rather put the extra cushion in there.

 

[Jack_Pine]

If I understand correctly you are only leaving job a year ahead of plan. With those DB income streams plus 2.5 mil in investments I think any planning tool will say you are good to go. Even with 100k targeted income.

 

[travelover]

I'd say forget what you are leaving on the table. What matters is whether you have enough. Many of us have been pleasantly surprised at how little we actually spend in retirement once we quit bribing ourselves to endure the stress.

 

[Aerides]

Have you checked on SS to get that $50k? I've looked recently for DH and I and it's well short of that, but ymmv. You can look into it very easily and eliminate the guess so I'd do that.

The only other thing would be to look at your actual expenses the last 2-3 years and determine if that 100k is realistic, and if so you look great.

10k reduced pension though, if not cola'd, won't mean that big of a difference after the first 8-10 years.

 

[Fedup]

I suffered the last year because I didn't want to throw away $5k pension with COLA. I don't know if it's wise or not but I finally managed to retire. How about waiting for them to fire you? That's what I told people at work who aggravated me, my boss. Guess what, they didn't and I retired with my pension, however small, and I won't receive it until I'm 62. I retired at 55.


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[pb4uski]

I guess I am confused by the pension in question. You say it is $26k if you leave now and grows about 6% a year and you are only leaving a year early... so where does the $10k come from? Does that mean that if you wait a year that it is $36k rather than $26k? Also, if you leave now but don't start collecting until 2017 when you planned, what would you receive per year?

That said, you are in such good shape that $10k a year isn't going to make a difference other than to your beneficiaries and charities.

Edited to add: joined July 2012 and today are your first posts..... when you said long-time lurker you weren't kidding! Welcome.

 

[jim584672]

With your numbers I don't see the problem.

Don't forget the Rule of 55 for 401ks. Check your 401K to see if it applies to you.

Spending decreases when most people retire, something to consider.

 

[Slow But Steady]

The numbers seem ok. But if it's not ok with your DH, I would tough it out to avoid any hard feelings.

 

[gauss]

Have you checked on SS to get that $50k? I've looked recently for DH and I and it's well short of that, but ymmv. You can look into it very easily and eliminate the guess so I'd do that.

Did you model taking at age 70 when you looked up your case as the OP mentioned?

I know when I have checked the combined result for DW and myself (both engineers), the combined amount at age 70 was over $60k/year total.

 

[sheehs1]

Looks like you guys are in great shape but the devil is in the details. As others said, double check your SS and the rule of 55 on the 401K's if that is where your deferred money is. You don't mention of that 2.5 million what percentage is in taxable accounts versus deferred accounts you presumably will owe some tax on.

What happens to the DB pensions if something happens to either one of you? Do they go away and if so, have you run your numbers without each others pensions to see the worst case scenario? Granted 3% of 2.5 million is $75,000 . At age 54 that takes you to 84 (30 yrs) without the pensions. Your pension is $26K (or$36K), plus 11K at age 65, your social security will be less if forced to draw earlier than 70 and you will have the remainder of the 2.5 million. Same thought process for DH. If you are both comfortable with the numbers running them individually as well then it is really your choice!

 

[EastWest Gal]

You have more than enough, especially with the pensions. I think you've been in the savings mindset so long it's hard for DH to make the switch.

Play around with Firecalc to see how much you can spend before dropping to <100% success rate. I'll bet it's over $125-150K/year. My numbers are similar to yours only no pensions. I know Firecalc says I can spend $125K/year before there are any fails. My target budget is $85K/yr so if I go over I won't panic.

Every retirement calculator said I was good for a year before I pulled the plug.

You can do it!


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[DustyMom]

You guys are the best!

Maybe between all your responses and my Powerpoint presentation my husband can get comfortable. Sheeesh! I really need to leave the corporate world.

Answers to some questions posed:

The SS amounts depend on whether we are talking today's dollars or future dollars. I tried to give approximate amounts as of age 70. FA came up with something higher, as did I when going through the benefit formula. I generally use something much lower in my retirement spreadsheet (extra cushion, you know!) Mine will probably be close to maximum, DH, maybe 80% of that.

The $26k pension would be $36k if I stayed till age 55 next year. Either way it will increase the longer I postpone.

Yes, I really meant it when I said long-time lurker! I don't think I realized how long that had been until you pointed it out, pb4uski!

Split of investments is approximately $1M taxable, $1.5M tax-deferred.

All except the $11k pension will be 50% survivor.

You are right about Firecalc, EastWest Gal. I had to keep upping the spending to get < 100% success. I think at about $150k it dropped to 89.5%.

And finally, there will be no hard-feelings from the DH if I retire earlier than planned. He's happy if it will work!

Thanks to all!

 

[Jackson D]

I know how you feel. Once you realize the numbers work it becomes harder and harder to put up with the stuff you hate at work. That being said, $10,000 per year extra to spend if you hang in there for 9 months would be hard for me to walk away from. Can you get part of it if you stay a couple of months or is it all or nothing? How much vacation time do you have or could you take a bit of unpaid time off that would not count against you? Knowing you can walk away if you want to is there any way to fend off some of the more unpleasant things you have to deal with or even go part time? Think of a couple of things you could do with the extra $10,000 and offer yourself a nice reward. You have worked this long and if it isn't just killing you to work do you want to leave that much to the company rather than get it yourself? It would cost around $175,000 to buy a $10,000 per year annuity so that is how much you are leaving on the table. If it was me I would try to tough it out and see if there is anything I could do to make work more tolerable. People who retire early typically leave something on the table and each of us has to look at our own situation and decide when to walk. Congratulations on getting to the point where you have options!

 

[pb4uski]

..... The $26k pension would be $36k if I stayed till age 55 next year. ....

I hate to complicate your decision but just for information that extra $10k bump in your 50% lifetime fixed pension for one additional year of work is probably worth ~$180k given one year deferred immediate annuity payout rates of ~5.5%. While that is a nice bump to your pay for another year's work, at some point enough is enough.

 

[gauss]

I hate to complicate your decision but just for information that extra $10k bump in your 50% lifetime fixed pension for one additional year of work is probably worth ~$180k given one year deferred immediate annuity payout rates of ~5.5%. While that is a nice bump to your pay for another year's work, at some point enough is enough.

+1 And don't forget the additional year of base salary too.

On the other hand, if her health is being threatened at all by another year at the job, then no amount of extra $ is probably worth it -- especially if they have enough. Hopefully OP and DH will come to an agreement on this where nobody resents anyone.

I was fortunate to have pension accruals stop before I ER'd so the decision was suddenly very clear/easy. A supportive DW was the other piece that fell together too.

I haven't been happier since I ER'd. I hope it works out for the two of you too.

-gauss

 

[48Fire]

Definitely do it in my opinion! 8 - 9 months is a long time in the corporate world if you are already stressed. I gave up a lot to retire at 52, but I received immediate benefits, including health, happiness, and freedom. Priceless

 

[Meadbh]

I would probably try to stick it out, because $10,000 a year for life is a lot of money to leave on the table. Why not ask DH how he can help make the next 8-9 months tolerable for you?

 

[travelover]

Screw the extra $10K. You can walk yourself to your grave thinking of all of the "extras" you can have if you just work a little longer, take a little more stress, delay retirement a little longer. The money you leave on the table is tangible, while what you gain (an extra year of retired life) is not. It is a lot easier to add healthy retirement years to the front end than to the back end. How do you put a dollar amount on them?

I'm living well entirely on my pension and don't know what I'll do with the money once I apply for SS or have to take out RMDs. Yet, I've never regretted retiring at 54.

 

[ivinsfan]

So now that you find that you have "enough" to quit working, try a little different approach.

That 10K in pension money is tied to the many years of hard work you have done. Try a spreadsheet that includes all the holidays, all your vacation days, any sick leave you might have access to. What's your companies position on unpaid time off? Do you have any lingering health issues that might need attention and keep you away from work? Now you know how many days you need to work to collect that money.

Perhaps you can plan a long vacation saying you are burnt out and considering retiring..you might either get a package or people might back off a little so you have some breathing room.

I see you have been the higher earner in the family, perhaps you have one of those jobs that is on your mind 24/7, in that case just do what you need to do for yourself.

People might tell you to just turn on the "who cares" attitude for 9 months, but some people just aren't built to do that.

 

[bizlady]

I assume taxes and RMD are calculated in your plans. That said, it seems you are fine, so go for it- and ask your self this: If one of you found out you were terminally ill, would you still have wanted to work for the next year? Have a great retirement!

 

[NanoSour]

Based on your inputs, I don't believe this is a financial decision. Although I see the lure of using your finances as a crux for what is basically an emotional life event. Bottom line is you are surely financially positioned to retire. Question is, are you willing to sell your time and sanity for another 8-9 months just to pad your nest.

For what it's worth, my advice is to give your DH a peck on the check and tell him you're pulling the plug. Then take him out for a nice dinner to celebrate.

Best of Luck and welcome to the active poster side of the house.

 

[Fedup]

I negotiated to work 1 day less for 20% less pay. That's how I managed to survive. Sure $5k is peanuts to me, but I've put up with them 4 years and I didn't want to let them win.


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[MichaelB]

I believe these 6 income streams would be more than enough to pay for our needs from age 70+.

In addition, we have about $2.5M in taxable and tax-deferred investments and a $500k paid off house that we will sell to move somewhere lower cost.

The SS amounts depend on whether we are talking today's dollars or future dollars. I tried to give approximate amounts as of age 70. FA came up with something higher, as did I when going through the benefit formula. I generally use something much lower in my retirement spreadsheet (extra cushion, you know!) Mine will probably be close to maximum, DH, maybe 80% of that.

Welcome to the forum, DustyMom.

Reading through your posts it is not clear if you are using actual current numbers, a projection of future values, or a combination of both. I would suggest you stick to actual current values for income and expenses, and let the online tools, such as FIRECalc, project into the future. Comparing your income stream to your expenses is not something you should have to guess at, a tool like FIRECalc should give you a pretty precise view.

Have you run the numbers through FIRECalc just looking at how the plan holds up with only one of you?