Are there any early retirees with small pension???

[huutrinon]

Hi,
Been reading this forum for a while: enjoyed, learned a lot, and also confused. I felt like I came to the wrong place -- The Millionaire club. So, how can I take ER with a small pension?

Will be 55 in five months. Decided that I have enough in the IT field: too much stress from deadlines, week-ends, on-calls all the time,...

Since I will have a choice to get my pension when I am 55, I am planning to retire in November with the following financial situations:

1. Will collect about 2000/month (before taxes) from my pension then it will reduce to 500 when SSN kicks in at 62.
2. About 900/mo interests from CDs (200K+)
3. 100K in 401K. Plan to draw $500/month when 59 1/2
4. Wife still works for five more years to handle health insurance then may join when she is 60 which will qualify for retirement pension from state ($1500/mo may be with some benefits)
5. No debts. No mortgage.
6. Plan to take early SSN at 62 (both of us)


So can i make it? Any early retirees out there have been managed with small pension? Can you give me some advices?

Thanks!!!

 

[Cattusbabe]

Does your income in ER cover your living expenses? That is the question.

 

[megacorp-firee]

Welcome huutrinon.

While some of us have been fortunate enough to have high paying jobs and stoked a lot of it away, there are many on the site that have more modest means. After lurking here for years and finally coming out of the closet, I have learned a lot from these guys.
... here is my 2 cents worth.

To FIRE, you need to figure out
1) what you want to do when you are no longer working full time
i.e. part time work (not quite FIREing in my mind), new career, hobbies, traveling, give back type of volunteer work, ...etc.
2) what that will cost
3) inventory your assets and income and see if you can support FIRE

It's not really having a million dollars, ... it's having enough money to support the life style that you want to live.

You have to do the homework and math to see if you are comfortable with FIREing.

 

[REWahoo]

huutrinon, welcome to the forum.

As others have mentioned, a key part of the FIRE equation is what your annual expenses in retirement will be. Neither you nor anyone else on the forum can answer your "Can I make it?" question until you have a handle on your annual costs once you stop working.

If you haven't already done so, start tracking your monthly expenses. Once you've done that for a few months you can extrapolate to get a ballpark annual number, then estimate how retirement will change your spending habits (no more commuting to work, more leisure travel, etc.).

Then use FIREcalc (link at the bottom of my post) to see if your expected retirement income is enough to cover your expenses.

Yeah, it's a pain to do, but it's the only way to answer your question.

 

[HFWR]

Does $0 count as small?

First, what are your expenses?

Next, I'd move all but about 2 years expenses out of CDs, and into a broad market mutual fund or ETF.

$6k/yr is probably too much to expect from your 401k. "Conventional" wisdom says to take about 4% each year, which would be $4k.

Try entering your numbers into FIREcalc (link at bottom of page).

 

[FIRE'd@51]

A quick "rule of thumb", assuming COLA'd pensions, is

Pensions + SS + (4% of portfolio) is at least equal to your projected expenses.

 

[dumpster56]

Pension ER works. Ours is about 2500 cola after taxes a month at 51YO. I have medical bennies and dental bennies and prescription bennies with that pension. A small mortgage, 300 a month no other debts. Wife will start a small 300 dollar a month pension in a year. So I have been substitute teaching and coaching a high school track team down here in north carolina, sold the big house in new jersey. Make an extra 16K a year really doing nothing but reading at the sub jobs and doing my running workouts with the track team.

I am finding that living expenses are not that high. I am looking at my fixed costs housing, taxes insurance utilities gasoline maintence are about 1800 a month.

My whole situation was to get out of the high stress area of the northeast, the high mortgage, the rat race the hamster wheel. I knew I needed another 1000 a month to make it work. A part time silly gig makes it work . Savings we have are in the 200K range so not real high.

We do have fantastic home equity around 400K. I can sleep at night.

 

[cute fuzzy bunny]

Yes! According to the recent Fidelity/HP fiasco of losing pension data, I discovered that I have a pension from HP via Compaq via Digital Equipment Corp, where I worked for 5 years back in the 70's and 80's...that will amount to about $50 a month starting about 10 years from now!

And TWO free years of credit monitoring!

That little pension should really put me over the top!

 

[huutrinon]

Thanks everyone for a warm welcome and good advice!!! Nice feeling to know that YES we have some early retirees who can live on small pension (newguy888). I came to this country 32 years ago with a tooth brush and a Navy uniform, so I believe that I can live on what God has given me for those years as long as I can live a simple life and make my time is worth for myself or people around me.
Even I do not have million dollars stacked away, but I did feel fortunate than my co-workers, my friends, that I have decided to choose my life over my money.
Thanks again!!! Great forum!!!

 

[bdk]

Hi Hu*u Tri' Non - like you I came to this country with just the clothes on my back, but a little bit later (1981). I think folks like us do know how to live simply!

Have you been tracking your monthly expenses? That is a key piece of budgeting info. What about health insurance after your wife retires? Medicare doesn't kick in until you turn 65.

 

[Khan]

$221.00
$73.24
$2170/month after taxes and medical.

Spent just under $1500 in May.

 

[huutrinon]

Hi BDK and Khan,
Thanks you guys. Yes, I've been tracking my monthly expenses. Since I have no mortgage, no debt, the average monthly expense is around $1700. Still have plenty to save for vacation and new car (Toyota Corola instead of BMW). We may have the full benefit which may include the health insurance from my wife retirement, but if not, i guess we can afford to buy one with high deduction.

I guess that I and BDK may come from same country since you know how to break my userid. I know if we go back to my country then we can live comfortable even with that monthly income, but can not leave here. Too many strings attached now (nephews, nieces, brothers, sisters, mom) and also America is my home now and I owe her my life. What I am having now -- education, good life -- is given to me from her -- God bless America!!!.
I also found an old thread which asked about the same thing: http://www.early-retirement.org/forums/f28/retire-on-3k-per-month-thoughts-15451.html

If we can live a simple life and make it worth it for us and people around us then even million dollar can not compare to it. Thanks guys!!!

 

[bdk]

HuuTriNon - indeed we're from the same country. There are a few more of us on this board, such as "Sam" and "Van". BTW, Van has gone back for good and seems to like it there very much.

You may be interested by this discussion we had a few months ago:
Who is thinking of retiring in another country? - Page 8 - Early Retirement Forums

 

[txdakini]

You are a millionaire (almost!). Your pension is worth about $600,000 (25* 24,000). Add that to what you've saved, you get $900,000+. and when your wife joins you in RE, her pension adds another $450,000. That's a total of 1.3MM plus. People on the board have every conceivable combination of money to fund their retirements, and every size. Some only have savings, some only have pensions. Some work part-time, some don't. Some live on $25,000 a year, some on 10 times that. It always boils down to what works for you. Everyone has already given you good advice about tracking your expenses, looking at health care costs (huge cost!), and running FIRECALC.

Enjoy your retirement.

 

[huutrinon]

Thanks txdakini, but actually my pension is not $600,000 (25 * 24000). It's only 7 yrs * 24,000 then only $6000 a year when i reach 62. That is the option i will take so i will have enough money to live on starting from 55 to 62, then at 62, the SSN will kick in + 401K )
Even that, i still feel like a million buck anyway.

Just want to see if people actual take early retirement even they only have small pension or just small budget to get by -- it does so i feel a lot better.

Thanks again for taking the time to reply!

 

[theoldwizard]

...
2. About 900/mo interests from CDs (200K+)
3. 100K in 401K. Plan to draw $500/month when 59 1/2
4. Wife still works for five more years to handle health insurance then may join when she is 60 which will qualify for retirement pension from state ($1500/mo may be with some benefits)
...

IMHO, you are being too conservative with your investments, especially since your wife is planning on working for another 5 years (BTW, I am in almost exactly the same situation as you !)

You should set a goal of between 7-10% ROI at least until your wife retirees. To get this I would suggest no more than 20-40% in fixed income (you have 66%). Look into sector funds, especially gas and oil, commercial real estate and international.

Your "ace-in-the-hole" is your wife and he job ! You need to be 100% certain she is on-board with your early retirement.

 

[Sam]

Hi,
Been reading this forum for a while: enjoyed, learned a lot, and also confused. I felt like I came to the wrong place -- The Millionaire club. So, how can I take ER with a small pension?

Will be 55 in five months. Decided that I have enough in the IT field: too much stress from deadlines, week-ends, on-calls all the time,...

Since I will have a choice to get my pension when I am 55, I am planning to retire in November with the following financial situations:

1. Will collect about 2000/month (before taxes) from my pension then it will reduce to 500 when SSN kicks in at 62.
2. About 900/mo interests from CDs (200K+)
3. 100K in 401K. Plan to draw $500/month when 59 1/2
4. Wife still works for five more years to handle health insurance then may join when she is 60 which will qualify for retirement pension from state ($1500/mo may be with some benefits)
5. No debts. No mortgage.
6. Plan to take early SSN at 62 (both of us)


So can i make it? Any early retirees out there have been managed with small pension? Can you give me some advices?

Thanks!!!

Welcome, HuuTriNon. I can actually understand your screenname!

Sounds like you are in a good financial situation, but only you (and your wife) know how much your expenses are. You're right, there are a lot of millionaires here, but also a lot of non-millionaires. You'll fit right in.

Edit to add: I see that bdk has already introduced Van and myself to you. Enuff2Eat is another one. We have a little email group and you're more than welcome to join. PM anyone of us if you'd like to. Warning: You will become the most "senior" member though ;-)