45- Can I retire in 2024?

[AZsniper]

Hello, brand new here to the forum, I hope to get some good advice and be helpful to others as well. I am looking to retire in the next 3-9 months and would love some advice. I have watched 1000 youtube videos, listened to podcasts, read books, etc. but would like real people’s perspective.

I have been tracking all of my monthly expenses this year and spend an average of $7200 per month.
I’m 44 and my wife is 43. I am a police lieutenant and my wife works out of the house. Three daughters 1 college grad (RN) one current college (tuition scholarship) and one Junior in HS.

401k $175,000 (still contributing max) 80/20
457 $440,000 (still contributing max) 80/20 I can access this penalty free at retirement
403 $140,000 (this is a DROP - deferred retirement account – Access at 59.5)
HSA $70,000 (employer contributed 100% of this and adds $150 per month
Cash $136,000 (High interest savings)
Brokerage $115,000 (SCHD, JEPI, VTI, VOO mostly with a few small shares in single stocks like V and F)
House: Value 800,000 (170k mortgage at 3.25) $600k +/- equity
Vac. Home: Value $750,000 paid off
TOTAL planning on is about 1M, and 1.6M when I sell my house

INCOME
Pension: $70,000 per year (2% cola annually and wife gets 80% survivor benefit)
SS: we will both collect however my wife’s will be very small. Not sure the age to collect yet.

My plan is to sell our current house as we would have approximately $600k tax free to invest, and move to our paid off vacation home.
This year we have spent $7200 per month, and that includes our current house PTI of 1600 + 500 in utilities, that we will no longer spend in retirement once the house is sold.

I am totally guessing what retirement spending would be, but my basic expenses as of now, minus our current house are about $5100 per month. I feel that I could spend 9-10k per month and be ok?

Between my pension and cash my plan would be to keep my MAGI low for ACA coverage.

My biggest fears:
Leaving a good career that is stressful yet rewarding
health insurance during retirement for 20 years
Running out of money and wishing I would have just worked 1-2 more years as a high earner.

What am I missing? Thank you!

 

[latexman]

SS: we will both collect however my wife’s will be very small. Not sure the age to collect yet.

Don't forget about SS spousal benefits! Take a look at opensocialsecurity.com and see what it recommends for an optimal claiming strategy. There's lots of threads here about this. Use the search tool.

 

[AZsniper]

Don't forget about SS spousal benefits! Take a look at opensocialsecurity.com and see what it recommends for an optimal claiming strategy. There's lots of threads here about this. Use the search tool.

I have not heard of that, thank you for the reply! My wife mostly stayed home with the kids and has low income, but I will check this out!

 

[latexman]

Basically, after you claim, and when DW is FRA (67?), she can get 50% of your FRA benefit. It's worth checking into. I read, Get What's Yours. It was well worth the nominal cost.

 

[USGrant1962]

Your numbers look fine to support up to $120K/year spend. For retiring as early as age 45, many will suggest that the 4% rule be reduced to 3.5% or 3.3% (ignore the 2%ers - they want you to never retire so you can pay for their Social Security ). So 3.3% of $1.6M plus $70K is about $124K/year, and that is ignoring SS. You are not going to run out of money, especially with your base expenses at $62K - that is less than your pension! Adding in ACA insurance probably brings you right up to your $70K pension amount - very manageable with a $1.6M stash on top if it.

Some other thoughts:
What are you allowing for college cost for Junior?
Are you looking at hobby jobs or part time work?
Any big repairs coming up on your retirement house?
Did your base expenses include taxes?

But with a fairly secure $120K/year I don't think any of these are even close deal breakers.

Have you tried modeling your situation in FIRECalc or similar calculators to see a historical range of results?

 

[AZsniper]

Your numbers look fine to support up to $120K/year spend. For retiring as early as age 45, many will suggest that the 4% rule be reduced to 3.5% or 3.3% (ignore the 2%ers - they want you to never retire so you can pay for their Social Security ). So 3.3% of $1.6M plus $70K is about $124K/year, and that is ignoring SS. You are not going to run out of money, especially with your base expenses at $62K - that is less than your pension! Adding in ACA insurance probably brings you right up to your $70K pension amount - very manageable with a $1.6M stash on top if it.

Some other thoughts:
What are you allowing for college cost for Junior?
Are you looking at hobby jobs or part time work?
Any big repairs coming up on your retirement house?
Did your base expenses include taxes?

But with a fairly secure $120K/year I don't think any of these are even close deal breakers.

Have you tried modeling your situation in FIRECalc or similar calculators to see a historical range of results?

Thank you for your comments, I appreciate the insight...
Good questions about part time/hobby work. I definitely think I would have that in my future, especially considering my age and potential time ahead....

 

[tmitchell]

I retired 1.5 years ago without a clear "retire to" plan, mainly due to burn out. I just took a leap of faith. I would highly recommend spending a good amount of time thinking about what you want to do after you leave your job and discussing that with trusted people in your life. Read some good books like "Joy of Not Working" by Zelenski or "Live Your Best Retirement" by Raymond Reid. There are many others.

The money part is much less of an issue than I anticipated, except for tuning out some of the excess the frugal habits that no longer serve the program.

Other than that well done & good luck!

 

[Surewhitey]

Your numbers look fine to support up to $120K/year spend. For retiring as early as age 45, many will suggest that the 4% rule be reduced to 3.5% or 3.3% (ignore the 2%ers - they want you to never retire so you can pay for their Social Security ). So 3.3% of $1.6M plus $70K is about $124K/year, and that is ignoring SS. You are not going to run out of money, especially with your base expenses at $62K - that is less than your pension! Adding in ACA insurance probably brings you right up to your $70K pension amount - very manageable with a $1.6M stash on top if it.

Some other thoughts:
What are you allowing for college cost for Junior?
Are you looking at hobby jobs or part time work?
Any big repairs coming up on your retirement house?
Did your base expenses include taxes?

But with a fairly secure $120K/year I don't think any of these are even close deal breakers.

Have you tried modeling your situation in FIRECalc or similar calculators to see a historical range of results?

All of this & 1 more thing is your income probably will not help you with the ACA. But that's probably not the end of the world either. Lots of wiggle room in the $120k base. Have fun and I'm right behind you, just no pension

 

[aaronc879]

If I had a $70K/yr pension there is nothing that would keep me at work and I see no reason for you to stay a minute past pension eligibility.

 

[cyber888]

If you sell your house and have no mortgage, $70,000 pension + your savings should work out.
The only question is - do you hate your job at this point and ready to retire. I say 'Do it', if you can't stand working and it has already been a stressful burdensome task.

 

[DrRoy]

I did not see an estimate of your housing costs after you sell the current house.

 

[AZsniper]

I retired 1.5 years ago without a clear "retire to" plan, mainly due to burn out. I just took a leap of faith. I would highly recommend spending a good amount of time thinking about what you want to do after you leave your job and discussing that with trusted people in your life. Read some good books like "Joy of Not Working" by Zelenski or "Live Your Best Retirement" by Raymond Reid. There are many others.

The money part is much less of an issue than I anticipated, except for tuning out some of the excess the frugal habits that no longer serve the program.

Other than that well done & good luck!

Good advice, thank you. I loved "the joy of not working" and I just ordered "live your best retirement", thanks for the recommendation.

I am worried about retiring to "a bunch of hobbies" in the event that I lose purpose in my day to day. I am not opposed to working again, I really just want a long break and do some things while I am still healthy and young!

How have you best found purpose and meaning in retirement?

 

[AZsniper]

I did not see an estimate of your housing costs after you sell the current house.

After selling my current house, I would move to my cabin, which is paid for.
Annual Housing expenses are:
3500 prop tax
1200 insurance
3600 utilities (estimate)

 

[tmitchell]

Good advice, thank you. I loved "the joy of not working" and I just ordered "live your best retirement", thanks for the recommendation.

I am worried about retiring to "a bunch of hobbies" in the event that I lose purpose in my day to day. I am not opposed to working again, I really just want a long break and do some things while I am still healthy and young!

How have you best found purpose and meaning in retirement?

This is an on-going question for me. In truth it's taken about this long just to detox from a high stress career. I've scheduled my day with daily exercise, taken some classes to see what appeals to me, read lots of books, spent time with family & friends, and traveled a good deal.

Meaning & purpose have taken the shape of a deep introspection about the nature of work and why I pushed myself so hard. I've come to understand it's all about the programming I received from dad and society about how a man should show up in a consumerist world. Unravelling who I am beyond that is starting to become clearer, and I'm hopeful that I'll gain some inspiration on the other side in terms of what I might want to manifest next.

I'm also just allowing myself to be and enjoy the time I've earned for myself, and not push too hard on finding another "purpose," which in some ways another key word for "productivity." So maybe I'm in a "post-productive" phase and that's just fine for this season of life.

But I tend to suspect I'll be doing something along the lines of giving back eventually. Just not sure yet what that will be.

It's a wonderful journey and a privilege to be able to think about these things. I hope you are able to embrace it once you take the leap.

 

[pacergal]

Is your vacation cabin in the same school district as your high schooler is going to? Or would you wait until He/she graduates and heads off to college? I would not want to move my kiddo in their senior year of HS!

*Run firecalc to check your numbers.
*In the forums section of this website, there is an early retirement FAQ, with a subsection "Some important questions to answer before asking Can I retire?"--answer those questions and see where you are.
You and your DW have a potential 40+ years to plan for.

 

[AZsniper]

Is your vacation cabin in the same school district as your high schooler is going to? Or would you wait until He/she graduates and heads off to college? I would not want to move my kiddo in their senior year of HS!

*Run firecalc to check your numbers.
*In the forums section of this website, there is an early retirement FAQ, with a subsection "Some important questions to answer before asking Can I retire?"--answer those questions and see where you are.
You and your DW have a potential 40+ years to plan for.

Great question, we would wait until after she graduates to sell the house! (we are not that mean lol) the cabin is in the mountains about 2 hours away.

Thanks, I will check that FAQ section too!

 

[ncbill]

Great question, we would wait until after she graduates to sell the house! (we are not that mean lol) the cabin is in the mountains about 2 hours away.

Thanks, I will check that FAQ section too!

Go for it!

My youngest just started as a local LEO but plans to move to federal (only 20 years to full retirement) ASAP.

Hopefully a (Reserves) military pension as well sometime in his 50s.

 

[Rianne]

OP, important statement:
"Between my pension and cash my plan would be to keep my MAGI low for ACA coverage." It seems to me, this is key to your success.
If you can keep your MAGI below the required income you can get a very affordable health insurance plan. Our NW is ~$3M. Our income, ~$60K. Our premiums (DH/me), $8/month. The deductible $6000/each. But we're relatively healthy and overall, for 8 years, spent maybe $3K/year and for a few of those years, that was high. It is based on your zip code, so check into those details.

 

[1242Vintage]

Couple of thoughts on the financials of early retirement …

We have three kids (my youngest is now an RN) and university costs were significantly higher than we anticipated. Got help from our State on university costs for the youngest (she is deaf) but not on the two others. Suggest taking a hard look at higher education costs.

Other thoughts, my pension has what’s called a “purchasing power protection” clause. Meaning over time if the consumer price index continues to increase, my pension will be augmented to keep me from failing too far behind. You might want to look at the details of your pension system if there is anything like that. That provision gives you additional security that pension income won’t be eroded over time by inflation.

Lastly, If I die first, my wife will continue to get my pension but won’t get much of my social security due to the Windfall Elimination Provision (WEP). Hope that won’t impact you

 

[AZsniper]

OP, important statement:
"Between my pension and cash my plan would be to keep my MAGI low for ACA coverage." It seems to me, this is key to your success.
If you can keep your MAGI below the required income you can get a very affordable health insurance plan. Our NW is ~$3M. Our income, ~$60K. Our premiums (DH/me), $8/month. The deductible $6000/each. But we're relatively healthy and overall, for 8 years, spent maybe $3K/year and for a few of those years, that was high. It is based on your zip code, so check into those details.

Thanks for the comment on the health insurance part. This is one of my biggest stressors! Based on savings and the proceeds of my house sale, I should have a decent pile of cash to spend on top of my pension. It seems like you have a pretty good plan, I have been on the ACA site to look some up but holy cow that is overwhelming with all the different plans.

 

[AZsniper]

Couple of thoughts on the financials of early retirement …

We have three kids (my youngest is now an RN) and university costs were significantly higher than we anticipated. Got help from our State on university costs for the youngest (she is deaf) but not on the two others. Suggest taking a hard look at higher education costs.

Other thoughts, my pension has what’s called a “purchasing power protection” clause. Meaning over time if the consumer price index continues to increase, my pension will be augmented to keep me from failing too far behind. You might want to look at the details of your pension system if there is anything like that. That provision gives you additional security that pension income won’t be eroded over time by inflation.

Lastly, If I die first, my wife will continue to get my pension but won’t get much of my social security due to the Windfall Elimination Provision (WEP). Hope that won’t impact you

Yes, My pension has a 2% annual COLA and my wife will get 80% of my pension if I pass before her.

Also, I have contributed to SS during my entire career, and will not have any windfall issues, I know some LEO agencies do not fully contribute.

Best of luck to you!

 

[AZsniper]

Go for it!

My youngest just started as a local LEO but plans to move to federal (only 20 years to full retirement) ASAP.

Hopefully a (Reserves) military pension as well sometime in his 50s.

Thank you!

Best of luck to your son and his career! It was great for me!

 

[FLSUnFIRE]

Your numbers look fine to support up to $120K/year spend. For retiring as early as age 45, many will suggest that the 4% rule be reduced to 3.5% or 3.3% (ignore the 2%ers - they want you to never retire so you can pay for their Social Security ).

Us 2%ers are people too! I planned for 3% but pretty conservative/lean early on so spending has been closer to 2% these first two years and I'm ok with that given the market and inflation. I do expect my spending to increase a bit over the next few years.



Agree that 2% for the OP would be very conservative with the LEO pension. OP looks to be in a good position to make the leap now.

 

[AZsniper]

UPDATE:
I still feel that I am on track and am considering 2024 my last full year of work. I anticipate retiring sometime between Jan-April of 2025. My youngest will graduate HS in May of 2025.

I am also treating 2024 as a pre-retirement year and already booked several trips. 7 day cruise, NYC, 2 weeks in Iceland, John Muir Trail backpacking trip, and lots of snowboarding trips to our cabin.

Thanks for the comments and suggestions. One thing I learned from comments on this post was the spousal social security benefit. My wife was a stay at home mom most of the time and at 67 she will be able to receive 50% of my benefit! I wasn't even factoring that in my initial plan! Still lots more to learn.