Planning for 2029

[Wish2RE]

Ive been reading all the great wealth of info on here for a long time but decided to post now as I recently changed my retirement plan because of recent health issues. Let me know what you think.

I’m a federal worker with 25 years of service. I am eligible for a immediate retirement at 57 years old in 2031 but don’t want to work that long. Our 401k (TSP) has the 55-rule where you can make penalty free withdrawals if you retire in the year you turn 55 ( l learned that info here!) So my plan is to retire in January 2029, the year I turn 55, and live off of savings until I am allowed to get my retirement pension in Sept 2031 when I turn 57.

I currently live in a HCOL area and my bills are about $70K a year. I’ll be moving to a LCOL area in the summer of 2030 after my youngest child graduates from high school. So I would need to pay the following living expenses until my retirement pay starts in Sept 2031:

$70K - 2029 bills
$40K - 2030 Hcol Bills
$20K - 2030 Lcol Bills
$15K - 2029-2030 travel
$40K - 2031 bills
$25K- Reno HCOL home
——
$210K


-My retirement pension is projected to be about $48000 yr based on 34 yrs of service, is COLA’d and is enough to pay my bills on the LCOL area (under $35K without travel).
-Hubby will also be retired federal and will have the FEHB medical retirement benefit. Does anyone know if this will be passed to me if he were to die? He is also retired military and will have tricare healthcare.
-I plan on taking Social Security at 62. This will be my travel money.
-We will be renting our home in the HCOL area which will be over $1000 more than its mortgage payment. That mortgage will have about $160K left and the house is now worth $725K. We project our new mortgage to be under $2000 in the LCOL area and we’ll use the $1000 extra from first house to pay for half of it. The mortgage on the first home will be paid off in about 10 years after I retire then it will be positive cash flow even after paying for the second home.
-My savings should be about $750K in my TSP and $250K in my regular savings by 2029.
-Husband will have about $24000 in military and federal pensions and about the same in Social security.
-I will be paying for my youngest kids college from a 529 and my 401K.

Some may say that $210K is a lot of money to quit just 2 years and 9 months early. However, my job is stressful and I don’t have much time for taking care of my health and I have recently had Health issues. I would rather have my time and health.

So what do you think? Is it doable?

 

[WyomingLife]

Sorry for your health situation; your motivation to prioritize your life is noble and sound.

It is also impressive that you have been here so long. You undoubtedly have educated yourself and considered the options. It is also impressive that you have such a specific plan for events that are still a decade away.

From the 10,000 foot level, if everything plays out per your plan, your pension alone should sustain you by the time you reached 57, with more than enough savings to get you from age 55 to 57.

My only other observations are:

1. I found your financial presentation to be somewhat confusing. Income isn’t mentioned. It is unclear if the numbers are yours alone, or also include DH’s. I couldn’t tell how many children you have. Your costs are not itemized. How much are you currently saving? And so on.

2. Assuming $70K in current expenses, the 4% Rule would suggest you need $1.75M by the time you exited the labor force (this is conservative, of course, as it does not include your pension, SS, etc.).

3. Your plan is based on a lot of assumptions about what may happen over the next decade, and what you will be able to do at the end of that time (e.g., buy a LCOL house for X amount). The best financial move we ever made was to cash out of a HCOL existence to a LCOL one, so I like that aspect of your plan a lot. Estimating property values that far down the road is pretty much guessing, however. You also appear comfortable carrying a mortgage into retirement. You also seem to have at least one non-trivial unknown: coverage by DH’s HC (and I don’t know the answer to that). All plans are based on assumptions and forecasts, so none of this is criticism.

Bottom line: You are a thoughtful person obviously, and I am sorry for your health status. You are a planner as well, and if your plan plays out, you should be fine. I found your presentation to be somewhat unclear, however.

Best wishes to you.

 

[clobber]

I'm not sure the intricacies with tricare and FEHB. Just don't forget that if you are going to get FEHB from your husband, then he will have to take a reduced pension (either 10% or 5% reduction) so that you can get FEHB. Yes - you would remain eligible for FEHB should he pass.

Also don't forget that when you leave at 55, you are technically doing a FERS deferred retirement. One impact is that you will not receive the FERS supplement at all.Based on numbers you have providing, I'm guessing this would be on the order of $1500/mo for you (from age 57 to 62).

 

[dirtbiker]

Ive been reading all the great wealth of info on here for a long time but decided to post now as I recently changed my retirement plan because of recent health issues. Let me know what you think.

I’m a federal worker with 25 years of service. I am eligible for a immediate retirement at 57 years old in 2031 but don’t want to work that long. Our 401k (TSP) has the 55-rule where you can make penalty free withdrawals if you retire in the year you turn 55 ( l learned that info here!) So my plan is to retire in January 2029, the year I turn 55, and live off of savings until I am allowed to get my retirement pension in Sept 2031 when I turn 57.

I currently live in a HCOL area and my bills are about $70K a year. I’ll be moving to a LCOL area in the summer of 2030 after my youngest child graduates from high school. So I would need to pay the following living expenses until my retirement pay starts in Sept 2031:

$70K - 2029 bills
$40K - 2030 Hcol Bills
$20K - 2030 Lcol Bills
$15K - 2029-2030 travel
$40K - 2031 bills
$25K- Reno HCOL home
——
$210K


-My retirement pension is projected to be about $48000 yr based on 34 yrs of service, is COLA’d and is enough to pay my bills on the LCOL area (under $35K without travel).
-Hubby will also be retired federal and will have the FEHB medical retirement benefit. Does anyone know if this will be passed to me if he were to die? He is also retired military and will have tricare healthcare.
-I plan on taking Social Security at 62. This will be my travel money.
-We will be renting our home in the HCOL area which will be over $1000 more than its mortgage payment. That mortgage will have about $160K left and the house is now worth $725K. We project our new mortgage to be under $2000 in the LCOL area and we’ll use the $1000 extra from first house to pay for half of it. The mortgage on the first home will be paid off in about 10 years after I retire then it will be positive cash flow even after paying for the second home.
-My savings should be about $750K in my TSP and $250K in my regular savings by 2029.
-Husband will have about $24000 in military and federal pensions and about the same in Social security.
-I will be paying for my youngest kids college from a 529 and my 401K.

Some may say that $210K is a lot of money to quit just 2 years and 9 months early. However, my job is stressful and I don’t have much time for taking care of my health and I have recently had Health issues. I would rather have my time and health.

So what do you think? Is it doable?

I'm not sure about FEHB, but if your spouse were to pass, you would be eligible to continue using Tricare AFAIK.

Have you considered selling your home rather than renting it after you move? If you are married filing jointly, up to $500K of profit of your primary home is tax-free if you've lived there 2 of the last 5 years, which, depending on your purchase price, would probably mean you'd have to pay no taxes on it. If you buy a second home and live there, if you decide to sell later you won't be entitled to this tax free benefit. Plus, you won't have to deal with the headache of renting. I know there are other tax benefits to real estate, but if I were you, I'd sell the house. With the proceeds, you'd probably have enough to buy your new house outright in a LCOL area and possibly entirely fund your time between retirement and collecting pension without touching your other savings.

 

[Wish2RE]

Sorry for your health situation; your motivation to prioritize your life is noble and sound.

It is also impressive that you have been here so long. You undoubtedly have educated yourself and considered the options. It is also impressive that you have such a specific plan for events that are still a decade away.

From the 10,000 foot level, if everything plays out per your plan, your pension alone should sustain you by the time you reached 57, with more than enough savings to get you from age 55 to 57.

My only other observations are:

1. I found your financial presentation to be somewhat confusing. Income isn’t mentioned. It is unclear if the numbers are yours alone, or also include DH’s. I couldn’t tell how many children you have. Your costs are not itemized. How much are you currently saving? And so on.

2. Assuming $70K in current expenses, the 4% Rule would suggest you need $1.75M by the time you exited the labor force (this is conservative, of course, as it does not include your pension, SS, etc.).

3. Your plan is based on a lot of assumptions about what may happen over the next decade, and what you will be able to do at the end of that time (e.g., buy a LCOL house for X amount). The best financial move we ever made was to cash out of a HCOL existence to a LCOL one, so I like that aspect of your plan a lot. Estimating property values that far down the road is pretty much guessing, however. You also appear comfortable carrying a mortgage into retirement. You also seem to have at least one non-trivial unknown: coverage by DH’s HC (and I don’t know the answer to that). All plans are based on assumptions and forecasts, so none of this is criticism.

Bottom line: You are a thoughtful person obviously, and I am sorry for your health status. You are a planner as well, and if your plan plays out, you should be fine. I found your presentation to be somewhat unclear, however.

Best wishes to you.

Hi WyomingLife! Thanks for your comments. I started my early retirement planning before I met my husband and so I do my retirement planning based on only my income as I like to know that I can retire if I have to do it on my own (you never know nowadays ) If we're still together than great

Since my pension is projected to be about $48000 yr, that covers all of my expenses in the LCOL area and most of my expenses in the HCOL area. If I decide to retire in the HCOL area, then I will not retire at 55 but instead work until 57, pay off my $160K mortgage, and then my yearly bills will be $52000 in the HCOL area. 3% of my projected 401K balance should cover what my pension doesn't. Social Security is bonus at this point and will be used for travel.

I'm not sure the intricacies with tricare and FEHB. Just don't forget that if you are going to get FEHB from your husband, then he will have to take a reduced pension (either 10% or 5% reduction) so that you can get FEHB. Yes - you would remain eligible for FEHB should he pass.

Also don't forget that when you leave at 55, you are technically doing a FERS deferred retirement. One impact is that you will not receive the FERS supplement at all.Based on numbers you have providing, I'm guessing this would be on the order of $1500/mo for you (from age 57 to 62).

Thank you clobber. This was the missing piece I needed. I confirmed what you stated above on a few websites. My husband would need to do a either a maximum survivor benefit (10% reduction) or partial (5% reduction) in order for me to continue the FEHB insurance coverage. And you're right, I would be leaving the FERS Social Security Supplment of about $1500/mo from age 57 to 62 on the table if I quit at age 55...but if my job is this stressful, than it will be worth it. I need to find an easy 9-to-5 job with very little travel.

I'm not sure about FEHB, but if your spouse were to pass, you would be eligible to continue using Tricare AFAIK.

Have you considered selling your home rather than renting it after you move? If you are married filing jointly, up to $500K of profit of your primary home is tax-free if you've lived there 2 of the last 5 years, which, depending on your purchase price, would probably mean you'd have to pay no taxes on it. If you buy a second home and live there, if you decide to sell later you won't be entitled to this tax free benefit. Plus, you won't have to deal with the headache of renting. I know there are other tax benefits to real estate, but if I were you, I'd sell the house. With the proceeds, you'd probably have enough to buy your new house outright in a LCOL area and possibly entirely fund your time between retirement and collecting pension without touching your other savings.

We have considered selling and it is still an option for us. We already have enough equity (>$400K) to buy a home outright where we want to go. However, if we ever want to go back to the HCOL area (Hawaii), it would be tough to get back into that real estate market as the prices just continue to keep climbing. The rental market is really good here and the military are the only ones who can afford the crazy rental prices these days (we feel better renting to military). We really like the idea of having the rent from the Hawaii home paying for the other home. However, we've also heard about the negatives of being a landlord so both options are on the table at this point.

Thank you all for your advice and comments!!!

 

[clobber]

..but if my job is this stressful, than it will be worth it. I need to find an easy 9-to-5 job with very little travel.

That is one of the great things about federal work, can you not make a lateral transfer to a different, happier job?

There is another possibility. What about transitioning to part-time in the future? Maybe you could have 4 day weekends every week - and just work 3? You would not be able to touch the TSP at 55, but you would still be making money and might not need to. For retirement, part time service counts as credit just like full time (e.g., you could start part time now and still retire at 57). It would reduce your pension, but it is fairly minimal if maybe you did it your last 5 years.

 

[Wish2RE]

That is one of the great things about federal work, can you not make a lateral transfer to a different, happier job?

There is another possibility. What about transitioning to part-time in the future? Maybe you could have 4 day weekends every week - and just work 3? You would not be able to touch the TSP at 55, but you would still be making money and might not need to. For retirement, part time service counts as credit just like full time (e.g., you could start part time now and still retire at 57). It would reduce your pension, but it is fairly minimal if maybe you did it your last 5 years.

If they ever roll out the part-time retirement within DOD here, I would definitely do part-time the last 3-4 years!!

 

[REWahoo]

If they ever roll out the part-time retirement within DOD here, I would definitely do part-time the last 3-4 years!!

Uh-oh, the IRP are going to be all over this. "Since when did working part-time become part-time retirement?"

 

[clobber]

If they ever roll out the part-time retirement within DOD here, I would definitely do part-time the last 3-4 years!!

I don't understand what you mean? You could work full time until you are maybe 54, then go part time until 57 and then retire.