REtiring early at 57 and scared

[Sunset]

The SS discussion is an interesting one and one that seems to be debated all the time. I look at it this way. I could get by without SS, but having it would make life quite easy. So taking it at 62 would improve my quality of life in the early stages of retirement. I would rather have that income in the earlier days than to have more when I am older and less able to enjoy it. I don't see any financial issues with my wife if I were to pass early. Realistically, life would likely become less expensive without me around .....

Does your wife qualify for SS on her own work record ?

If you take SS at 62, it means she will get a lower Survivor pension when you are dead. Remember at that point she will get just 1 SS pension, not what the two of you collect while living.

Please explain how her life would be less expensive when you are dead ? , certainly the property tax will remain the same, Income tax rates will double due to cut in the brackets, Dating will cost her $$. Food cost will drop by 1/3, as it's not a 50% drop since buying for 1 is more expensive than for 2.

Delaying SS is the best inflation indexed annuity around, so maybe think more on it.

 

[LateToFIRE]

...It's funny, the more I write, the more it feels like I am in a good position to do this.

Lol, That's exactly the idea! Most of us don't have experienced, unbiased people we can just talk this all through with. And putting it in writing kinda makes what seems way too intangible, much more real and tangible, and way less scary.

 

[AZsniper]

I think you need to just work out a more specific plan but you are good to go.
#1 Make sure you spending is what you think it is, and have a plan for future expenses, health, emergencies.
#2 Figure out what you and spouses SS will be

So you take out 60k a year for the next 5 years until you are 62? Assuming no growth that is only 300k and could leave you with 1.2m. Then Figure out what SS contributes to you expenses. Example-Say your SS is 36k per year, so you only need to withdraw 24k (or so/add for inflation etc) per year. That's a 2% WD rate, and you could likely afford to take even more.

Just a few thoughts. Good Luck!

 

[InTheBasement]

Does your wife qualify for SS on her own work record ?

If you take SS at 62, it means she will get a lower Survivor pension when you are dead. Remember at that point she will get just 1 SS pension, not what the two of you collect while living.

Please explain how her life would be less expensive when you are dead ? , certainly the property tax will remain the same, Income tax rates will double due to cut in the brackets, Dating will cost her $$. Food cost will drop by 1/3, as it's not a 50% drop since buying for 1 is more expensive than for 2.

Delaying SS is the best inflation indexed annuity around, so maybe think more on it.

I was kind of tongue-in-cheek saying the part about life being cheaper for her with me out of the picture. Yes she qualifies for SS on her own. The whole SS thing I guess is up in the air. All of my calculations are done not considering it so it's reasonable to think that I may wait until FRA anyway. It's good to know that if my plan fails that I have a fall back option to collect SS if necessary.

 

[upupandaway]

I will refer you to this thread as a quick start and also the more detail you provide the more accurate the advice from the fine folks on the forum will be.

Some Important Questions to Answer Before Asking - Can I Retire?


edit - I just saw there were 3 pages here. Sorry if someone already posted this.

 

[pb4uski]

I was kind of tongue-in-cheek saying the part about life being cheaper for her with me out of the picture. Yes she qualifies for SS on her own. The whole SS thing I guess is up in the air. All of my calculations are done not considering it so it's reasonable to think that I may wait until FRA anyway. It's good to know that if my plan fails that I have a fall back option to collect SS if necessary.

Check out opensocialsecurity.com and be sure to check the box at the top for additional input.

 

[Buckeye]

Not all veterans are eligible. It depends on dates of service.

At a current age of 57, there is a very high probability he's in the window. Free to apply.

 

[Buckeye]

Yes, I am a veteran but I was not deployed into combat, and I did not retire from the Army. I was only in for five years so I am not eligible for VA health benefits. I am lucky enough to qualify for some benefits such as property tax reduction and such. Welcomed of course, but not overly significant.

I did not deploy and I did not retire from the military and I qualify for VA healthcare. Neither of those two things are required to qualify for VA healthcare. Even if it's just a backup, it might be worth applying and getting a formal acceptance or denial.

 

[InTheBasement]

I did not deploy and I did not retire from the military and I qualify for VA healthcare. Neither of those two things are required to qualify for VA healthcare. Even if it's just a backup, it might be worth applying and getting a formal acceptance or denial.

I will look into it. I was of the understanding that I would not be eligible. Thanks for the note.

 

[Buckeye]

I will look into it. I was of the understanding that I would not be eligible. Thanks for the note.

You might not be eligible but it never hurts to ask. Your level of income doesn't disqualify you from care but will cause you to make nominal co-pays.

https://www.va.gov/health-care/eligibility/
https://www.va.gov/health-care/how-to-apply/

 

[Sojourner]

Periodic expenses like car purchases, roofs, painting, major appliance replacement and the like need to be averaged in. And taxes are expenses that need to be included and will likely change over time as income sources change.

This would be my #1 recommendation for someone in OP's situation (wondering if they are financially ready for FIRE). It's critical to come up with a FIRE spending budget that factors in the big, lumpy expenses... and to somewhat overestimate those to be on the safe side. For example, even if you really don't think you'll need to buy a car within the next seven years, go ahead and use seven (or eight) years in your calcs anyway. Same with putting a new roof on the house, or with replacing your HVAC, etc. Better to be a little overprepared than to be stretched uncomfortably thin when something expensive inevitably needs to be replaced sooner than expected.

Good luck, OP! And be sure to check out FIRECalc, and to use it often during your FIRE journey.

 

[Surewhitey]

This would be my #1 recommendation for someone in OP's situation (wondering if they are financially ready for FIRE). It's critical to come up with a FIRE spending budget that factors in the big, lumpy expenses... and to somewhat overestimate those to be on the safe side. For example, even if you really don't think you'll need to buy a car within the next seven years, go ahead and use seven (or eight) years in your calcs anyway. Same with putting a new roof on the house, or with replacing your HVAC, etc. Better to be a little overprepared than to be stretched uncomfortably thin when something expensive inevitably needs to be replaced sooner than expected.

Good luck, OP! And be sure to check out FIRECalc, and to use it often during your FIRE journey.

Agreed. We have 3 columns on our 40 year spreadsheet.
Car/house maintenance - $2.5-10k annually
health/parent events - $12-55k annually
new car every 6-7 years - $40-85k

I figure if I have at least something for these, I will be ok. The good thing is our roof, hardwoods, kitchen, bathroom, ac & water heater are 3-5 years old and 1 car is a 2018 Toyota Avalon...

 

[Onda]

I am sooooo ready to retire and I think I am financially prepared but it's that fear of the unknown that is there.

That is good. Only fool would not be scared
You have to what is good for you. Life is short.

 

[rodi]

Late to the thread but want to offer my suggestions and advice.

OP - I get where you are... emotionally ready to retire. I had been working towards retirement and had a bad meeting with my boss one week and gave notice the following Monday. It was liberating. But, as said, I'd been working on my plan, and getting advice here for over a year and was confident I was good to go.

Check out the link that was previously posted.https://www.early-retirement.org/forums/f47/some-important-questions-to-answer-before-asking-can-i-retire-69999.html

As others have stressed - you need to be solid in your understanding of your spending. This is *all* inclusive: taxes, health care, lumpy expenses, discretionary stuff like travel, etc.

I found the best way to get confident I had a handle on my spending was to approach it from both directions. First: start from your gross income, deduct off things that will go away when you retire like 401k contributions, savings contributions, medicare and SS payroll deductions. You come up with a number that is the money that was spent... in theory. Second approach it from the other end- add up your fed/state taxes, household expenses, groceries, vacations, utilities...

The first few times my two numbers were off a lot from each other... so I looked at the bottom up spending for things I'd missed. I ran this excercize until the numbers were the same... I knew I'd figured out where my money was going.

Then in prep for retirement, I looked at things that would change: No more contributions to retirement savings.. different premiums for health insurance... food bill would change with more home cooking.

My biggest expense was our mortgage payment - and a month before I retired I paid off the mortgage. That meant a lot less cash needed a month.

I retired almost 10 years ago with a similar number, but also with 2 kids under roof. But we also had a granny flat bringing in income each month, as well as DH already being on SS. I was terrified.

For me the way I dealt with the fear was by getting super frugal for the first few years. I've eased up on that but I found there were things I cut in my fear, that I never missed... and therefore never added back to the spend.

Read the link above (FAQ)
Get super familiar with your all-in spending (taxes and healthcare included).
Run all the calcs, especially firecalc.
And if all signs say go... Pull the trigger.

 

[51togo]

Late to the thread, but I was in a similar situation 10 years ago. I think I had much less in the 401 at that time than you. You may check out my post seeking advises on this site as well. I did used the FIRE calculator and confirmed I was good to go. I was 56 and I had to withdraw 3% annually until I collect SS at 62. All is well, now 11 years later I’m glad I did. My 401 had almost double in the last 10 years and we are more financially comfortable than in the beginning of our retirement. But health due to aging and other circumstances had deteriorated. Another aspect we seldom taking into consideration…don’t look back, I had no regrets and I was scared too. Very best to your retirement!

 

[F.I.R.E User]

Hello all, my name is Jon and I am brand new here and am VERY glad to see there is this active forum to help me get along. I have been working since 1983, constantly and in many different occupations. Starting at 16 years old as the cleanup kid in the local supermarket meat department, then 5 years in the US Army followed by 2 years full time college as my only non working break. I am sooooo ready to retire and I think I am financially prepared but it's that fear of the unknown that is there. I am assuming this is a common thing. I'm hoping that I can get some advice and anecdotal evidence that I CAN do this. I guess a major fear is the task of paying for health insurance before I am eligible for Medicare. I have looked into options but have not been able to get a really solid idea of how much it will cost. I will be spending a lot of time reading the existing posts, but please let me know; what were the main issues you have had in early retirement and how did you overcome them?

What is your premium on healthcare?

 

[fuelie60]

insurance at 57

If you are able to control your adjusted gross income number (by limiting pension withdrawals after accounting for other income) you can obtain the Obamacare subsidy to reduce or eliminate your monthly premium, then you have what amounts to self insurance and catastrophe insurance for low premiums....then just your deductible becomes an issue.

 

[F.I.R.E User]

If you are able to control your adjusted gross income number (by limiting pension withdrawals after accounting for other income) you can obtain the Obamacare subsidy to reduce or eliminate your monthly premium, then you have what amounts to self insurance and catastrophe insurance for low premiums....then just your deductible becomes an issue.

What’s the strategy to get the subsidy insurance?

 

[fuelie60]

I would keep our tax return adjusted gross income in the $60-$65k range (I don't remember the exact amount, changed slightly each year due to interest and dividends) on our joint return. This gave me enough subsidy to cover pretty much 100% of the monthly insurance premiums for an Obamacare policy with $7k per person deductibles and max out of pocket. In the worst case we would spend $14k in a year in deductibles, but this only amounts to $1167 per month.....way below monthly premiums on regular policies. I would have to use some savings every year to cover spending, but it was well worth the savings in the medical area. We had several years with very low medical costs and hadn't spent anything on premiums for insurance we didn't use.

 

[LakeRat1]

You Got This ~~~ I had always planned to retire at 55, my DW retired at 59.5, we are 8 years apart, she is older..... The opportunity arose at Mega Corp to keep working or take a nice 1 year, severance, along with my 6 weeks of vacation..... I took the offer at 52..... Today I am 62, and will receive my first SS check in May ....... Like yourself, a portfolio of 1.5ish and 10 years later we are going strong...... Nothing went to plan, we have bought and sold 12 properties between Ft Myers, FL and Lake of the Ozarks, MO..... Taken 5 to 6 major vacations each of those 10 years, 4 new cars ...... Life is good .... Tomorrow is not promised

 

[LakeRat1]

You Got This ~~~ I had always planned to retire at 55, my DW retired at 59.5, we are 8 years apart, she is older..... The opportunity arose at Mega Corp to keep working or take a nice 1 year, severance, along with my 6 weeks of vacation..... I took the offer at 52..... Today I am 62, and will receive my first SS check in May ....... Like yourself, a portfolio of 1.5ish and 10 years later we are going strong...... Nothing went to plan, we have bought and sold 12 properties between Ft Myers, FL and Lake of the Ozarks, MO..... Taken 5 to 6 major vacations each of those 10 years, 4 new cars ...... Life is good .... Tomorrow is not promised

 

[orbops]

Since most people did not focus on the healthcare costs of ACA (Marketplace or Obamacare), I will try to.

I used this calculator to get early estimates for ACA:
https://www.kff.org/interactive/subsidy-calculator/

Generally, if you keep your AGI below $40K, premiums for Bronze can be < $50/month. It starts to ramp up above $40K. My AGI this year was $43K and my Silver premium was $150/month. If you're very healthy, you may want to consider an HSA plan through the ACA , and then you'll be able to deduct $8300 per family.

BTW - I retired at 50 with $1.7M, and 7 years later I'm at $3.6M. We spend about $60-70K/year.

 

[eyenitnoy]

Thanks Major Tom. Not sure if it's appropriate to talk about portfolio values or not, but would you share what you started out with at 45? I am expecting at 57 to start out in the 1.5 million range and I am wondering if that is going to cut it. Have you taken on any kind of supplemental income endeavors in the past 15 years or have you been able to support your retirement on the investments you took into it? My wife and I are not big spenders. We tend to be in the 60K range and Firecalc seems to think it should work out OK. When I used it I only took into account what I have now, and my present spend, not considering any SS income when that time comes.

Hi Basement:

1.5 million certainly could be enough. But please note the following:

1. How much, if any, of this 1.5 million dollar nest egg is taxable? Never forget the tax man. If this is in a taxable retirement account you need to estimate the taxes you will pay just like any other expense. Also remember, if it is in a taxable retirement account, when you take the money it will count as "regular income" this of course effects your taxes but it will also impact the premiums you pay for Obamacare, your likely source of pre-Medicare health insurance. If the money is all in a Roth, you need not worry. The taxes are paid and when it comes out it won't be counted as income. And if it is all in a retail account, be mindful of capital gains as well as dividends which all are taxable. My guess is it's probably a mix, so you will need to crunch numbers. (A common hobby on this forum.)

2. Insofar as insurance, I retired early involuntarily due to a medical condition. (Thank goodness I had been FIRE planning for years!) I purchased Obamacare off the exchange. Because my income is not that high, my premiums are subsidized. It's a big help.

Those are my thoughts. Good Luck.

 

[imnontrad]

Some people choose to become expats in a country with reasonable healthcare costs and lower cost of living. And some just "slow travel" for a few years saying in one place for a month or more before moving on.
You may find that after being off work for a wile that you get a renewed sense of purpose and start a completely different career - and not having to worry about the income/salary may make it more enjoyable.
I also know someone who retired from the Navy in Hawaii and gave his whole family a surfing lesson to celebrate. He fell in love with is and is out with his board every chance he can get (and he retired more than 20 years ago).

 

[RobLJ]

Welcome IntheBasement!
I was in your position about 8-9 years ago. I also semi-retired at 57 (in 2015) with approximately your assets. A few thoughts and differences

1) As many seem to note, nailing down your heathcare options/cost (and a budget although you seem to have a grip on that) is crucial. In our case, I had Texas State Employee health benefits for myself and DW, which simplified things. We're luckier than a lot on here in terms of health care.
Thankfully, I never had to deal with ACA like many here, but getting a grip on health insurance is probably #1. We spent $460/month until I went on Medicare last May, which added 180 or so. When DW hits 65, that goes back down to a little more than we were spending.
It sounds like you probably can find a decent ACA plan, given your AGI, but nailing that down sounds like a #1 priority.

2) I was able to work online half-time for half salary for 5 years until 62. That stream of income allowed my younger wife to fully retire a few years later in 2018 since she didn't like where she was working in Reno. I was fine; in fact, I felt retired in comparison to before. I could draw from my 403b to make up the difference.

At the high point, after I stopped working in 2020-2023, we withdrew 6.5% but that was OK, since FRA SS for me is in Jan 2025, at that point the withdrawal goes down to 3.5. I kept early SS as an option if the portfolio plummeted (it didn't).
The sweat period was 2020-2023 with no income and withdrawals at the peak. It worked out fine.
Many here withdraw less than 2% but they have huge assets and many have pensions and SS. SS for us will radically lessen the withdrawal rate.

3) About 20% of our withdrawals since 2018 went into a brokerage account, which is now large. Our budget had about 20% for repairs/emergencies and travel and it turned out we didn't spend much of the overage, even though we travelled to Europe 4 times and installed solar (during COVID) when we weren't spending anything other than food and insurance. We will install a heat pump in a couple weeks, but it almost fits in the yearly budget, almost.
I think the most nervewracking period will be until SS at 62, but you can monitor your withdrawals and portfolio; it might not even be necessary, if you are lucky (like us)