51 with three teens. Considering retirement but feel irresponsible

[Tyrone]

Hello forum,
New here and looking forward to gathering collective wisdom and contributing what I have to offer.
I am 51 years old and married (she is 48yo) with an 18yo college fros, 17 year old h.s. senior and a 15 yo h.s. sophomore. All kids are high functioning and in or will be in college. I have worked in emergency rooms, for a private practice, had my own private practice and now working for a local school district's self contained school filled with these little buggers. After 30 years in this high burnout profession I am ready to walk. Just at the start of this school year I reduced my schedule from 4 to 3 days. On the 5th weekday, I work about 5 hours as a consultant for another district. My concern/question: not sure I have enough saved up to walk with the uncertainty of college expenses. I am not the type of parent to say to my kids "college is on you" as I won't sleep if I take that approach. My wife and I have told our kids they are paying 10% of all their college expenses.
The numbers: My wife took an early retirement from a state hazard duty job and has a pension of $48k/year with COLA and great health insurance for both of our lifetimes. She brings in about 15k/year at p.t. jobs.
We have $690k in savings at a 55% stock, 35% bond fund, 10% cash ratio. Most in retirement, but 5 months expenses in emergency fund. A big chunk is my wife's 457 (240k) that we can access immediately (she retired in 2016).Our burn rate is about $5k/month. not counting college.
The big variable is college expenses. The kids' grandmo has 90k saved for their collective college expenses plus gifts us 10k/year for their 4 years each of undergrad (120k), so a total of 210k. We have 56k saved for their collective college ourselves, left after first semester payed in full. The cost for our oldest in school his first year is 35k after scholarship. Using the NPC for next college year, our oldest, along with the second child's school she plans to attend (coach told her she is in), looks like about 22k each (44k total). The cost for the third kid is a big ? but looks like if we total up college expenses for all three kids undergrad, about 270k.
Question: Can I walk?

 

[Newventurer]

Good morning

You haven’t said what you want your retirement to look like - some work, no work, lots of travel, downsize, upsize? Does the burn rate stay $5k, after the last bugger is out?

 

[Maenad]

Burn rate of $5K/month is $60K/year. Less the $48K pension is a shortfall of $12K/year. 4% rule would say you need $300K to support that. Add $300K for college for convenient rounding, and you need $600K. If you have $690K, you may indeed be good to go. (If your wife makes up the $12K shortfall in her p.t. work, you won't even touch your stash.)

The caveats are, as Newventurer said, what do you want to do in retirement? That can adjust your expenses up or down. You also need to include an annualized amount for the big lump sum purchases that come up every decade or two- new HVAC and other appliances if you own a house, new vehicles as old ones wear out, etc. We can help you with those with a little more detail on your situation, and there are threads that have gone through those discussions as well.

Do you have a large house you'd like to downsize? Drop down to a townhome with 1 spare bedroom for a visiting kid once they've all graduated?

Also, you don't have to permanently retire. You can stop the burnout job you're doing now, take 6 months, and then see if you'd like to do something else now that you're not exhausted.

You're not irresponsible for wanting to take a breather or retire completely. There are numerous stories about teenaged children that are happy their parents retired - it means you're there for them when they need you, which is huge. Though it may not be appreciated until later.

 

[ivinsfan]

Not to be a Debbie downer but you had a high paying job for 30 years, your spouse had a very nice state job with good insurance and you only have 690K in total savings?


This tells me you've been spending more then that 5K a month you mentioned.

Lifetime HI is nice but even state governments have been changing health benefits so anything could happen there. IMO you don't want to be raiding your retirement accounts this early in the game.

 

[Tyrone]

Good morning

You haven’t said what you want your retirement to look like - some work, no work, lots of travel, downsize, upsize? Does the burn rate stay $5k, after the last bugger is out?

Really good questions:
Our current home will be to large for the wife, myself and visitors, so the plan is to downsize. The lower cost of maintaining a smaller place/condo and net profit between the two residences will be offset by, what I think will probably be an increase in spending over the early retirement years. So overall, the 5k/month spending rate will be roughly the same. Maybe move up a bit to about 6k if I get my small sailboat Some work might be possible but I don't want to plan on that or the income it would bring.

 

[Dtail]

Have you run your numbers through Firecalc including at least 70% of expected SS?
If your spending goes to 6k, perhaps the results are a little tighter.

 

[Walt34]

If you haven't seen it this is a list of questions that you'll want to have solid answers for before you retire:

http://www.early-retirement.org/for...re-asking-can-i-retire-69999.html#post1399715

 

[rodi]

Welcome Tyrone -

I retired at 52 with 2 kids in high school and am now looking at college expenses in the very near future (kids are currently sr and soph in HS.) You've probably done the FAFSA thing already for the first kid - but my understanding is they take into consideration if you have more than one in college at the time, and what your current income is. If your income drops to your wife's pension and earnings you might qualify for more college aid - especially as kids 2 and 3 enter college.

The link above (for questions to consider before you retire) is a good one. Be honest with yourself about your actual expenses - all in... healthcare, taxes, periodic replacement of cars, home maintenance.... everything. Firecalc is a great tool - make sure you use all the tabs to input your expected SS, your asset allocation, etc. Make sure your spending is 'all in' - same as above... taxes, emergencies, everything. You're young enough that you should extend from the default 30 years. SS will probably be less than the statements show if you stop working now... unless you've already got the max earnings for enough quarters.

Running through the questions and running through firecalc (and other calculators) gave me enough confidence to pull the trigger.

 

[pb4uski]

Question: Can I walk?

You have a bit more work to do, but it seems more likely than not.

As Maenad suggested, your wife's pension covers a large portion of your $60k/year spending xcollege costs... in fact, with her $15k of part-time earnings it covers it fully.

Are income taxes included in that $60k? Periodic car, HVAC and roof replacements? Also, are you absolutely sure that $60k is the right number? It seems a bit on the low side for a family of 5.... go through your spending for 2017 to make sure.

For college it looks like ~$275k less $210k from grandma less $56k that you have saved plus a portion that the kids need to put up that college is covered.

You also need to factor in SS, or to be conservative, 75% of SS.

I think when you put it all together that you will find that you are good to go.

Do you own a copy of Quicken? If so, it includes a tool called Quicken Lifetime Planner that is a good tool for retirement planning. Or FIRECalc ... link is further down on this page.

 

[SecondCor521]

I think you're in the ballpark. The main thing that concerns me is the fact that both spending numbers you gave ($5K and $6K) are monthly round multiples of $1K. This makes me strongly suspect that you don't really know very well what your expenses are, which isn't good. (Or you're a free spirit liberal arts type, which would be better.)

Make sure you're counting all your spending. Include taxes. Don't subtract out "one off" expenses that you don't think will happen again - that particular one off expense won't, but another one will. Some ways to do this are to funnel all spending through one or just a few accounts, or take your beginning balance, income, and end of year balance and do the math - the difference was spent.

It can be done. I retired at 46 and am paying for my three kids' college educations (they're currently 23, 18, and 16). Because financial aid, federal income tax, state income tax, and ACA credits act like four parallel progressive tax systems, I think it really can make sense to be low income during the FAFSA years. Then if you hit a shortfall when your last kid is a junior or senior, make it up then by being a Walmart greeter or whatever.

I will add that at least in my case, planning college precisely isn't possible. So far in my case we have: scholarships, switching schools, changing majors, financial aid, turning 24 and being independent, tax credits, living at home vs. in the dorms, repeating a grade in high school so now my last two overlap more, private high school, and probably some other things. This means I hold my thoughts loosely about the spring semester starting in January, and even more loosely my thoughts beyond that. Very roughly speaking, all I can say is there is a reasonably large pile of money, we'll spend it prudently, and we'll adjust as we go along. As a non-free-spirited type, that gives me a bit of the heebie-jeebies, but I don't know how else to handle the changing circumstances that occur.

Also, it's possible things will turn out better than you expect. I hit FI about 4.5 years ago and RE about 2.5 years ago, and my net worth has gone up about 25% even with me spending money on regular living expenses, college, and private high schools. It could have gone the other way, obviously, and I'm more lucky than good. But still, if you plan for the median, sometimes you'll get lucky. I'm personally earmarking that 25% for any shortfall in the kids' college fund pile.

 

[Tyrone]

Not to be a Debbie downer but you had a high paying job for 30 years, your spouse had a very nice state job with good insurance and you only have 690K in total savings?


This tells me you've been spending more then that 5K a month you mentioned.

Lifetime HI is nice but even state governments have been changing health benefits so anything could happen there. IMO you don't want to be raiding your retirement accounts this early in the game.

That's ok. But double check, I never said I had a high income job and nor did my wife. Being a social worker just doesn't pay as well as one might think I guess! I will double check my spending tho. Insurance and pension are locked in as she is retired. Things have changed since she has retired and she is grandfathered in. Unless the state goes bankrupt...
Thanks

 

[treeofpain]

One way to view things is to "in your mind" convert the income from the pension based on (arguably) standard retirement rules-of-thumb. If she gets $48K/year in pension, that is the functional equivalent of having $1.2M in the bank and drawing 4% per year (not including the COL increase).



Do the same with the medical at, say, $25K per year and that is like having another $625K next egg with the same 4% withdrawal rate.


This is only a tool, not pure reality, but it may be helpful to compare to a straight investment total.

 

[ivinsfan]

That's ok. But double check, I never said I had a high income job and nor did my wife. Being a social worker just doesn't pay as well as one might think I guess! I will double check my spending tho. Insurance and pension are locked in as she is retired. Things have changed since she has retired and she is grandfathered in. Unless the state goes bankrupt...
Thanks

For some reason I got the impression you were in the medical field, my mistake the word practice confused me.

 

[Tyrone]

For some reason I got the impression you were in the medical field, my mistake the word practice confused me.

No problem. I actually am considered to be in the medical field. Many aren't aware that when a clinical social worker is licensed in their state for 5 years or more, most insurance panels will reimburse for services. Private practice sounds glamorous and does provide more autonomy, but between the low insurance reimbursement for therapy and the no call/no show rate in the mental health field, where I work now actually pays more net of overhead.

 

[Tyrone]

Update: So after consulting with a friend who is a financial planner and after much hemming and hawing/discussions with wife, I decided to leave my main job and keep only the one day per week consulting contract I have. It's been great, getting to a lot of home maintenance projects that I never had time to get to before. Enjoying the freedom and new lifestyle. Thanks for the thoughts and support!

 

[Dtail]

Great to hear. Continue enjoying life.

 

[LarryMelman]

Update: So after consulting with a friend who is a financial planner and after much hemming and hawing/discussions with wife, I decided to leave my main job and keep only the one day per week consulting contract I have.

Oh, this thread was started over a year ago.

That's exactly what I was going to suggest. You have the ability to work part-time.

 

[Finance Dave]

Congrats!

 

[daylatedollarshort]

Thanks for the update. I'm glad to hear you are enjoying retirement.