Anxiety and Big Decisions

[gooddog]

One option for the buyout is $74,000 received over five years. That would fund the four more international trips you mention

That is the best answer I've seen. You will probably want to travel earlier than later, and the payout over 5 years gives you the $ each year to do just that.


Worrying about the COL on such a small amount is bit much.



Your pension/investments will easily fund your future.


Regarding Portugal - check out the Azores. My grandparents were from there and it is a pretty awesome place (especially if you are a veteran). At the same time, there are plenty of places in the U.S. to retire to that are not a culture shock and will give you what you want.

 

[jeroly]

You will find yourself spending less in Portugal than where you are now, in all likelihood.
When you sell your townhouse it will almost certainly net you more than buying something in Portugal will cost you, unless you seriously upscale your tastes/wants.

In any case you will have more available in retirement than you do now - you will be able to withdraw more than $40k/yr, with inflation adjustments, without real concern about running out of money, and much of that along with much of your pension will be taxed at 0% or a low rate.

 

[meleana]

Go for it. You’re rich and can afford it.

 

[jldavid47]

Severing that connection to work is uncomfortable. I think another facet of my anxiety stems from my experience as a child when my father went into business for himself and my family experienced some lean years. So, rational or not, a 40% reduction in my income affects me viscerally. There are other issues as well, potentially moving away from friends and family is one.

OK, so your issues here are mostly emotional and not financial. Your 40% reduction in pay really isn't 40%. it is "top line" but not net. You will be paying far less in taxes (no FICA and less in income taxes) and given your lifestyle you will still be able to save some of your pension income. FWIW, we didn't have much when I was growing up so I tend to be frugal and a bit nervous (financially).



Let me tell you a story. In 2001 I was 47 years old and was offered a retirement package from Megacorp which would give me a monthly pension that was about 1/3 of my salary. We were saving about 25% of my pay so the actual reduction (for expense purposes) was far less than 67%. It was scary because we were about to put 3 kids through college and I had no backup plan for employment. Was I nervous? Sure. But the company was going down the toilet and there was no guarantee I'd be employed 6 months later if I stayed. So I took it (Retirement #1). My wife took a full time job and I landed a 14 month consulting gig 9 months later. (The end of that was Retirement #2).



For the next 6 years after that I bummed between rather low-paying (but interesting) jobs (I considered myself mostly retired) before landing another consulting gig in 2009. At that point I was 55 years old. Two years later the last kid graduated from college. 3 kids, 8 years, 3 degrees and NO STUDENT LOAN DEBT despite the fact that my employment was irregular. In 2014 I turned 60 and decided I had enough (Retirement #3). My wife (who is 3 years younger) had a full time job (important for medical benefits) but to give up the money from the consulting gig was a big decision. Was I nervous? Sure. But everything worked out just fine. The anxiety was for nothing.


Fast forward to 2020. The pandemic hits and my wife's company decides to roll out a retirement package. We weren't planning on having her retire until 2022 but her company was in the crapper and there was no guarantee she'd be employed much longer if she didn't take the package (which included subsidized medical insurance until she turns 65 and 5 months of severance). I start running numbers. Well, if we both take Social Security earlier than planned it looks like we're OK. She takes the package. Were we nervous? Sure. But things (once again) seem to be working out just fine. More than fine, actually. She is happier than I've seen her in years now that the corporate BS is gone.



You know what retirement really is? Being able to wake up in the morning and do whatever the hell you want. If you retire you can still keep in contact with your former colleagues. You can make new friends and can completely indulge interests that you may have put off for years. Don't overthink it. From your description, just do it. Everything will be OK. Really.

 

[oiseux]

You are definitely set x2 but getting to that point of pulling the trigger can be difficult -- I understand as it something we are trying to work through.

Regarding Portugal and other overseas destinations, you should consider the health care situation, the tax treaty and the available programs (and things like exit tax, wealth tax and inheritance). The US will always tax citizens abroad, so tax schemes are relative to paying no more than the US, and ensuring your health care expenses are manageable. Italy has an attractive 7% scheme for 10 years in smaller southern towns, without an investment, for example. France does not tax pensions/401k/IRAs and does not require an investment.

 

[Hermit]

Financially you are good and have gotten lots of good advice so I won't add more there. I am also single and within a week of retirement I had moved from Virginia to the Colorado mountains. I live in a very small community in the middle of a National Forest. No hiking this last week. Snowshoeing was more appropriate. For me the plan was made before retirement and I just put it in action. I was not retiring from a job or moving from a home. (I had sold my home a year before.) I was heading to my new home and my new vocation (building my own house.) I was raised on the prairies of eastern Colorado so it was not too far from old friends. There are many places even in Colorado where the cost of living is reasonable as long as you stay away from the very pricy areas. I am sure there are many other places just as nice in other parts of the country if you want to live a slower, less crowded life. Spend some time exploring areas you may be interested in before you pull up stakes. I think finding a new place to live would be a great first retirement adventure. Good luck!

 

[imnontrad]

Question - while working at this college, did you also pay into Social Security? If not, you will run up against the WEP reduction for SS. You must have 20 years paying into SS (meeting the substantial income rule) for that reduction to be diminished and 30years paying into SS (again the SI rule) to avoid WEP completely.
In this case, you might consider a side business where you could meet the SI rule to get those 30 years OR consider moving to another university system where you will pay into SS.

 

[Alcofribas]

Which is the perfect segue to this link: Some Important Questions to Answer Before Asking - Can I Retire?

I went back and calculated expenses for the last three years, this time including withheld taxes. One of those years included a big, six week trip to central and eastern Europe. The three year average was $28,300. Still less than half of my pension.

 

[Alcofribas]

OK, so your issues here are mostly emotional and not financial. Your 40% reduction in pay really isn't 40%. it is "top line" but not net. You will be paying far less in taxes (no FICA and less in income taxes) and given your lifestyle you will still be able to save some of your pension income. FWIW, we didn't have much when I was growing up so I tend to be frugal and a bit nervous (financially).

...

You know what retirement really is? Being able to wake up in the morning and do whatever the hell you want. If you retire you can still keep in contact with your former colleagues. You can make new friends and can completely indulge interests that you may have put off for years. Don't overthink it. From your description, just do it. Everything will be OK. Really.

Thank you, this was really helpful. Yes, it seems my issues are mostly emotional. The storm of emotions this decision has unleashed has really surprised me. I saved and lived well below my means for all of my adult life to be in the position where I could retire early. I always envisioned that I would be ecstatic to be in this position. Instead I have found myself sometimes even depressed focusing on what I'll be giving up, no matter which decision I make, instead of the positives.

I think part of the problem is that the deadline for accepting the buyout pushed this decision forward unexpectedly so I've had less time to process it that I would have otherwise had. I friend of mine with a graduate degree in social work told me that retirement is considered a traumatic life event for many people. Sometimes it seems that it would be easier to just keep working than to step out of my comfort zone and get started on some of those things I've always dreamed of doing but never had the time.

 

[Alcofribas]

Financially you are good and have gotten lots of good advice so I won't add more there. I am also single and within a week of retirement I had moved from Virginia to the Colorado mountains. I live in a very small community in the middle of a National Forest. No hiking this last week. Snowshoeing was more appropriate. For me the plan was made before retirement and I just put it in action. I was not retiring from a job or moving from a home. (I had sold my home a year before.) I was heading to my new home and my new vocation (building my own house.) I was raised on the prairies of eastern Colorado so it was not too far from old friends. There are many places even in Colorado where the cost of living is reasonable as long as you stay away from the very pricy areas. I am sure there are many other places just as nice in other parts of the country if you want to live a slower, less crowded life. Spend some time exploring areas you may be interested in before you pull up stakes. I think finding a new place to live would be a great first retirement adventure. Good luck!

Thanks for this! Coincidentally I have been looking at a cohousing project in a small town in a mountain valley in Colorado. It has many attractive features but it is pricy so it is nice to know that there are reasonable alternatives if it doesn't work out. Rural Colorado sounds very appealing in comparison to the throngs of people, terrible traffic, and suffocating summers here. On the other hand though, moving away from friends and family here would not be easy. I have to keep reminding myself how fortunate I am to have these options.

 

[Alcofribas]

Question - while working at this college, did you also pay into Social Security? If not, you will run up against the WEP reduction for SS. You must have 20 years paying into SS (meeting the substantial income rule) for that reduction to be diminished and 30years paying into SS (again the SI rule) to avoid WEP completely.
In this case, you might consider a side business where you could meet the SI rule to get those 30 years OR consider moving to another university system where you will pay into SS.

No, I did not pay into SS and have taken it as a given that I will never receive any substantial SS benefit since that would require many more years of work. I am counting on my pension to give me adequate income, which should not be a problem considering my spending habits. The pension is subject to COL adjustments but I have no idea how well those adjustments have kept up with inflation over the years, which is the source of most of my financial unease with regard to early retirement. I will probably discuss this concern with a pension counselor soon to see if I can clear up some of this uncertainty.

 

[Calico]

You might find this recent thread about "retirement anxiety" interesting. Some of the posts address the uncertainty of taking the big "leap."

https://www.early-retirement.org/forums/f29/wow-i-cant-believe-im-getting-nervous-anyone-else-had-this-issue-108306.html#post2574268