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bbohnhoff can't take it anymore.
Old 08-05-2007, 09:52 AM   #1
Confused about dryer sheets
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bbohnhoff can't take it anymore.

I'm a 56 year old male, 23 years with the same company as a project manager, traveling for a living.
The company Management no longer cares about the workers, only the bottom line.
I will have a pension based on a 1.66% x years worked x about 80K. At age 56, it pays 57% of the total.
DW is a 49 year old RN,and wants to work another 20 years. We are living in south Alabama, with a lower cost of living- but it has been "discovered" now and many new residents are putting a strain on the semi-rural infrastructure and driving up the COL.
We have about $310K total in 401K and IRA in mutual funds. $1000/mo mortgage, $500/mo car note, $15000 in credit card and student loan debt.
Should I FIRE and take the reduced pension, planning to do part time contract work, or resign and wait to get the full pension amount (reduced by SS) at 65 years old? I'm definitely changing jobs in September, and need to decide which way to go.
Anyone with a similar circumstance want to give advice? Is there any way that in the worst case the reduced pension and the retirement savings can support a $50k/ year lifestyle? The FIREcalc looks pretty grim.
Any help is appreciated!
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Old 08-05-2007, 10:04 AM   #2
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Welcome to the boards.

It sounds like you have some choices ahead of you. I guess the first thing I would look at is getting ride of the credit card debit. How much of that are you adding into FIREcalc. How would your calculations look without it?

I am sure others might have other suggestions.
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Old 08-05-2007, 12:08 PM   #3
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You are lucky to have options available to you (contract, change jobs completely). I really think you need to pay off that $15,000 cc and student loan debt before you leave the full-time workforce. Did you run Firecalc yet? How does that look?
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Old 08-05-2007, 10:32 PM   #4
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Sounds to me like you have too much debt to think about ER yet. OTOH, if your DW wants to keep working and is willing to help pay off the debt, then maybe you can get by. Your call. But for me personally, getting rid of essentially ALL debt was a requirment for my REing.
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Going after the debt!
Old 08-06-2007, 08:38 AM   #5
Confused about dryer sheets
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Going after the debt!

Both I and the DW are concentrating on the CC and Sallie Mae (school) debt now. Some of it is more or less reduced by her employer commiting to pay the student loan debt if she stays with them for at least 18 months. I won't be able to pay it all by mid-September, however.
I appreciate the constructive comments, but I see my main issue as whether to resign and wait to take the pension at its face amount in nine years, or early retire and get 57% of it until assuming ambient temperature.
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Old 08-06-2007, 09:11 AM   #6
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We don't have enough information yet on your specific question (yeah, paying off the debt is a priority).

Is the pension COLA'd? What would you do with the reduced pension now instead of letting it ride until later? That is, will you be able to meet your current expenses and pay off debt with your new employment excluding the pension? If not, you really don't have a choice. If so, you would be taking funds that you don't need - so what would you do with this money? Accelerate debt reduction? Spend? Save until 65 so that the balance can give you an income that is equal to or greater than what you would get if you delayed? Can you get that rate of return with reasonable risk? What are the pension rules - can the company change
the payout if you haven't started drawing yet or is that clearly set?

I am sure there are other questions...
I would not have anyone adopt my mode of living...but I would have each one be very careful to find out and pursue his own way, and not his father's or his mother's or his neighbor's instead. Thoreau, Walden
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Old 08-06-2007, 11:39 AM   #7
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Boy do I know the feeling! It sounds very much like the company I just left. One of the main questions as to whether take a reduced early pension is how long do you think you are going to live? You can do the math about where the break even point is in age.

For me, the math came up that it was better for me to wait until I am 65 to actually start drawing that pension.
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Old 08-06-2007, 11:43 AM   #8
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Sandy has asked a lot of good questions. I would also ask.... Do you also get some other benefits from taking the discounted pension now? Health? Life Insurance? Sometimes it is worth to take a discounted pension if the annuitant gets other benefits.

I would also ask how the vested pension benefits work in case of your death. What does she get if you were still working versus you already collecting a pension?

I would agree with others that the primary driver to take a discounted pension versus waiting for 65 depends on your cash flow needs in the intervening 9 years (and how COLA, if any, provisions work).

Added: I chose to take a discounted pension at 57 a year and a half ago. Did not need to do so because I could live off my investments, but the peace of mind allowed me to enjoy life living mostly off my pension and to optimize my investment returns with emphasis on the equity markets
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Old 08-06-2007, 12:15 PM   #9
Confused about dryer sheets
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Unfortunately the defined benefit pension has no COLA. No benefits from MegaCorp when I leave either way other than the pension $.
DW does have good health care benefits from her employment at a large hospital, however.
I do wonder when MegaCorp is going to do away with the pension. New hires have not been able to particpate for several years- maybe it would be better to apply and get 57% for nine more years than to stand a chance of not getting zip. The income would certainly give me some more flexibility in when and what j*bs I would need to do to keep our heads above water-
Thanks for all the viewpoints! It has started me looking at some other options.
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Old 08-06-2007, 02:51 PM   #10
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Welcome to the board. It looks like you have some pretty good questions and have received some good responses so far.

A few comments of my own:

Your desired income in retirement will come from a variety of sources. If you DW really really wants to work until she is 69 (my heart goes out to her if she does) then your situation is less complex. However, if she throws in the scrubs in a couple of years then you must then make up that income form somewhere or reduce expenses by a similar amount.

Waiting for a pension to bloom or grow can be a very painful process. Sometimes it is worth the wait...other times it is like daily torture.

Your information on the specifics of your pension are a bit foggy. It is not clear what you are asking. Please try it again with some additional specifics if you can so the money experts here can do the math for you.

For what it's worth....I took early retirement and the reduced pension. My situation required it at the time but later on I wished I have waited. My life situation changed and I decided to continue working for a different company (no pension plan) for longer than orginally planned so the pension was not needed.

It is clear that unless your retirement income from pensions and wife's job is adequate to fund your lifestyle then what does it matter when you retire? Ont eh other hand...if you think DW will pull the plug sooner you will need some additional income to pay off your debts (car, mortgage and CC debts.)

Getting to FIRE requires controlling debt (some eliminate it completely) controlling expensed and stretching your retirement income to be sure you don't outlive it.

Good luck and welcome to the board.
Work? I don't have time to work....I'm retired.
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Old 08-06-2007, 04:30 PM   #11
Confused about dryer sheets
Join Date: Jul 2007
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Thanks for the input- I'll post the financial questions and details in the appropriate forum-
and see what the math whizzes can tell me.

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