Can I retire?

[jgman]

Hello everyone,
I am currently a Federal Employee looking to retire on December 31 2021. Wanted to get opinions on whether I am financially able or whether to wait a few more years.

Age 56 (turn 57 January 2022)
Single no kids (no heirs so want to spend it all before I pass
TSP $1.1 million
Roth 100k
taxable savings 100k
Debt 470k mortgage (house worth 750k)
no other debt
Federal Pension 5k/month (includes health and dental insurance premiums)
Rental income from home 1k a month

I would like to keep the house although I know I should probably sell it. I love the location and rent out part of it for 1K/month. Im in the process of refinancing to a low rate mortgage P&I of $2600/mth

Thoughts?

 

[REWahoo]

Check out this link: https://www.early-retirement.org/fo...-answer-before-asking-can-i-retire-69999.html

 

[pb4uski]

It depends. If you can live on $80k a year then you're good to go. If you need $300k a year to live then keep working. And lots of in betweens.

IOW, we need to know how much your annual living costs are, including periodic car, roof and HVAC replacements, health insurance, taxes, etc before we can give you a sensible assessment.

 

[bizlady]

I would say since you have a pension of 60k a year, assuming you get that right away, you could comfortably take 2.5% of your tsp, if invested properly, and if you can live in about 85k a year including taxes, then you are probably good to go.

 

[jgman]

Want to travel and have fun so I need around 100k a year. Can always cut back if necessary. I receive the pension immediately. My refinanced mortgage will be around $2600 a month.

House is in very good shape. New HVAC and roof has less than 10 years.

 

[finnski1]

As others have said. you need to determine your actual reasonably accurate yearly spending including occasional bigger purchases (car roof etc) however with your pension and rental income you would only need to withdraw about 2.2 % yearly to spend 100k/year including taxes. I know this isobvious math but throwing it out there anyway.

 

[Dtail]

What is your expected social security benefits at X age?
Is your pension cola'd?

 

[jgman]

What is your expected social security benefits at X age?
Is your pension cola'd?

Estimated SS at 62 is $2400/mth

I believe federal pension receives COLA starting at age 62

 

[ShokWaveRider]

Yes.

 

[Dtail]

Estimated SS at 62 is $2400/mth

I believe federal pension receives COLA starting at age 62

Thanks. You appear good to go.
I ran your numbers through Firecalc using a 60/40 stock/fixed income allocation %.
The maximum spending yearly was calculated at 138k at 100% success rate.

 

[jgman]

Thanks. You appear good to go.
I ran your numbers through Firecalc using a 60/40 stock/fixed income allocation %.
The maximum spending yearly was calculated at 138k.

Perfect and thanks!

 

[pb4uski]

...You appear good to go. ...

+1

 

[Koolau]

In thinking about your expenses, be sure to keep in mind that your taxes might go up when you begin to draw from tax-sheltered funds (TSP is tax sheltered, right?). You will file as single, so std deductions are smaller than for us old married folk. In short, do an expense projection and don't forget the tax bite.

Try to figure your Social Security within FIRECalc. You may be able to draw quite a bit more between your ER date and your beginning of SS draw. I'm guessing you're good to go. Some folks here actually do a trial run - living on what they expect they can draw plus projected pension. Always remember that YMMV. Good luck!

 

[jgman]

In thinking about your expenses, be sure to keep in mind that your taxes might go up when you begin to draw from tax-sheltered funds (TSP is tax sheltered, right?). You will file as single, so std deductions are smaller than for us old married folk. In short, do an expense projection and don't forget the tax bite.

Try to figure your Social Security within FIRECalc. You may be able to draw quite a bit more between your ER date and your beginning of SS draw. I'm guessing you're good to go. Some folks here actually do a trial run - living on what they expect they can draw plus projected pension. Always remember that YMMV. Good luck!

Thanks for the advice. I realize Ill probably be in the 24 percent bracket but want to stay away from the 32 percent bracket

 

[pacergal]

Go through all of the questions in the post #2 from REWhahoo to review most issues, but it looks like you are good to go. It all depends on your actual spending.

 

[Bamaman]

You say something about selling the house. Is it worth the costs of refinancing if the home's going to be sold?

You are certainly capable of retirement. But you'd be in especially great shape if you would move to a less expensive place to live than Falls Church. A big mortgage is quite a lot to swallow for a single person.

 

[MikeWillRetire]

Based on your TSP, I'm assuming you are in the FERS system. If you have 30 years, then you will also get a supplement from retirement age to age 62. It is commonly known as the social security supplement. To estimate that, take your years of service and divide by 40. Multiply that by what your SS estimate will be at age 62.
Regardless, you look good to go.

 

[jgman]

You say something about selling the house. Is it worth the costs of refinancing if the home's going to be sold?

You are certainly capable of retirement. But you'd be in especially great shape if you would move to a less expensive place to live than Falls Church. A big mortgage is quite a lot to swallow for a single person.

Want to keep the house for a while longer as I like my neighborhood. I also want to stay In Northern VA and there really isn't anything cheaper unless I move to a condo. Prefer a house to a condo as it will be easier to sell and will also hold its value better.

 

[jgman]

Based on your TSP, I'm assuming you are in the FERS system. If you have 30 years, then you will also get a supplement from retirement age to age 62. It is commonly known as the social security supplement. To estimate that, take your years of service and divide by 40. Multiply that by what your SS estimate will be at age 62.
Regardless, you look good to go.

Yes I included the supplement in my 5k a month pension amount.

 

[jgman]

Go through all of the questions in the post #2 from REWhahoo to review most issues, but it looks like you are good to go. It all depends on your actual spending.

Thanks, and I have been doing a lot of reading and research the past several months. The feedback I received in this post reaffirmed my ability to call it a career and enjoy my retirement. Many thanks to everyone!

 

[MikeWillRetire]

Yes I included the supplement in my 5k a month pension amount.

So your pension is really about 3k per month. But your pension does not get a cola for 5 years until you turn 62. So at age 62, if inflation averages 2%, it may only be worth 2.7k in today's dollars.
Your SS estimate of 2.4k may be a bit high, especially if you haven't worked 35 years.
So let's say pension and SS equal 5k per month, 60k per year. Add in a 4% withdrawal from your portfolio, and you get 108k. But since you are young, I would suggest less than a 4% withdrawal. So say 100k.

 

[beowulf]

Jgman- as a retired fed who left several years ago, you are definitely good to go. Being single makes a huge difference. As to your house, if you like the area, keep it. As you said, you won’t find anything better or cheaper in the DC area. Just make sure to have a plan on what you want to do after retirement. Going from 100 mph to 0 can be quite a shock.

 

[jgman]

Jgman- as a retired fed who left several years ago, you are definitely good to go. Being single makes a huge difference. As to your house, if you like the area, keep it. As you said, you won’t find anything better or cheaper in the DC area. Just make sure to have a plan on what you want to do after retirement. Going from 100 mph to 0 can be quite a shock.

Thanks Beowulf.

If things get slow, I will take a part-time job doing something I enjoy. Working from home the past 9 months because of COVID was actually what convinced me it was time. I could never go back to commuting and working in an office.

 

[ncbill]

Thanks Beowulf.

If things get slow, I will take a part-time job doing something I enjoy. Working from home the past 9 months because of COVID was actually what convinced me it was time. I could never go back to commuting and working in an office.

So, could you move to a different federal position where you can stay fully remote?

Then you could travel and work from anywhere...

 

[jgman]

So, could you move to a different federal position where you can stay fully remote?

Then you could travel and work from anywhere...

Possibly, but I have no desire to work for the Federal Govt anymore. Also, I want to stay in DC area near family and friends.