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can retire at 48 and looking for opinions
Old 11-30-2016, 03:55 PM   #1
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can retire at 48 and looking for opinions

Hello, I can retire from my current job at the end of 2020 (125K). At that time I will be 48 and DW will be 52. I project my pension to be about 75K per year and I will be able to keep my health coverage for myself and the family. I have twin sons that are 4 ˝(yes, we started late). Currently, we have a little north of 1 million in retirement accounts and 150k spread in stock (85k), mutual fund (22k) and rental home equity (43K).Our home will be paid off next year which will give us 19k left on a HELOC as our only remaining debt. Annual expenses are currently running about 70k (health ins, car ins, house taxes and ins. Utilities, car(s) fuel and maint.Food, cc bill, misc). DW has been home with the boys since birth and expects to go back to work when the boys are in school every day (next year). Her salary can vary from low up to 100k but as we live in central PA it usually limits high paying prospects.

I always thought about retiring early and was flexible on that thought. After my boys were born a lot of people told me I will be working forever to pay for their college. Their birth actually had the opposite effect on me as I want to retire as early as I can so I can spend as much time with them before they go off to college.So here I am, four years away from that potential moment and wondering if I can pull it off.I have always been somewhat of a hyper planner/forward thinker and have really been thinking/planning for early retirement since I was 20.As far as the college cost question, I currently plan to utilize the 150k portion of our investments to use toward tuition.The hope is that when they go off to college we will have more than 300k to help.This will still leave us with more than a million in investments as of today.With my contributions and match over the next four years and assuming a 7% ROR we should have 1.4 million. This does not account for DW, hopefully, working or the no mortgage benefit which may up the total.My thought is we should be pretty close to maintaining current standards with my pension since we won’t be paying toward 401k, state/local taxes (none on my pension), mortgage and a few other paycheck deductions I have now.I figure, if needed, we could do a SEPP withdrawal from one of our retirement accounts that would bump up available funds but that would only be if truly needed.DW has said she can/will still want to work but, at this tme, we are not sure doing what or for how long.

We do a lot of local activities with the boys that typically don’t cost much money but we did take them to the Caribbean with us last year and have another trip this coming year. There is the desire to travel and I would love to be able to continue that in the future but would think that would be no more than once a year, if that, since the boys will be in school.I am not naďve enough to believe that I can fill my days with fishing, hunting, hiking etc and be content, but I do not want to retire to then have to work.Key words “have to.”I am not sure what I want to do but I am interested in DYI projects and perhaps a house flip.I realize the tv shows are modest exaggerations at best and see that possibility as a structure for me doing something I really enjoy.I figure it won’t be contingent on making a financial windfall but rather to give me something to do that I could make “some” money on.I also would like to volunteer with local organizations.I always see request for help but I never seem to have the time so retirement would hopefully give that time if I choose to pursue.

I did take out a 750k term life policy last year which will cover the family two years after the boys are out of college.

Any opinions advise or suggestions would be much appreciated. I welcome input from all and would love to hear from someone who may be similarly situated and a few years ahead of me.Thank you for your time.
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Old 11-30-2016, 04:00 PM   #2
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Old 11-30-2016, 04:48 PM   #3
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First off, a question. Is your anticipated pension inflation adjusted or a set amount? $75k in 15 years won't likely go nearly as far as it does today so it's a significant difference in your planning depending on the answer to that.

Second question (sure, why not two of 'em), are you paying for insurance out of pocket now or is it employer subsidized. If it isn't out of pocket, it's likely to cost significantly more than you currently pay for that insurance when you no longer have an employer covering much of the costs. You'll need to account for that in your planning as well.
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Old 12-01-2016, 07:50 AM   #4
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First off, a question. Is your anticipated pension inflation adjusted or a set amount? $75k in 15 years won't likely go nearly as far as it does today so it's a significant difference in your planning depending on the answer to that.

Second question (sure, why not two of 'em), are you paying for insurance out of pocket now or is it employer subsidized. If it isn't out of pocket, it's likely to cost significantly more than you currently pay for that insurance when you no longer have an employer covering much of the costs. You'll need to account for that in your planning as well.
Yes, the pension does have a cola. Health insurance is and will remain subsidized. This year I will have paid about $4000for full family coverage and I did project in cost increases.
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Old 12-01-2016, 07:58 AM   #5
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Then the best advice I have right now is to track total actual spending (not including retirement savings) so you can determine how much income you need to maintain your quality of life in retirement. Wouldn't want to retire based on your "expenses" only to realize you can't afford to do anything outside of watch tv at home after all.
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Old 12-01-2016, 08:44 AM   #6
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Are you sure that MegaCorp will allow you to retire at your tender age? My company wouldn't allow early retirements until 55 years of age due to government regulations.

My close friend was in management at United Parcel Service, and he had a very large UPS stock account--enough live on forever. They too made him wait until age 55 to retire.

You're in a completely different position in life--with such young children. If you're burned out in your job, you could take some time off and start another profession or go self employed.

While you've done well for your age, remember you've got to live for the second half of your life. Healthcare and raising kids is very, very expensive, and we're on our knees to inflation in the long run.
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Old 12-01-2016, 08:45 AM   #7
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Old 12-01-2016, 08:55 AM   #8
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Originally Posted by Bamaman View Post
Are you sure that MegaCorp will allow you to retire at your tender age? My company wouldn't allow early retirements until 55 years of age due to government regulations.

My close friend was in management at United Parcel Service, and he had a very large UPS stock account--enough live on forever. They too made him wait until age 55 to retire.

You're in a completely different position in life--with such young children. If you're burned out in your job, you could take some time off and start another profession or go self employed.

While you've done well for your age, remember you've got to live for the second half of your life. Healthcare and raising kids is very, very expensive, and we're on our knees to inflation in the long run.
Your MegaCorps might be feeding you a line.... My salaried DW will be elgible at age 52 (and 30 years of service) next fall with a heavily subsidized ER pension.

It is possible than any regulations regarding this may have grandfathered employees hired before a certain date.

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Old 12-01-2016, 08:55 AM   #9
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Sounds thin to me. I would plan to work longer and then retire ahead of schedule if thinks work out better than expected. The cost of your kids will be going up in the coming years not down.
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Old 12-01-2016, 11:54 AM   #10
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I note from your profile that you work for government at some level, very generous pension!

You may need to make a decision on priorities--become a soccer Dad or maintain spending/lifestyle but retiring appears do-able.

My story: I retired at age 50 with one and three year old sons under a govt early retirement program. The decision to be an active participant in my sons' lives was the clinching factor. Like you, I had a COLA'ed govt pension, about $1 mil in savings, no debt, and a wife that quit her career when first son born. Being LBYM my whole life, we just were careful with the spending, used cars, lots of camping travel with the boys.

I picked up a "dog days of winter" j*b though to keep busy during the winter, working for a CPA firm as a backroom seasonal tax prep person. Started in AL, but last ten years in PA. Also have been school crossing guard, soccer coach/manager for my sons travel soccer teams, treasurer of Cub and Boy Scouts (both are now Eagle Scouts).

Having young kids in retirement is very non-typical. Between school, travel soccer, and Scouts, our family schedule essentially revolved around their activities and our involvement. I derived so much enjoyment of being involved that I've never second guessed what may have been I had stayed in my career (engineering). Last year I did a wilderness canoe trip with one son, two years ago we all rafted the Grand Canyon.

Now 67, one in college, the younger one a senior in HS.

BTW, in PA, your pension may be taxable if you retire prior to your organizations full retirement age. If your 1099R for your pension, box 7 is coded 1 or 2 (early distribution), the pension is taxable to the extent that the distributions exceed your basis in the retirement plan. Once the code is 7 (normal distribution), then the pension is not taxable on a PA return.

Since you don't have much in the way of assets outside of your retirement plans, I'd suggest that concentrate on building up those assets in next few years to give you flexibility in what funds to use to augment your pension income as needed without the potential tax consequences.
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Old 12-01-2016, 12:54 PM   #11
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Originally Posted by exnavynuke View Post
Then the best advice I have right now is to track total actual spending (not including retirement savings) so you can determine how much income you need to maintain your quality of life in retirement. Wouldn't want to retire based on your "expenses" only to realize you can't afford to do anything outside of watch tv at home after all.

Thank you. Agreed. I actually planned to start diligently tracking expenses at the start of last year (potential 5 years out) but it didn’t happen. The plan is to start Jan 1 and see how thing go. The expenses mentioned in the OP include CC expenses which is where we usually put travel/vacation charges. I have been tracking CC expenses over the past 9 years so I am using an average plus an additional amount for future expenses.
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Old 12-01-2016, 01:22 PM   #12
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I note from your profile that you work for government at some level, very generous pension!

You may need to make a decision on priorities--become a soccer Dad or maintain spending/lifestyle but retiring appears do-able.

My story: I retired at age 50 with one and three year old sons under a govt early retirement program. The decision to be an active participant in my sons' lives was the clinching factor. Like you, I had a COLA'ed govt pension, about $1 mil in savings, no debt, and a wife that quit her career when first son born. Being LBYM my whole life, we just were careful with the spending, used cars, lots of camping travel with the boys.

I picked up a "dog days of winter" j*b though to keep busy during the winter, working for a CPA firm as a backroom seasonal tax prep person. Started in AL, but last ten years in PA. Also have been school crossing guard, soccer coach/manager for my sons travel soccer teams, treasurer of Cub and Boy Scouts (both are now Eagle Scouts).

Having young kids in retirement is very non-typical. Between school, travel soccer, and Scouts, our family schedule essentially revolved around their activities and our involvement. I derived so much enjoyment of being involved that I've never second guessed what may have been I had stayed in my career (engineering). Last year I did a wilderness canoe trip with one son, two years ago we all rafted the Grand Canyon.

Now 67, one in college, the younger one a senior in HS.

BTW, in PA, your pension may be taxable if you retire prior to your organizations full retirement age. If your 1099R for your pension, box 7 is coded 1 or 2 (early distribution), the pension is taxable to the extent that the distributions exceed your basis in the retirement plan. Once the code is 7 (normal distribution), then the pension is not taxable on a PA return.

Since you don't have much in the way of assets outside of your retirement plans, I'd suggest that concentrate on building up those assets in next few years to give you flexibility in what funds to use to augment your pension income as needed without the potential tax consequences.
Thanks for the info. Yes this is govt and based on my job I am eligible for full retirement benefits at 48. I appreciate your response as I was hoping someone similarly situated would chime in.My thought, if I truly intend to retire at 48, would be to bolster finances/investments as much as possible while I am still working.We have also been LBYM so I don’t think there would be a radical change in retirement.I am on my 4th vehicle (used and paid off) in my life and have owned one home which is a modest 1500sf.I pack a lunch every day, make my own coffee blah blah blah.

I definitely don’t want to step out the door if I am shooting myself in the foot financially but you seemed to have realized what I am envisioning, which is the time with your children is precious and fleeting. It is incredibly sad to me to think how fast time is going and that it is only 14 years until they would potentially be going off to college.If I go at 48 then I would have 10 years of quality time with them before they are off on their own.

If you don’t mind me asking, did you have any luck with financial aid for college? Based on my research it doesn’t seem likely we will be eligible for FA but I will have two in school at the same time which may help somehow.Assuming you did FAFSA, how did pension etc. factor in.Any thoughts or advice on that would be appreciated.
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Old 12-01-2016, 03:49 PM   #13
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I definitely don’t want to step out the door if I am shooting myself in the foot financially but you seemed to have realized what I am envisioning, which is the time with your children is precious and fleeting. It is incredibly sad to me to think how fast time is going and that it is only 14 years until they would potentially be going off to college.If I go at 48 then I would have 10 years of quality time with them before they are off on their own.

If you don’t mind me asking, did you have any luck with financial aid for college? Based on my research it doesn’t seem likely we will be eligible for FA but I will have two in school at the same time which may help somehow.Assuming you did FAFSA, how did pension etc. factor in.Any thoughts or advice on that would be appreciated.

My wife and I realize that the routine of the last 16 years is coming to an end.....soon to be empty nesters and the adjustments to our routine and planning. It hurts to ponder the change as the boys, as children, have been a huge part of my life. We recognize that our roll now is to transition them to independence, but I'm already missing them as children.

Financial aid, not really. Just finished the FAFSA a few days ago. In our case, 60% of our assets are after tax investments, and FAFSA calculates over 5% is available for college expenses. And those assets have grown very nicely as we don't make regular withdrawals and the stock market has done well in recent years. We live largely on pension, SS (WEP), and modest earned income and only touch investments for "special" items (newer used car, once every three year special vacation, etc.) Even with two soon to be in college, we can expect no need based aid, particularly since both have chosen state schools. Pensions, TIRA withdrawals, are both considered income for FAFSA purposes. Assets sitting in retirement accounts are not counted.

Of course, the rules may be different in 14 years.
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Old 12-01-2016, 04:56 PM   #14
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I retired from state employment and here my health insurance cost skyrocketed even though I get to keep the government insurance. They just make you pay a lot more for it. So I would check to see if that is the case for you. When kids to school age they can keep you very busy with activities, etc and it is a fun time.
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Old 12-03-2016, 11:03 AM   #15
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I worked as I raised my children and missed little of the fun I could have with them. Of course I did miss out on more time with my hobbies.

My job allowed me to get off work at 3:30 so I was available for any after school activity. I help with coaching sports and other after school activities. Always took our vacation time.

Kids grew up seeing me work hard and both of them are now are hard workers raising their own families.

Kids go through many stages but for the most part they would rather spend time with friends than dad. Trying to remember how old my daughter was when it was just not cool to be seen with dad (13 to 16 maybe).
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Old 12-03-2016, 12:54 PM   #16
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You seem to have thought this out carefully. The advice to track expenses is right on and probably one of the most important things you can do.

Don't obsess about the date. Anything can happen with the stock market between now and then. It may mean you'll have more than you need at 48, or you may have to work a few years longer. You have no control over it, so pick a suitable asset allocation and go along for the ride.

And remember to enjoy every day.

Good luck!
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Old 12-05-2016, 10:54 AM   #17
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My wife and I realize that the routine of the last 16 years is coming to an end.....soon to be empty nesters and the adjustments to our routine and planning. It hurts to ponder the change as the boys, as children, have been a huge part of my life. We recognize that our roll now is to transition them to independence, but I'm already missing them as children.

Financial aid, not really. Just finished the FAFSA a few days ago. In our case, 60% of our assets are after tax investments, and FAFSA calculates over 5% is available for college expenses. And those assets have grown very nicely as we don't make regular withdrawals and the stock market has done well in recent years. We live largely on pension, SS (WEP), and modest earned income and only touch investments for "special" items (newer used car, once every three year special vacation, etc.) Even with two soon to be in college, we can expect no need based aid, particularly since both have chosen state schools. Pensions, TIRA withdrawals, are both considered income for FAFSA purposes. Assets sitting in retirement accounts are not counted.

Of course, the rules may be different in 14 years.
Thank you for the info. Much appreciated!
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Old 12-05-2016, 10:55 AM   #18
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You seem to have thought this out carefully. The advice to track expenses is right on and probably one of the most important things you can do.

Don't obsess about the date. Anything can happen with the stock market between now and then. It may mean you'll have more than you need at 48, or you may have to work a few years longer. You have no control over it, so pick a suitable asset allocation and go along for the ride.

And remember to enjoy every day.

Good luck!

Thank you!
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Old 12-05-2016, 10:59 AM   #19
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I worked as I raised my children and missed little of the fun I could have with them. Of course I did miss out on more time with my hobbies.

My job allowed me to get off work at 3:30 so I was available for any after school activity. I help with coaching sports and other after school activities. Always took our vacation time.

Kids grew up seeing me work hard and both of them are now are hard workers raising their own families.

Kids go through many stages but for the most part they would rather spend time with friends than dad. Trying to remember how old my daughter was when it was just not cool to be seen with dad (13 to 16 maybe).


I figured the same thing with the ages and wanting to be with their friends. Time will tell. If I do go then I hope to have five years or so till they hit that point. Thanks for the info.
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