Downshifting Life to Fastrack FIRE - Early 40's Corporate Lackies

[StealthSlacker]

Howdie. I am half of one of the legally married gay couples in CA - we live in the Sacramento area and have always been good savers with an eye on our futures. We have about $600K in 401Ks / IRAs and $150K in a taxable investment account managed by LPL Financial. Cash savings is $45K. Only debt is our mortage on the current (fancy) home - $300K, value $500K.

I've worked for the same company since graduating from college in 1992 and now qualify (rule of 60) for retiree benefits at age 44. No subsidized healthcare, so it isn't worth much. However, I can purchase into the group plan and cover my spouse. DH is 4 years my junior but has done a mix of contract and permanent employment so no employer sponsored retirement bennies are in his future. Neither of us love our jobs or employers, or would chose to do what we do if we weren't paid well.

Things were going along as expected for us young urban professionals trodding the corporate treadmill until a series of health setbacks knocked the foundation out from under us. A serious injury and 6 month recovery (me) followed by a near fatal adverse drug reaction (husband) and 2 + years of ongoing side effects has caused us to re-examine our priorities. My husband continues to struggle with ongoing health problems, complicating the issue of ER as we need a health care solution that can cover his needs.

The other major issue is that my work environment has deteriorated over this same time, and is intensifying at an alarming rate. Job security has never been an issue, but job abandonment may become the solution if I don't make some decisions or effect some changes. I am stressed out, having trouble sleeping, and I want nothing more than to quit today. I am done with it.

We are finishing our first read through of Your Money or Your Life and truly believe in ourselves and our ability to forge a new chapter in our lives. The word "sabbatical" has been introduced. We are very fortunate to have resources, and are now believing that rather than a "Cadillac" retirement in our 60's, we'd prefer a liveable life now.

 

[walkinwood]

Welcome!

Your Money or Your Life was the first book that seriously motivated me to become financially independent. The financial / investment chapter of that book, though, is woefully out of date - having been written in the days of double-digit bond coupons. I recommend Bob Clyatt's (a member of this board) Work Less, Live More for an up-to-date guide to the financial & other aspects of semi-ER or ER.

 

[donheff]

Welcome SS. Take your time figuring out the path forward. Don't let the emotional pressure of the moment lead you to rash decisions but, at the same time, let it be a lesson going forward.

 

[chris2008]

You do not seem to be in bad shape financially. I hope the health issues will improve and go away soon.
To prepare for ER a lot of people here recommend tracking expenses. It has improved our saving rate and allows us to predict our financial requirements in ER more precisely than popular rules of thumb.
If you have read YMYL you might be interested in the forums at www.simpleliving.net, too.

 

[midlifeguy]

StealthSlacker -

Sorry to hear about the health issues, but I can totally relate to your situation generally speaking. I'm on the other coast, but appear to be in your age bracket, and my partner and I have also been thinking long and hard about starting a totally different life. He also has health problems, but thank God he's blessed with health insurance for the rest of his life when he retires in two years. Anyway, I would echo what someone else said and just encourage you to not do anything rash - put a plan in place and have some very specific goals and timelines BEFORE you leave the job. I quit my job fourteen months ago (after having made a decent financial cushion in an acquisition) and felt liberated for a while but later found myself dealing with a pretty brutal identity crisis, trying to decide what to do next in life. While I know I'm lucky that I can get by without working right now, I have found myself ruminating too much and becoming almost paralyzed with fear and indecision. I know I'll get through it, but I wonder if I had stuck around at my company and made it work for a little while, maybe I could have put a plan in place and made some longer-term decisions before bolting and I would have a better direction right now. (Or maybe I needed to get out in order to sort through my feelings - not sure). Just have a plan if you can. From your post, it doesn't sound like you have any semblance of a plan (other than to "get out") so I would put something together before making the big decision.

 

[StealthSlacker]

We definately need a plan! Thanks for the thoughtful replies. I haven't really formed a great idea of what life would be like outside of MegaCorp and need to figure that out.

I have been browsing the forums and there is a lot of deep content here. I'm encouraged and feeling more confident that we can build a successful plan. I think we are in great financial shape, but need to keep our lousy jobs because of the subsidized health care until we have a lot more money saved, or health care becomes more affordable.

midlifeguy - I understand what you are saying, and think I'd probably react similarly. I tend to second guess my second guesses, and even a generous cushion would feel slim. But as you say, this is often how we work stuff out. Does your partner have a plan for what to do in 2 years?

 

[Helen]

Hi Stealth,

I'm sorry to hear of your health problems, I hope it improves. You guys are doing great as far as savings. Do you have a goal in mind in terms of how much you need to retire on?

You are right, there is a wealth of information on this forum.

I'm glad you joined and look forward to reading your posts. It's nice to have other gay people here as our situation is a little bit different.

Warm regards,

-helen

 

[flyfishnevada]

Welcome! I am 43 and will retire from State of Nevada this summer. Full pension of about $5000/mo + partial health beni's. I had my own health issues (colonectomy due to diverticulitis. Lost ten inches of colon and have a nice 10 inch scar to show for it. Eat your fiber!!!!) that began to shift my thinking. Until about 3 months ago I had still planned on working until the kids were gone to build bigger savings for a "Cadillac" retirement starting about 50-52. Then I found Your Money or Your Life.

Working hard for 6 to 8 more years just wasn't sitting right and the book kind of reset my thinking. Once I started thinking about what really made me happy, working to get more money kind of fell out of favor. We are now tracking our spending (two weeks so far) and are thinking of selling our home with the $2000/mo mortgage and downsizing.

I am planning to work part-time/casual in my field and for myself (small hobby business, writing a book) to build a smaller savings and pay bills until we can adjust our spending. Yes, that means I will be semi-retired (DW already is part-time from home), but working doing what I want, when I want beats the toxic office environment. I have also made arrangements to be able to play at full retirement for about 6 months. We have also looked at alternative means of living after the kids are gone. Instead of a house and mortgage, maybe full time RVing, condo, sailboat, whatever.

We are thinking that the experiences we have and spending time with each other far outweighs a big house, fancy cars, expensive toys.

You aren't alone. If you want to do it, go for it!!! You will find lots of support and very little "you'er to young!" or "what will you do?" stuff here. Good luck on your RE and I hope the health issues can be resolved. I think sometimes getting out of the rat race is a big step in the right direction in that regard.

Your Money or Your Life was the first book that seriously motivated me to become financially independent. The financial / investment chapter of that book, though, is woefully out of date - having been written in the days of double-digit bond coupons. I recommend Bob Clyatt's (a member of this board) Work Less, Live More for an up-to-date guide to the financial & other aspects of semi-ER or ER.

I have seen that book. Now that you mention it, I will see if it is at my library (see YMOYL is already working it's magic).

 

[soupcxan]

I am 43 and will retire from State of Nevada this summer. Full pension of about $5000/mo + partial health beni's.

How is this possible?

 

[StealthSlacker]

Hi Stealth,
Do you have a goal in mind in terms of how much you need to retire on?

Hi Helen! We need to figure that out. When DH was on disability ('08), we set a plan in motion to lower our current fixed costs as much as possible, with the goal of living WELL on one paycheck. So I know where our minimum is today (still too high but that is why I am here!), but we won't continue to live in this city when we stop working.

After thinking on it last night, there is more of a plan in place than I realize. We own some family land in a semi-rural area and are talking about building a modest home there (using ca$h) over the next few years. When we are ready, or when circumstances dictate, we will sell the current fancy house and move there. A lot of moving parts in that plan, but it is motivated by wanting to see a recovery in the local housing market before making a move, and also a MegaCorp-instilled desire to take advantage of the depressed Northern CA construction industry to lock in lower costs labor and materials to build the house.

fly, I too plan to be "semi-retired", not in my current professional field, but rather in a field of interest. YMOYL has made think about the "what do you want to be when you grow up" question for the first time in years. I love to repair things and am very good at it. I am a decent auto mechanic and love machines of any description. I can drive a tractor, backhoe, and 30' box truck. There has got to be something in there that I could do for some scratch!

 

[Onward]

Then I found Your Money or Your Life.

That pesky book has ruined more good careers! Including mine....

 

[flyfishnevada]

How is this possible?

30 years at any age. Started when I was 18, bought 5 years. 18+25=43. Tada!!

 

[flyfishnevada]

fly, I too plan to be "semi-retired", not in my current professional field, but rather in a field of interest. YMOYL has made think about the "what do you want to be when you grow up" question for the first time in years. I love to repair things and am very good at it. I am a decent auto mechanic and love machines of any description. I can drive a tractor, backhoe, and 30' box truck. There has got to be something in there that I could do for some scratch!

Yes! I am not an engineer anymore. I am a writer. Been thinking about writing books for years. Now I am doing it, or at least doing the research and planning if not the actual writing. YMOYL is a little too hippie/green for me, but core message is solid. It's changing the way I look at life.

 

[clifp]

30 years at any age. Started when I was 18, bought 5 years. 18+25=43. Tada!!

No offense flyfishing and while I am happy for you, this is outrageous.
5K/month equal $60K a year. Presumably there is some COLA aspect to your pension. At age 43 the state of Nevada will on average pay you for 35 more years. You would need the equivalent of more than 1.5 million to get a $60K pension. Or to put it another way the pension is the equivalent of a pay raise of $55,000 a year (assuming a return of 8%), over the last 25 years.

However, it is impossible to argue with your logic of taking the money and run.

 

[flyfishnevada]

No offense flyfishing and while I am happy for you, this is outrageous.
5K/month equal $60K a year. Presumably there is some COLA aspect to your pension. At age 43 the state of Nevada will on average pay you for 35 more years. You would need the equivalent of more than 1.5 million to get a $60K pension. Or to put it another way the pension is the equivalent of a pay raise of $55,000 a year (assuming a return of 8%), over the last 25 years.

However, it is impossible to argue with your logic of taking the money and run.

That is 75% of my average salary for the last three years and ya, it is COLA'd. I have heard it is one of the best in the nation. I am not sure why. Maybe it was created way back when to coax people to come to Nevada. Who knows? Its a fairly well funded pension and it is protected by law from being raided. I would usually have to work 30 years, but I bought five years of service. Because I was so young and made so little money (I started in the mail room), it only cost me $14,000. Now it would cost me about $130 to by 5 years. I am not offended. It is what it is and I wouldn't expect anyone to pass up a deal like this on principle. I didn't!

Sorry for the inadvertent thread jack

 

[Milton]

Your Money or Your Life ... great book. I don't personally agree with the investing advice, but the rest of it remains very useful.

Michael, we don't have a lot of time on this earth! We weren't meant to spend it this way. Human beings were not meant to sit in little cubicles staring at computer screens all day, filling out useless forms and listening to eight different bosses drone on about about mission statements.

 

[Rich_by_the_Bay]

Welcome aboard. I'm impressed at your adaptibility after life threw you a couple of curveballs.

One small note - the firm that is managing your investments - how much in the way of fees and commissions are they charging? One of the most important pieces of my retirement "evolution" was to fire my advisor and set out on my own.

Check the archives for other suggestions but books by Solin, Bogleheads, Lucia and others might convince you go out on your own. Remember: a 1.5% annual fee may not seem like a lot, but when you are living on 4% of assets a year (as you might in FIRE) it's substantial.

 

[HsiaoChu]

...... listening to eight different bosses drone on about about mission statements.

After 39 years of this...... it does get old. And when you've been listening to it for longer than the "droners" have actually been living, its also kind of funny in a macabre way.
Z

 

[Walt34]

No offense flyfishing and while I am happy for you, this is outrageous.

Why is that outrageous? The state offered him a deal 30 years ago and he accepted it.

I have a similar arrangement - DB pension, 100% COLAs, health insurance (I pay 30% of the group premium). But I also worked 18 years of weekly rotating shifts which is now known to play havoc with circadian rhythms and statistically cut five to seven years off my life.

I paid my dues. So did he.

If it makes you feel any better the retirement plan that I'm under is not being offered now.

 

[Milton]

Why is that outrageous? The state offered him a deal 30 years ago and he accepted it.

clifp can speak for himself; but I suspect that he meant that it was outrageous that the elected politicians (who are ostensibly the guardians of the public purse) would offer/approve such a sweatheart pension. I didn't infer any criticism of flyfishnevada from his post.

If it makes you feel any better the retirement plan that I'm under is not being offered now.

It is a continuing mystery to many voters why public servants enjoy such good deals (job security, indexed pensions, decent salaries, handsome vacation entitlements, full benefits, etc.) relative to the private sector. As government deficits mount, I suspect that the situation will gradually change ... it is no longer sustainable.

One of the most important pieces of my retirement "evolution" was to fire my advisor and set out on my own.

Me too. Fortunately this happened fairly soon into my investment journey.

 

[FinanceDude]

clifp can speak for himself; but I suspect that he meant that it was outrageous that the elected politicians (who are ostensibly the guardians of the public purse) would offer/approve such a sweatheart pension. I didn't infer any criticism of flyfishnevada from his post.

Maybe the taxes the govt collects on casinos allows them to do this??

It is a continuing mystery to many voters why public servants enjoy such good deals (job security, indexed pensions, decent salaries, handsome vacation entitlements, full benefits, etc.) relative to the private sector. As government deficits mount, I suspect that the situation will gradually change ... it is no longer sustainable.

It IS unsustainable, so all those folks that are govt employees close to the guaranteed pension ages and such should take a HARD look at ER because the benefits will be cut, and not just a little bit........

 

[donheff]

It is a continuing mystery to many voters why public servants enjoy such good deals (job security, indexed pensions, decent salaries, handsome vacation entitlements, full benefits, etc.) relative to the private sector. As government deficits mount, I suspect that the situation will gradually change ... it is no longer sustainable.

I find it amusing that people find government benefits so mysterious. Al you need is a sense of history. When I entered the Federal Civil Service in 1974 the general perception was that Federal salaries were low relative to the private sector. The benefits were pretty good, but not great compared to big, stable corporations like IBM. By the 80's Feds were completely demonized. College recruiting was extremely difficult. I can remember kids asking why in the world they should consider a Federal career when they could make far more in the private sector. The Federal pension was viewed as pretty generous but also as "golden handcuffs" that forced civil servants to stay with the government once they had reached about a decade of Federal employment. The absence of a 401K plan and the lack of portability was viewed as a disincentive. The replacement FERS system combined Social Security, the TSP (a 401K look alike) and a substantially reduced defined benefit plan, with reduced COLAs. The whole package was intended to match the best of private sector practices.

The FERS system was treated as a recruitment tool offering many of the benefits the private sector was offering. Many of my co-workers opted to convert from the CSRS to FERS to take advantage of the portability and greater TSP component. Even so, throughout the late 80s, early 90s, recruitment still remained a bear. I well remember "Workforce 2000" predicting recruitment calamities if the Feds could not make their salaries more competitive. Along comes a little recession and jobs are scarce everywhere -- by, by Workforce 2000 fears. Later in the dot com boom Fed employment once again looked like a backwater. Money was to be had in the private sector. Recruitment once again a bear, salaries perceived as non-competitive. Boom, a crash and suddenly those of us who stayed in CSRS were prescient and our salaries suddenly seemed generous. The civil service was golden. The current recession makes that seem even more the case.

The bottom line is that governments at all levels have historically been perceived as under paying employees and the benefits package has been viewed as balancing the pay to a degree. I agree with the OP that entering into such a contract 30 years ago was not a reprehensible choice and offering such a contract was not lunacy at the time. Governments need to attract good employees and they need to offer a compensation package sufficient to do so.

 

[yakers]

IMHO the shift on the Federal level from CSRS to FERS probably did defuse citizen resentment. Now all Federal civil service get social security and a 401K type package. I see that as likely to evolve for state & local governments, I am surprised it has not happened yet. I am happy to be one of the old CSRS types, I had an opportunity to convert to the new system and there were times in the 80s & 90s when I had to wonder why I did not as all those TSP (401k) accounts had grown beyond my benefit package. Recently my intelligence has seemed to improve As to the regular pay package at NASA they could not come close to the salaries of the defense industry and silicon valley. Every scientist I knew was there because they wanted to and had turned down better paying jobs. NASA set up a lot of commercial, university and research center contracts to provide better pay try to capture the talent. Executives in the Federal government left for double (and in once case, a friend of mine, for 10 times) the pay. They were already working 80 hour weeks and had plenty of responsibility for mission success just not profitability. The MD head of the medical operation gets paid $135K to $150K period, no bonuses, profit sharing or even fancy trips (all Federal travel is coach). In Europe national govt executives get paid comparable to industry. The head of the US Fed is the lowest paid federal bank manager of any major country.
Now I understand that a lot of folks see someone hired by the local city (especially) county and state governments and wail about civil service pay & benefits but it just isn't true on the Federal level. If wages get too far below industry you will first get only lesser quality people and eventually corruption, look at how low civil service pay works in 2nd & 3rd world countries.

 

[Milton]

I agree with the OP that entering into such a contract 30 years ago was not a reprehensible choice

I also agree. One cannot really fault a union for advocating the best possible terms for its members.

offering such a contract was not lunacy at the time.

Time will tell.

Governments need to attract good employees and they need to offer a compensation package sufficient to do so.

This begs the question whether an attractive compensation package actually results in engaged, service-oriented government employees. Unlike the private sector, there is no competition so 'clients' / 'customers' have no other options, and market forces generally have no impact.

 

[stoutboy]

I agree completely. I don't get the outrage and misplaced anger at state/fed workers. Instead of the sour grapes, they should try to get state/fed jobs themselves. And this whole business about 'unsustainability' is bunk. Why aren't these same people complaining about CEO pay and bonuses? Why aren't they angry about the atmospheric disparity in pay of CEOs compared to workers? Or Wall Street shell games? Our economy has become one where we don't produce anything. Our 'wealth' is dodgy financial instruments and 'products'. That's what's really unsustainable in our economic system. Instead, it seems many on these forums are all to happy to join the race to the bottom. Good on you for your pension, says I.

I find it amusing that people find government benefits so mysterious. Al you need is a sense of history. When I entered the Federal Civil Service in 1974 the general perception was that Federal salaries were low relative to the private sector. The benefits were pretty good, but not great compared to big, stable corporations like IBM. By the 80's Feds were completely demonized. College recruiting was extremely difficult. I can remember kids asking why in the world they should consider a Federal career when they could make far more in the private sector. The Federal pension was viewed as pretty generous but also as "golden handcuffs" that forced civil servants to stay with the government once they had reached about a decade of Federal employment. The absence of a 401K plan and the lack of portability was viewed as a disincentive. The replacement FERS system combined Social Security, the TSP (a 401K look alike) and a substantially reduced defined benefit plan, with reduced COLAs. The whole package was intended to match the best of private sector practices.

The FERS system was treated as a recruitment tool offering many of the benefits the private sector was offering. Many of my co-workers opted to convert from the CSRS to FERS to take advantage of the portability and greater TSP component. Even so, throughout the late 80s, early 90s, recruitment still remained a bear. I well remember "Workforce 2000" predicting recruitment calamities if the Feds could not make their salaries more competitive. Along comes a little recession and jobs are scarce everywhere -- by, by Workforce 2000 fears. Later in the dot com boom Fed employment once again looked like a backwater. Money was to be had in the private sector. Recruitment once again a bear, salaries perceived as non-competitive. Boom, a crash and suddenly those of us who stayed in CSRS were prescient and our salaries suddenly seemed generous. The civil service was golden. The current recession makes that seem even more the case.

The bottom line is that governments at all levels have historically been perceived as under paying employees and the benefits package has been viewed as balancing the pay to a degree. I agree with the OP that entering into such a contract 30 years ago was not a reprehensible choice and offering such a contract was not lunacy at the time. Governments need to attract good employees and they need to offer a compensation package sufficient to do so.