Fed up .. Retiring or Semi-Retiring next year

[cyber888]

Hi, I have been lurking here a few times but have not posted much.
I'm very fed up with my current job and new boss. I'm doing really well and my work evaluations are well above average (evaluation is base on client feedback, not boss). I could feel zero appreciation from boss. It's time to go. My contract ends next year Sept. 2016, and I am just finishing my work contract before I turn 53 yrs old. I'm applying for other jobs, but if I don't get any new job starting next year, I may just have to retire. Me and my wife are experience anxiety from my quitting my job for next year, but she understands. My wife is a houswife, and has no job.

I won't reach $1 Million by the time I quit next year, but will have around $700,000 (pre-tax and after-tax savings) at 53. After-tax savings will be in tax-free bonds, and pre-tax 403b will be 80% stocks. We live in a low cost southern state and can survive on $3,500/month or $42,000/year, using Obamacare as insurance. My wife and I will collect social security at 62 years old, which is probably around $34,000/year base on social security statements/calculators. If I don't find a job, I might do a SEPP 72 from my 403b to tide us over to 62 yrs old, withdrawing minimally to get very minimal or zero tax.

My wife and i have already traveled 30+ countries and we have lived in Europe for 5 years, so we could retire with minimal overseas travel - been world travelers already from age 20s to 50s. We have a timeshare exchange for travel and a sister who works for an airlines and gives us companion passes for travel. So, we can retire with minimal travel expenses.

We have no kids and don't really have to leave any remaining retirement money when we croak. In short, our goal to spend our retirement money until it is zero a day before we pass on to the next plane of existence. LOL.

Our back-up plan, if our financial situation turns out to be not so good, is to go live in the Philippines when we hit 60 or older. Our social security income alone will be sufficient to sustain us in the Philippines, where we still have relatives and friends. Right now, $1500/mo or $18,000/year means a luxurious life in the Philippines.

Anyway, I plugged in $700,000 in Firecalc with Social Security income (at 62 yrs old) and 50% equities / 50% fixed income, 30 years, and it came out to 99.1% with one failed scenario. With 75% equities/25% fixed income, it was around 95% success. Anyway, I still have anxieties, and hope that subsides soon.

 

[brewer12345]

I bailed early as well, since I was very burnt out and just needed to get out. What I did was come up with several contingency plans that fit our circumstances and I planned to generate some income at least from time to time. What has happened is that I am apparently much in demand and am now working way too much! So I will be getting off one of my two contracts at the end of the year and the other one is an intermittent thing. I will take a few months off and keep my eyes open for interesting work that pays reasonably well and does not require me to show up in a cube or commit to be someone's workplace bitch full time.


How much could you easily generate in income working part time? 10 or 20k a year in part time work for 5 or 10 years can make a very big difference in portfolio draw statistics.

 

[cyber888]

I bailed early as well, since I was very burnt out and just needed to get out.

How much could you easily generate in income working part time? 10 or 20k a year in part time work for 5 or 10 years can make a very big difference in portfolio draw statistics.

Yeah, if I could do part-time and earn $20K a year - that would be nice, and I don't have to do a SEPP 72 until I turn 62.

 

[MBAustin]

I think most of us here would say you are cutting it closer than we would be comfortable with, unless you pick up some PT w*rk. If you haven't seen them yet, there are two excellent resources here that might be useful:

http://www.early-retirement.org/forums/f47/some-important-questions-to-answer-before-asking-can-i-retire-69999.html

and

Early Retirement FAQs - Early Retirement & Financial Independence Community

Tracking expenses in detail and making sure you have allowed for "emergencies" (roof replacement, car replacement, deductibles, etc.) is critical.

But I completely understand being fed up, and you're the only one who can decide when the benefits outweigh the risks.

 

[cyber888]

I agree MBAustin. I'm trying to find full time work at this point, where I'm appreciated. And if not, I'm definitely going to do part-time work. Thanks for your feedback.

I think most of us here would say you are cutting it closer than we would be comfortable with, unless you pick up some PT w*rk. If you haven't seen them yet, there are two excellent resources here that might be useful:

http://www.early-retirement.org/for...-answer-before-asking-can-i-retire-69999.html

and

Early Retirement FAQs - Early Retirement & Financial Independence Community

Tracking expenses in detail and making sure you have allowed for "emergencies" (roof replacement, car replacement, deductibles, etc.) is critical.

But I completely understand being fed up, and you're the only one who can decide when the benefits outweigh the risks.

 

[VFK57]

When you are aging it is not easy to find a decently paying job yet you might get lucky. On the other hand if no other opportunity here you can try to move to a country where living cost is far lower than here until you are 62 and apply for SS. In Equator, Costa Rica, Guatemala, Thailand, Philippines etc., you could live on$2,500 to $3,000 per month (medical and dental insurance included) unless you cannot do it because of elderly parents or/and grandchildren you need/ want to take care of.

 

[cyber888]

When you are aging it is not easy to find a decently paying job yet you might get lucky. On the other hand if no other opportunity here you can try to move to a country where living cost is far lower than here until you are 62 and apply for SS. In Equator, Costa Rica, Guatemala, Thailand, Philippines etc., you could live on$2,500 to $3,000 per month (medical and dental insurance included) unless you cannot do it because of elderly parents or/and grandchildren you need/ want to take care of.

My wife and I have no one to take care - no kids, no parents, nobody. No one to leave our money too. So, ideally, we have to spend all our money one day before we die. LOL.

You're right - Philippines, we can live $1,500/mo in luxury ($3000 is too much). We can live in the US for $3,300 - $3,500. So if the difference is only $300 - $500, no need to relocate if we have to spend $3000 in another country. I'll try to get part-time work if I can't get full time. The Philippines is a back-up plan in extreme case.

 

[NgineER]

Welcome to the board!

Is your SS statement based on the assumption that you will continue working until age 62? You might get a better estimate if you go to the website and I out your numbers and also input $0 for the rest of the year until age 62. I assume that it won't change that much, but it will probably be less than their projected estimate.

 

[Senator]

My contract ends next year Sept. 2016, and I am just finishing my work contract before I turn 53 yrs old.

Are you an employee? Or a contract person? If you are a contract person, aren't you your own boss?

 

[ArkTinkerer]

Welcome to the board!

Is your SS statement based on the assumption that you will continue working until age 62? You might get a better estimate if you go to the website and I out your numbers and also input $0 for the rest of the year until age 62. I assume that it won't change that much, but it will probably be less than their projected estimate.

This was my concern as well. Go and pull your wage history from SS and do the full calculation--the SS website has a page where you can do a detailed calculation where you enter 0's for all years after you retire and before you start drawing SS. Most estimators assume you work until you start drawing SS. It makes a significant difference.

I'm about your age, have a bit more savings and some rental property income. Still a bit nervous and just settling into retirement. I am making the assumption returns will be lower than historical averages for at least the next 10 years.

 

[cyber888]

Welcome to the board!

Is your SS statement based on the assumption that you will continue working until age 62? You might get a better estimate if you go to the website and I out your numbers and also input $0 for the rest of the year until age 62. I assume that it won't change that much, but it will probably be less than their projected estimate.

Hi Molof and ArkTinkerer, no - my SS computation is when I will stop working at 53 yrs old. Yes, my assumption in the SS calculator is $0 income from 53 to 62. I use the detailed SS computation where you enter your salary year by year. It's probably around $300/month less were I to work until 62. My wife will also be getting hers when I get to 62, but she will be at full retirement age as she is older than me.

But instead of computing a 2.70% yearly inflation adjustment as the SS calcultor website assumes, I am computing for a 1.70% yearly inflation adjustment per year on average from today till I'm 62.

I'm also assuming nest-egg balance will grow at no more than 5% per year on average till I'm 100 years old.

So I'm keeping it conservative

 

[cyber888]

Are you an employee? Or a contract person? If you are a contract person, aren't you your own boss?

I'm an employee, but my company gives us a new yearly contract when we get a raise every year.

 

[hnzw_rui]

You're right - Philippines, we can live $1,500/mo in luxury ($3000 is too much). We can live in the US for $3,300 - $3,500. So if the difference is only $300 - $500, no need to relocate if we have to spend $3000 in another country. I'll try to get part-time work if I can't get full time. The Philippines is a back-up plan in extreme case.

Living on $1,500 in the Philippines would be very comfortable indeed but not luxurious. Well, maybe it is depending on how you define luxury.

Also, be prepared to budget for medical. Dad had $80K (PhP 3.6M) in medical bills after a 2-month hospital stay.

 

[rodi]

First a pet-peeve of mine. You say your wife is a housewife, and that she doesn't have a job. I assume she takes care of the household - so she *does* have a job, just not a paying one. (My husband was a househusband for a while - and I made sure he got credit.) Ok... end of peeve.

Did your spending include taxes? If not - you definitely need to reduce spending or find PT work. You don't need to worry about medicare/SS withholdings - but fed and state will still want their cut on any cap gains, withdrawals from tax deferred, etc... But taxes tend to be lower in retirement... at least they are for me.

How adaptable are you to pulling in spending if there are market downturns? And do you think you're likely to spend more or less in retirement. Some folks really ramp up the travel, but it sounds like that won't be the case for you. For us, our travel expenses increased - but so many other expenses fell in ways I didn't expect... Less auto expenses, less grocery expenses because I'm cooking more from scratch vs processed or pre-packaged easy to prepare items... and I'm shopping more at lower cost markets (Ranch 99, Zion, Costco) and less at traditional grocery stores. Having time, I've been able to cut my budget tremendously.

 

[THUNDER_75]

Rodi,

Just retired at 58. Have you had any problems with OBAMACARE. I have heard horror stories from various folks. Any comments would be appreciated.

Thanks,

 

[hnzw_rui]

Did your spending include taxes? If not - you definitely need to reduce spending or find PT work. You don't need to worry about medicare/SS withholdings - but fed and state will still want their cut on any cap gains, withdrawals from tax deferred, etc... But taxes tend to be lower in retirement... at least they are for me.

In fairness, the less you need to spend, the lower your taxes. Particularly so if majority of expenditures can be covered by ltcg, q-divs, tax free bonds and cash savings. With 12.6K standard deduction and 8K personal exemption, a couple spending 42K might pay very little if any federal income tax. For a couple with only 18K (1500/mo) of ordinary income, that's 0 in federal income tax.

 

[cyber888]

Hi Rodi, Thanks for your responds. - I guess you misunderstood semantics. What I mean by job - is a normal job outside of the home. And I mention that, not to degrade my wife's role, but to reflect our financial situation that we both won't have "jobs" that earn money. That's the context of my reference to my wife in my initial post.

I love my wife and never asked her to work if she did not want to. She said she would never ever want to work - and that was one discussion 25+ years ago, and we never talked about it ever again. I gave her all the world travel she wanted. I would say that we are rich in cultural and spiritual experience from our world travels and that is priceless. We have traveled more than 30 countries+ for the last 20 years, because we told ourselves we better travel the world when we were young. Frankly, I want to take a break from world traveling, and just want to be a coach potato lol. So, less travel for us is not a problem. We have so much memories to cherish.

I completely agree with you that a housewife does have an important job, and would never argue against that. And we don't even have kids. I'm the only other household. But even though we file taxes together, she won't get any Medicare or SS at 65 or 67 because she's never had a job outside of the house. So,we needs to wait when I file for SS to get spousal benefits.

Yes, I have computed federal tax deductions/exemptions and also my local tax exemptions. I have enough post-tax cash savings/bonds and if I do SEPP 72, and withdraw only $15K-$16K a year from my pre-tax savings until I get SS, we will live comfy and will pay minimal or even zero income taxes. The withdrawal method will mean zero or almost zero taxes, which also means maximum subsidy from ACA/Obamacare. I'm looking for work or part-time work next year just in case a financial buffer is needed, but if I get work next year - will be paying full tax and getting medical from the new job. I'm just in this transition, where retirement is not without part-time work that I would enjoy.

We've never been fond of eating out a lot. My wife demands only 'organic food' and 'organic grass-fed meat' when we eat at home. She does not even microwave food. Nothing processed. We prepare our food at home, so we don't spend more than $90/a month eating out. She's terrified of what she eats outside our house - no meat, and fish has to be 'wild caught' so tuna but not farmed salmon. I, on the other hand, still likes the occasional steak, but I go to Costco to get my seaweeds

Ranch99 - California? I love the eateries near there. My brother takes us there when we visit CA.

First a pet-peeve of mine. You say your wife is a housewife, and that she doesn't have a job. I assume she takes care of the household - so she *does* have a job, just not a paying one. (My husband was a househusband for a while - and I made sure he got credit.) Ok... end of peeve.

Did your spending include taxes? If not - you definitely need to reduce spending or find PT work. You don't need to worry about medicare/SS withholdings - but fed and state will still want their cut on any cap gains, withdrawals from tax deferred, etc... But taxes tend to be lower in retirement... at least they are for me.

How adaptable are you to pulling in spending if there are market downturns? And do you think you're likely to spend more or less in retirement. Some folks really ramp up the travel, but it sounds like that won't be the case for you. For us, our travel expenses increased - but so many other expenses fell in ways I didn't expect... Less auto expenses, less grocery expenses because I'm cooking more from scratch vs processed or pre-packaged easy to prepare items... and I'm shopping more at lower cost markets (Ranch 99, Zion, Costco) and less at traditional grocery stores. Having time, I've been able to cut my budget tremendously.

 

[cyber888]

Yes, I agree, I think up to $21K for a couple for zero federal income tax. But in my State, $15K (standard deductions) or $18K (with itemized deductions), I pay 5.6% with income above that.

In fairness, the less you need to spend, the lower your taxes. Particularly so if majority of expenditures can be covered by ltcg, q-divs, tax free bonds and cash savings. With 12.6K standard deduction and 8K personal exemption, a couple spending 42K might pay very little if any federal income tax. For a couple with only 18K (1500/mo) of ordinary income, that's 0 in federal income tax.

 

[I earned it]

if I use a term housewife or homemaker or something that hits a cord with someone can you deliver the critizim a little softer, I was cringing

 

[cyber888]

if I use a term housewife or homemaker or something that hits a cord with someone can you deliver the critizim a little softer, I was cringing

I'm proud to call my wife a housewife (even if she has no salaried job), and that's because I voted, campaigned, and fully supported for a simple housewife with no previous job to become President when I was growing up in the Philippines. Her motto was "I'm just a simple housewife" and we all cheered up and risked our lives to get her voted!

And she did become President. You can read about it here. She became the champion of democracy.

https://en.wikipedia.org/wiki/Corazon_Aquino

I grew up in a country where housewives with no salaried job have dignity and are not looked down upon in any way or labeled negatively. They are looked up to. And the term 'Housewife' is clearly understood that she does a lot of work at home - that's already a given definition. But apparently in some parts of in the United States the term housewife becomes sensitive. I just got reminded of that here. This shows that there's more to learn about diversity of culture and thought, not just diversity of race or color.