Is early "retirement" feasible?

[frankromano]

Hi all.

I am at a crossroads in my career. We moved to DE from North Carolina 7 years ago and things at work have become unbearable (work stress, supervisor dynamics, etc). I am only sleeping about 4hrs a night from stress for the last few months and I am very unhappy. I currently make about $300K per year. Our plan was to move back to Mississippi at 50 when our daughter started college but things at work have become so bad lately that we are seriously considering returning this year. We have no desire for another temporary move, we have no personal ties to DE and all of our family is located where we would move to in Mississippi. It is where we grew up, went to college, our closest friends are still there and we routinely visit to see family.

My wife stopped working about three years ago and has no plans to return to work. We have run our expenses over the last three years with detailed spreadsheets and compared those costs to what it would cost us to live back in the South (including medical costs, property taxes, etc.) with a paid for house and we come up to $70K per year (includes vacations and additional wiggle room costs as well). In all honesty that number could be about $60K but we wanted to build in wiggle room.

Tax Filing Status: Married Filing Jointly (one daughter - 12 years old)
Tax Rate: If we retire the money would be pulled from taxable assets at capital gains rate of zero so only state tax of 5%
State of Residence: DE but thinking about moving back home to Mississippi
Age: 45 (Husband/Wife)

Current assets

Taxable Assets: 1M taxable - Vanguard SP500
Tax Deferred (401k/IRA): 1.6M - Vanguard SP500/Total Market
Cash - 400K
Assets - House ($800K - very conservative essentially what we paid for it 7 years ago. Homes in that price range in our area are sold within a week with multiple offers)
Debt - Mortgage - $265K (we put down a large down payment)
Net Worth: 3.5M
529 ($100k) (I don’t count the 529 in our NW since that is for our daughter.)

The plan would be to sell our house here and with those proceeds have $3M invested in the market (roughly 1.5M taxable/1.5M tax deferred) with a (60/40 or 70/30 mix with Vanguard), pay cash for a $300K house in the South (which would be a very nice house for that price) and have $200K left over in a cash savings account for emergencies, etc.

I use the word retire but I am sure I will do something back home. I don’t see making or really needing anything close to my current compensation back home. However, I am just not wired at this age to come to a full stop but I also don’t want to die in my 40s from stress and we have no desire to move to yet another temporary stop.

Is our plan feasible?

Thanks

 

[24601NoMore]

Seems very feasible to me. You only need to do a 2.3% SWR to pull $70K from a $3M investment portfolio and that succeeds in pretty much any scenario. Plus, you have a $200K cash cushion equivalent to almost 3 years of expenses in case of an extended market downtur.n.

I assume the $70K expected expenses include HC? We budgeted $25K / yr for HC pre-Medicare, and that looks pretty close to what will be needed - at least for our area.

HC is the biggest expense pre-Medicare. If your $70K covers that, I'd say you're set - but take a close/realistic look at what your HC expenses could be if you haven't done so already..

 

[SteveNU]

You don't need to work! Go back home and find something you love to do! You're in that comfortable spot where you can work if you want to but always have the option to walk away. It's a good place to be!

 

[pb4uski]

Yes, very feasible. You're essentially talking about a 2.2% withdrawal rate.... $70k of spending in relation to $3.2m of investments. ETA: and that doesn't even consider any SS retirement benefits later in life.

Congratulations in having the courage to recognize that you are unhappy and the impact your job is having on your health and to act to change the situation.

Frame it as taking a break from a stressful, dysfunctional job situation that was adversely impacting your health..... and then reassess after a year or 18 months.

Good luck.

One thing to think through thoroughly is what you'll do for health insurance. Start with healthsherpa.com.

 

[Red Badger]

Yes, very feasible. You're essentially talking about a 2.2% withdrawal rate.... $70k of spending in relation to $3.2m of investments.

Congratulations in having the courage to recognize that you are unhappy and the impact your job is having on your health and to act to change the situation.

Frame it as taking a break from a stressful, dysfunctional job situation that was adversely impacting your health..... and then reassess after a year or 18 months.

Good luck.

One thing to think through thoroughly is what you'll do for health insurance. Start with healthsherpa.com.

^^^^^^^^^^^^^^^^^^^^^^^ Yes.

Nothing to add other than congrats!

 

[Bir48die]

I would do it and if you see a need or want down the road then go back and do something. My sister retired four times before retiring for good. So, give it a go. HC is the main variable and cost. As long as you understand that piece then you're good to go.

 

[Rianne]

Suggestion:

I started using https://www.i-orp.com/bequest/index.html as suggested by firecalc.com, which many of us use. This website makes some assumptions but it takes into consideration SS decrease in 2035, assumes a 15% tax rate and assumes 60/40 throughout retirement. Takes you to age 92 and gives you spending amount to that age.

 

[bltkmt]

You have done a great job of saving - congratulations!

 

[Jerry1]

There's no place like home. You definitely have enough to go where you have friends and family. Do that, catch your breath and then decide whether or not you want to continue working in any capacity. You have enough not to, but you may find something you truly enjoy, so no need to close that door yet. Go. Go now.

 

[nuisance]

I am only sleeping about 4hrs a night from stress for the last few months and I am very unhappy.

Quit today. As others have mentioned, your numbers are great, and with so little sleep you're literally killing yourself. E.g. from Healthy Sleep at Harvard:

Data from three large cross-sectional epidemiological studies reveal that sleeping five hours or less per night increased mortality risk from all causes by roughly 15 percent.

I'm sure similar correlations exist with stress, too. At a minimum take some vacation soon.

 

[38Chevy454]

I agree with the other replies, you seem good shape to quit your current job and move back to MS. Take some time off working once you move, or even a little before the move while selling the current house, in order to destress and get back to sleeping better. Once settled into the new house in MS, you can work if you want. That's the beauty of being financially independent, you can choose what you want to do. Continued working is OK, but because you want to you have the flexibility and attitude so that it won't create the stress and potential health issues you are facing now.

 

[corn18]

MOVE! NOW!

Congrats! You have won the game. If you find yourself in MS and need to work again, then you can, but if I had your assets and expenses, I would be gone, too.

Enjoy the next 6 years with friends and family in MS and think of all the fun you will have with your soon to be teenage daughter.

 

[24601NoMore]

If it helps, I was in a very similar situation in terms of comp and unmanageable stress that was in all likelihood taking years off of my remaining life if not killing me outright. To top it off, I had a pretty sizable pile of unvested RSUs in a hot company who's shares have gone pretty much vertical.

Made the VERY tough decision to walk away from it all when I was 54 1/2..worked ~6 more months to transition things, and have been ER'd now for 2 and a half months.

You can always find another gig. Might not pay $300K a year, but in your (or my) situation that's likely not going to be needed. Once you get over the psychology / ego of it, taking half or less of that if you "had" to - or doing complete ER - is not that bad of a thing compared to taking years off your life, or winding up 6 feet under the dirt.

Good luck..I feel your pain. Been there, done that. Saw the movie, have the T-Shirt and visited the theme park.

 

[imoldernu]

Wonderful.... Though I try never to give advice, I would make the decision as soon as feasible for an orderly transition. Pleased to see that you've gone through the worksheet route, and not just an number from a calculator. That's ok by itself, but knowing where the dollars go is infinitely more important IMHO.
Our philosophy when we retired @ age 53, 30 years ago, was that if the worst happened, we could go back to earning a living. That was the mental cushion.
With assets much, much less, we lived a lifestyle, much different and much more social than before.

Not only snowbirding to Florida from our Campground (Woodhaven) in Il, but falling into interesting adventures, such as Counselor for the SBA, Boy Scout leader for hiking/camping and canoe trips, and local volunteer projects. Totally in to the social life of both home, for planning advising and working at dances, dinners, trips, and as an advisor for the HOA. Dozens of opportunities for involvement in projects with others.

Ah... yes... the dream is the full night's sleep, the nap during the afternoon, a a few days on the links, and a tasting tour at the local restaurants... then,
after the first two weeks...

The nightmares return... Late for an important meeting, the project that fell apart in the final stages, the aggravating kid who asked too many questions and wanted your job. The decision you had to make, where you knew both options were wrong. Plus the wondering how much college costs would go up in four more year.. and even worse... what if she wants to get married?

All a matter of perspective... things you never considered, take the place of those corporate worries you left behind.

It all balances out after the move, a brand new start in a very different world with a happy outlook for the coming 40+ years. Really.... how many people actually get to do that.

Best of luck!

 

[tb001]

One thing I haven’t seen mentioned is to make sure you have a good handle on moving costs. Moving and getting set up in a new to you home has more hidden costs than you might expect. Also consider how you’ll handle a significant drop in assets psychologically.

We have young kids and are building our nest egg a bit more before making any decisions, in part to make sure some of the kid expenses have a reasonable buffer, since there are a lot of unknowns there. That said, at your withdrawal rate and current workload, I’d be out!

 

[frankromano]

Thanks. We have estimated $13k based on a review of premium plans in Mississippi through healthcare.gov. The deductibles are $6K individual/ $12k family. We looked at our past HC costs and I don't see us hitting the full deductible every year. If so, we jave flexibility in the budget to cover. HC is the one issue that causes me concern because it is "mostly" out of my control. It is also one of the reasons I will likely get a less stressful job at some point, if we move back home, just to eliminate that concern.

 

[frankromano]

Thanks for the comments from everyone. I tried to answer each individual post but I can't figure out how to do that on my phone.

Luckily I married well. My wife is the one who recognized that the stress is not sustainable and suggested upping our timeline.

I feel guilty having to move my daughter yet again but hopefully having family around could ease the transition.

My wife keeps telling me that I need to figure out what I will do before I leave because I am bad at letting things go unless I have something I am moving towards. She is probably right so I am working on that.


It is helpful to hear the comments for this difficult decision. I will let you know once we decide what to do.

Thanks again.

 

[24601NoMore]

Thanks. We have estimated $13k based on a review of premium plans in Mississippi through healthcare.gov. The deductibles are $6K individual/ $12k family. We looked at our past HC costs and I don't see us hitting the full deductible every year. If so, we jave flexibility in the budget to cover. HC is the one issue that causes me concern because it is "mostly" out of my control. It is also one of the reasons I will likely get a less stressful job at some point, if we move back home, just to eliminate that concern.

Sounds about right. You guys appear to be a lot younger than us, so costs 'should' be much lower - but it all depends on where you live, also as rates vary wildly all over the country..

 

[SumDay]

Thanks. We have estimated $13k based on a review of premium plans in Mississippi through healthcare.gov. The deductibles are $6K individual/ $12k family. We looked at our past HC costs and I don't see us hitting the full deductible every year. If so, we jave flexibility in the budget to cover. HC is the one issue that causes me concern because it is "mostly" out of my control. It is also one of the reasons I will likely get a less stressful job at some point, if we move back home, just to eliminate that concern.

COBRA HC coverage through your soon-to-be-ex-employer is probably also available for 18 months. However, it can be pretty expensive, but your deductible would probably be lower. All speculation on my part!

Let us know what you decide to do - sounds like you're in the driver's seat. Hit that accelerator!

 

[daylatedollarshort]

Suggestion:

I started using https://www.i-orp.com/bequest/index.html as suggested by firecalc.com, which many of us use. This website makes some assumptions but it takes into consideration SS decrease in 2035, assumes a 15% tax rate and assumes 60/40 throughout retirement. Takes you to age 92 and gives you spending amount to that age.

I played around with that and only put in a $40K pension indexed to inflation (no savings or SS), and got a spend rate of $30K, which seems low? Or am I missing something?

 

[daylatedollarshort]

Luckily I married well. My wife is the one who recognized that the stress is not sustainable and suggested upping our timeline.

We retired when we reached our "number". In our case our number was was DHs elevated heart rate. It is 20 points lower these days.


Enjoy your retirement or new do what you love career.

 

[Rianne]

I played around with that and only put in a $40K pension indexed to inflation (no savings or SS), and got a spend rate of $30K, which seems low? Or am I missing something?

I have no idea. How old are you? Date of FIRE? Plan to be 60/40 throughout RE? I used the tool to include taxes, SS depletion and to see how much fun I could have if I didn't leave a dime to anyone.

 

[daylatedollarshort]

I have no idea. How old are you? Date of FIRE? Plan to be 60/40 throughout RE? I used the tool to include taxes, SS depletion and to see how much fun I could have if I didn't leave a dime to anyone.

There is no 60/40 if there isn't any savings and no SS cut if no SS entered. I just used a pension as an annuity indexed to inflation as a test case for someone 65, because that is a fairly easy answer to figure out without a program or spreadsheet and the results seemed off.

 

[kskmfire]

I calculated like crazy for a decade before FIRE at 43 (5yrs ago) and I can say that knowing your expenses makes the change so much easier. We spend just as we planned (as we had for decades).
We can use the 0% LTCG, but choose to fill the 12% bracket with Roth IRA conversion "income." I know some people with "low incomes" in FIRE choose to optimize the ACA option, we don't.
FIRE was the best decision life goal EVER.
p.s. If you decide to work, at your asset level, that will truly be a "playcheck."

 

[CaliKid]

I totally agree with others that you should quit now or quickly modify things at work. However, you don't have to retire. Find another job, back down south, that is bearable. Make $75k doing something you like. You are pretty young in my opinion.