Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Looking for ER advice from the experts...
Old 06-29-2013, 11:10 PM   #1
Confused about dryer sheets
 
Join Date: Jun 2013
Posts: 2
Looking for ER advice from the experts...

Hi,

I am hitting the ER date at megacorp this year and they are offering a buyout, no severance money or pension but almost 120K in funds that can only be used for medical premiums. So the question is do I take this, or work longer and hope that in the future another package is offered. It is tough to predict what megacorp might offer next, if anything, because over the last three years, three diff packages have been offered.

Facts:
Will be 55 later this year. Making very good money, but lots of stress and uncertainty. Not really into the pressure cooker anymore, and also concerned that staying longer might end up causing stress related health problems.
Wife is 57 in the medical field making reasonable money.

Finances:
My pre-tax accounts (ira,401k, etc) = 340K
Wife 401k = 150K
My megacorp retirement account = 360K
After tax money = 400K
Medical buyout account = 120K
Inheritance coming in 6 months ~300K (100K cash, 200K land)
2 Homes – 70K eq / 360K value and 230K eg / 500K value. Both should appreciate slightly faster than inflation and provide a nice payout in the future if the economy does not crater again.
SS @ 62 = 22K, DW SS @ 62 = 18K
Neither of us have pensions
No other debt other than the two homes

Plan would be to rent both houses by mid 2014, and to take a few years to wander around the USA and probably Europe; RVing, exploring, visiting relatives, and volunteering, hiking, biking, and other things to get back in shape. Then settle back down in a college town where one of our children live. We would most likely then work part time in an enjoyable job for 3-5 years. Plan to earn 20K+/- each working. If I model all of this in fidelity and FIRE the outcome is that we can do this if we stay around 80K a year total expenses with medical premiums paid for 5+ years. But this is a big cut from what we make now and quite a life style change. Plus it is somewhat hard to model using FIRE or Fidelity, the rental properties, the need to buy a small house in the future, and some of the other complexities we have, such as some (200K) of the inheritance may be farm land that is cash rented.

In summary, the planning tools say we can do this if we are careful and the markets are reasonably friendly. But I don’t want to make a rash decision based on work stress, so any advice and/or word of wisdom are appreciated. What are some fundamental questions we need to ask ourselves?

Thanks
Wanderlust is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-30-2013, 06:44 AM   #2
Recycles dryer sheets
 
Join Date: May 2013
Location: Kouts
Posts: 58
Welcome aboard.... I am certain many will have great advice for you.

In reading through your post, the first thing which popped into my mind is you should use Quicken's financial planner. It is a great too to consolidate the financial picture and let you run "what if" scenarios. It would also show what are you high spending years (I.e. greater than 80k) and what would be less.


What I would suggest doing, before you retire, is to try to live on $80k, plowing the excess into your account. Then have the discussion with you wife on what trade offs need to be made. That would put you into a good pre retirement mindset.


Another suggestion would to be to figure out those first few years of expense as a few of those activities have significant first time expenses (I.e. RV ing, hiking, etc)


Excited for you two....
CUinFl is offline   Reply With Quote
Old 06-30-2013, 07:06 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,266
One thing to consider is with Obamacare coming on-line how valuable that medical premiums account is. Is the $120k to pay for health insurance premiums as a retiree on the employer's plan or to help you buy health insurance outside the employer plan?

Assuming outside the employer plan, can the account be applied to the gross premium or only the premium after Obamacare subsidies?

Can you elaborate on how this account works?

+1 on the suggestion to use Quicken Lifetime Planner to plan for your retirement and look at what-ifs. I would supplement that with Firecalc or other stochastic model.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Old 06-30-2013, 09:56 AM   #4
Confused about dryer sheets
 
Join Date: Jun 2013
Posts: 2
Great information.

Quicken Lifetime Planner does not seem to be available anymore. Is this now part of Quicken Premier 2013? Anyone using this SW that is happy with the capabilities? Some amazon reviews panned it.

Trying to live on 80K(or what ever our future budget would be) and saving the rest is an interesting concept. Basically you are saying make all the post retirement adjustments pre-ER. Have other folks tried this? I was thinking more of the big bang approach. Spend like a drunken sailor (but still saving the max pre-tax allowed) until ER :-) Then go on an austerity budget.

As far as the medical premiums account, it can be used to buy insurance outside the employers plan. How this works with Obamacare subsidies is a good question. I need to research this some more.
Wanderlust is offline   Reply With Quote
Old 06-30-2013, 10:30 AM   #5
Thinks s/he gets paid by the post
 
Join Date: Feb 2011
Posts: 1,796
Strongly agree with living on actual anticipated ER budget for a while BEFORE you actually ER. Many have found it is not as easy to do as it sounds. Much better to find that out while still w#rking with decent income stream rather than later after having blown through much of the nest-egg & burned a good paying employment bridge behind you.

And not sure how that medical premium account would be considered under ACA (Obamacare). But with that MPA and anticipated income from your investments & rentals (or capital gains if/when you sell) my guess is you might not qualify for significant (if any) HI premium subsidies.
ERhoosier is offline   Reply With Quote
Old 06-30-2013, 10:39 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,266
Quote:
Originally Posted by Wanderlust View Post
Great information.

Quicken Lifetime Planner does not seem to be available anymore. Is this now part of Quicken Premier 2013? Anyone using this SW that is happy with the capabilities? Some amazon reviews panned it.

Trying to live on 80K(or what ever our future budget would be) and saving the rest is an interesting concept. Basically you are saying make all the post retirement adjustments pre-ER. Have other folks tried this? I was thinking more of the big bang approach. Spend like a drunken sailor (but still saving the max pre-tax allowed) until ER :-) Then go on an austerity budget.

As far as the medical premiums account, it can be used to buy insurance outside the employers plan. How this works with Obamacare subsidies is a good question. I need to research this some more.
Sorry, I should have been clearer - QLP is part of Quicken Deluxe or higher versions of Quicken. If you have a recent version of Quicken Deluxe or higher it would be under the Planning menu. While it has it warts like all planners, I like it because it is easy to use and pretty intuitive. The downside is that it is a deterministic planner (you provide the investment return and inflation assumptions and it uses those for every year), which is why I supplementally use other tools like FireCalc.

Our post-retirement budget is not very different from our pre-retirement budget other than medical insurance and lack of earnings.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Reply

Tags
er fire buyout rental


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


» Quick Links

 
All times are GMT -6. The time now is 04:33 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.