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Michigander retiring next June
Old 08-08-2010, 07:59 PM   #1
Confused about dryer sheets
Join Date: Aug 2010
Location: Allen Park
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Michigander retiring next June

Hi fellow retirees! I will be retiring next June as my company has outsourced my job. I will be 59 and was going to retire at 60 so it's ok. I have been getting all my ducks in a row paying down debt and getting a game plan together for next year. I am divorced and all my friends will continue to work so that will be my biggest hurdle. Glad I found this forum! Thanks. Jan
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Old 08-08-2010, 10:30 PM   #2
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Welcome, Jan, and congratulations on having just 10 months to go before you say goodbye to w*rk.

The search function and the ER FAQ's will keep you busy for hours and hours: Early Retirement FAQs - Early Retirement & Financial Independence Community

What are some of the ducks you are lining up? Health insurance? The fine print of taking withdrawals from tax-deferred accounts at age 59-1/2?
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Old 08-08-2010, 11:23 PM   #3
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Welcome from another Michiganian. Come on in, the water's fine.
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Old 08-09-2010, 03:57 PM   #4
Confused about dryer sheets
Join Date: Aug 2010
Location: Allen Park
Posts: 3
Hi Htown Harry and Travelover! Thanks for the warm welcome Health insurance isn't an issue because I am retiring from a health insurance company. Finances are kinda sorta on my mind but if I crunch the numbers any more I'll have nubs lol Here's the whole story-
After working 31 yrs the company outsourced my department. I belong to a union and they are telling us we will get a severance package which we think will be one years salary. Funny thing is before the sale (and out of state ins com will be taking the work) the company offered a buyout and the same terms-a yrs salary. Had I know this was going to happen I might have jumped back then but in hindsight I made the right decision to stay the additional year. Lots of ovetime which I am banking. I will collect unemployment until I can't anymore (that will cover my monthly expenses for the most part) then start my pension benefits. I have $90K in my 401K. House will be paid off in 2018 and the payment is reasonable. I have my "12 year plan" and once I get to age 62 and start collecting my SSN plus my pension I'll be GOLD! Or at least I hope so. Knock wood I am healthy as a horse lol
My other concern is staying busy. No grandkids to watch and I'm hoping to volunteer at the local animal shelter, library and meals on wheels but on the other hand I'm afraid on days I won't be motivated to do anything cuz I won't have to....I need a little structure.
Sorry I'm going on and on but I guess I feel like this is a place where people might understand the way I'm feeling.
Thanks for listening
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Old 08-09-2010, 11:53 PM   #5
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Sounds like plan, Jan. (Sorry, I couldn't resist. )

So you're working through a retirement cash flow spreadsheet, with income from your IRA account being a relatively small part of the puzzle. Social security and a 31-year employee's pension are a big part of it.

Beginning next June, you plan to live off several months of unemployment checks and your severance pay. That's Stage One.

Stage 2 is when you stop drawing on the Stage One funds and you begin drawing a pension

Stage 3: taking your SS payments beginning at 62.

Stage 4 starts in 2018, when your house is paid off and your monthly expenses drop.

Stage 5 (which you didn't mention) is when you turn 70-1/2 and must start taking minimum withdrawals from your IRA account.

All these income changes while keeping your spending relatively level in real terms, I assume. A piece of cake, right?

You might want to search for threads commenting on the many internet retirement calculators and plug your numbers into several of them. The very fine Firecalc program is referenced often here, but it is most helpful to folks who RE and must live off their savings and investments for many years before a pension or SS kick in.

It's been a while, but one tool I have used to prepare several different retirement income scenarios is this one:
Forecaster - Retirement And Estate Planning

I like it because it is sophisticated enough to take COLA adjustments, taxes, inflation and other important variables into account. But I especially liked that the calculated cash flows from each income source (or investment withdrawal) are individually presented. That helped me better understand how the numbers change over time and "stack" on one another. Bonus: that level of detail made it relatively easy for me to transfer numbers to my own spreadsheet.

Whatever tools or calculations you use, keep at it. I would think you want to be very detailed calculating the month-by-month cash flows and bank balances for the critical first few years, until you reach Stage 3.

Three critical "what-if's" you'll want to test:
  • Your starting balance in an emergency fund, bank accounts and other liquid investments. You didn't mention this other than to say you are saving your overtime.
  • Timing the start of the pension payments, especially if they are not COLA'd. If you start the pension before you fully spend your severance pay, for example, you could invest the remaining severance pay as a source of non-IRA funds available to cover inflation's bite on your pension in later years.
  • Confirming that you want to start SS at 62

Planning for the "what will I do all day?" part of retiring will probably seem easier once you have your own version of a FI plan that you are ready to launch with confidence.
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Old 08-10-2010, 05:56 PM   #6
Confused about dryer sheets
Join Date: Aug 2010
Location: Allen Park
Posts: 3
Wow Harry! That's quite a reply! Thank you Are/were you a financial planner? I've seen one by the way lol I was aware of Stage 5 and planned not to touch it until they make me at 701/2. The "planned" withdrawl from my severance would be minimal as I purposely left gasoline, food/extras monthly and it's only me. And yes , my monthly bills and cash flow both now and next June have been calculated and look pretty good.
I read through some posts here last night and it seems like I'm a little fish in a BIG BIG pond. I some people with 500K in their 401K WOW! I hope to lurk and hopefully (so far so good) learn something! Thanks for the friendly start Jan
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Old 08-10-2010, 06:09 PM   #7
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Originally Posted by JustJan52 View Post
Sorry I'm going on and on but I guess I feel like this is a place where people might understand the way I'm feeling...
Of course we do! You came to the right place. Congrats!
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
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