Not precisely early retirement

[trumpeting_angel]

Hello all -

I joined here in 2004, it appears, and wandered off a number of years back. Now I’m too late for ER, as I’m turning 65 next week. But, I’ve moved to Vermont, cut back to part-time, bought a house with cash (with my partner), and I’m eager to cut down more. I like my work (psychologist), but during the 3 days/week that the organization has my services they want to squeeze out as much as possible. The overfilled days are stressful. And it doesn’t pay much up here.

The calculators tell me I can quit working, but unless I take SS it will mean a scary amount of withdrawal from the nest egg. I had hoped to put off SS until 70.

I love my free time! I want more. The daughter of a Depression-kid dad who wrote personal finance columns and a book on the subject, I’m really anxious about reversing the aggressive savings habit and starting to withdraw instead. But skiing, hiking, and gardening call my name!

The look of this site has changed dramatically, but it’s good to see the ER and ER-hopeful folks here having these conversations.

 

[Golden sunsets]

Hi angel. Have you run firecalc with your inputs by either delaying SS until 70 or taking it now or at FRA? If you haven't then it might provide you with some comfort , or confirm your need to continue with some level of income. And if the later, perhaps dialing down with different more enjoyable employment to supplement taking SS now would ease your concerns about SWR's.

Regarding the long days have you spoken with the owner of the practice to straighten out their expectations on how many patients you are willing to see per day? It sounds as though you are putting in a weeks worth of work for three days salary, not an uncommon complaint among part timers.


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[joeea]

The calculators tell me I can quit working, but unless I take SS it will mean a scary amount of withdrawal from the nest egg. I had hoped to put off SS until 70.

Welcome back!

What percent of your portfolio per year is "scary"?

Being that close to the edge financially, can make a retirement decision difficult. (Personally I'd not retire with a "scary" proposition ahead if I had other choices as you do.)

Have you analyzed spending down some of your portfolio now in order to delay your SS until 70 versus taking SS now and living with a lower benefit amount for the rest of your life?

A tool like the following might help:
- https://maximizemysocialsecurity.com/
- https://opensocialsecurity.com/

It wasn't clear from your post - are you regretting burning cash on your home purchase, moving to a low-salary locale, and/or going to part-time work?

 

[pb4uski]

A couple thoughts.

First, you might want to try https://opensocialsecurity.com to see what the program thinks your optimal SS claiming strategy is and compare the NPVs of 65 and 70. The NPVs might be so close that either decision is a good decision. Check the advanced options box and select the appropriate mortality table or an assumed age at death. For discounting, the program suggests the 20 year TIPS rate... I don't really agree with that advice... I think an estimated investment earnings rate for the money that you will use if you decide to delay SS is more appropriate.

Second, you might think of delaying SS as simply buying a COLAed annuity. For example, let's say that your FRA is 66 and your PIA at age 66 is $2,000/mo and if you take at 65 you could get $1,880/month and if you take at 70 you could get $2,560/month.

If rather than take at 65 you take at 70, you'll have given up receiving $112,800 of benefits.... and in exchange, beginning at age 70 you will receive an additional $680/month for life. That is a payout rate of 7.23%... which is pretty good for a COLAed annuity. So the question becomes whether you want to "spend" $112,800 in exchange for $680/month for life beginning at 70. Another factor to consider is whether that $680/month might be haircut starting in 2034 if Congress doesn't make necessary changes to SS.

P.S. What part of Vermont are you in? Chittenden county? I live in the NEK.

 

[Choices]

We, too, recently moved to VT! We have been retired for about a year and 3 months. Retirement can be scary, you do not have a really good idea how much life will cost in a new location. The current slippage in the market is not helping. I would say what you are feeling is pretty normal.
We are still adjusting to spending down our nest egg. Moving money into checking kinda makes my breath catch.
Just keep track of your expenses. I find that most folks have no idea how much they spend and then no idea how much they need. Then run firecalc in all the scenarios you can imagine. You will figure it out!

 

[trumpeting_angel]

Wow, a lot of responses!

Hi angel. Have you run firecalc with your inputs by either delaying SS until 70 or taking it now or at FRA? If you haven't then it might provide you with some comfort , or confirm your need to continue with some level of income. And if the later, perhaps dialing down with different more enjoyable employment to supplement taking SS now would ease your concerns about SWR's.

Regarding the long days have you spoken with the owner of the practice to straighten out their expectations on how many patients you are willing to see per day? It sounds as though you are putting in a weeks worth of work for three days salary, not an uncommon complaint among part timers

Thanks for the response!

I haven’t run Firecalc lately; I think it’s a good idea to try more calculators. Right now I’m trying to balance work and expenses and get a handle on what I’m actually spending. I’ve used a calculator that runs optimistic and pessimistic assumptions and uses my actual SS figures. I think it’s called newretirement.com.

I work for a hospital, and I can take some control over the scheduling. Yesterday was a hard day; today I had 2 cancellations and 2 no-shows. So today, less whining! I do think of cutting from 24 hours to 20. At 20 I can still get benefits, miraculously.

 

[trumpeting_angel]

Hi joeea -

ANY withdrawal rate is scary! I have to wrap my head around stopping the aggressive saving and starting to withdraw.

I had always planned to retire at 70. A true daughter of my dad. It’s clear I don’t need to wait till then, and I love the idea of working less. (I expect to keep working, though much less, for the foreseeable future. Whining aside, I do like my work.). I guess I’m just chewing over the psychological changes needed to make this change.

maximizemysocialsecurity.com is on my radar. I don’t regret any of my recent financial changes, though it would be nice to make more money, of course. I’m just a nervous type.

Thanks for your thoughts and your questions. It’s good to talk about it.

 

[trumpeting_angel]

Hey, pb4uski -

I’m in Windsor County, near Okemo but more in the boondocks. Love it here! When do you go to Florida if you are here to ski? (innocent smile)

I appreciate your thoughtful description of the SS issue. 66 is the earliest I would consider. It seems all the retirement blogs and finance websites recommend putting it off. I will run the numbers, thanks!

I see several Vermonters here. Definitely the place to retire! I am a little startled by the increased cost of living. I moved here from Western Mass.

 

[trumpeting_angel]

Hi Choices! Vermont is the place to be! I lived here 40 years ago and I’ve wanted to come back ever since.

Getting a handle on spending is my next priority. Some costs here are higher than I expected - property taxes, satellite internet, food, and driving long distances. After the moving and a very few renovations, I will focus on the expenses.

You’re right, I’m sure. The adjustment is hard, and worrying over it for a few years ahead of time is my style. The numbers look really good, but - what if . . . ?

 

[harley]

ANY withdrawal rate is scary! I have to wrap my head around stopping the aggressive saving and starting to withdraw.

The calculators tell me I can quit working, but unless I take SS it will mean a scary amount of withdrawal from the nest egg. I had hoped to put off SS until 70.

I’m really anxious about reversing the aggressive savings habit and starting to withdraw instead.

I'm a little confused. You talk about an aggressive savings habit, but also about needing to withdraw a scary amount from the nest egg unless you start SS. Is this just nerves? Or do you really not have enough to bridge the 4-5 years until age 70 without implementing a larger than healthy withdrawal rate? Do you know how much you spend, and how much of that is need vs. want? I think if you take a deep breath and run a few numbers you'll be able to tell where you are in the process. If you want advice you'll need to share more specifically.

 

[trumpeting_angel]

It’s nerves.

I am not retiring for at least a year, and I have time to fine-tune the numbers, figure out when to take SS, and learn what my expenses are after this move and change in lifestyle.

Sorry for confusing folks. I’m likely to ask for advice when I know what to ask, and I promise to be specific when I do, rather than compose a meandering, anxiety-ridden post.

I have a friend who has a lower life expectancy than many of us, and she ER around 50. She spends her time racing a yacht and skiing. I told her how weird and frightening it seems to stop saving and start spending. She gave me some tough love: “You get used to it!”

Thanks for the offer of help! I’m sure I’ll be taking you all up on it soon. First I have to finish moving into this house.

 

[Oz investor]

Hi joeea -

ANY withdrawal rate is scary! I have to wrap my head around stopping the aggressive saving and starting to withdraw.

I had always planned to retire at 70. A true daughter of my dad. It’s clear I don’t need to wait till then, and I love the idea of working less. (I expect to keep working, though much less, for the foreseeable future. Whining aside, I do like my work.). I guess I’m just chewing over the psychological changes needed to make this change.

maximizemysocialsecurity.com is on my radar. I don’t regret any of my recent financial changes, though it would be nice to make more money, of course. I’m just a nervous type.

Thanks for your thoughts and your questions. It’s good to talk about it.

in that case do you need to withdraw in the near future if your stop work some expense should lower as well ( travel and clothing expenses for example )

**I guess I’m just chewing over the psychological changes needed to make this change. **

there is an old joke about that

Q .how many psychologists does it take to change a light bulb ?

A just one but the light bulb has to WANT to change

an alternative to quitting work could turkey , might be to do some counseling for a charity ( and see if there are tax breaks for doing that )

 

[Lawrence of Suburbia]

It's nice to know there's someone else on here who's not (I am only guessing!) a millionaire. I'm hoping to retire myself later this year, when I turn 65 (Medicare is everything in my scenario!)

 

[brucethebroker]

Welcome back, Angel.

 

[trumpeting_angel]

Q .how many psychologists does it take to change a light bulb ?

A just one but the light bulb has to WANT to change

Ahh, yes. Our very own lightbulb joke!

My version of not quitting cold turkey is what I'm doing now, cutting down to 3.5 days/week. I'll be happy to cut back more, maybe after I reach 66 (FRA).

 

[trumpeting_angel]

It's nice to know there's someone else on here who's not (I am only guessing!) a millionaire. I'm hoping to retire myself later this year, when I turn 65 (Medicare is everything in my scenario!)

I'm close to a million, but not there. My full retirement age is 66 (next year), so that's the earliest I'll take SS. I have to get to work on signing up for Medicare - don't want any penalties!

 

[Katsmeow]

One reason I chose not to wait to 70 take SS (I actually took it before FRA) was because I didn't want to withdraw a large amount to bridge the gap. Part of that was that we had some large non-recurring expenses during the gap years. From a pure numbers standpoint I understand the waiting to 70 thing but there are other factors.