Thinking daily about it now

[zaqxsw]

Hello folks! Made my first post a few minutes ago and have been roaming the board for a few months.

I'm 52 with a good paying job ($160/yr + some 5 figure bonuses) which is becoming intolerable. I've been with this company for a little over 30 years which qualifies me for retirement and retirement medical until they decide to take that away.

If I consider my pension as a lump sum, my total financial assets total around $1.1MM, with about $330M being the lump sum. The rest is in IRA's, an annuity, 401K, and around $120M in a brokerage account. My home is paid for and is valued around $270M.

I have two children in their early 20's. One is graduating college in Dec. with a good job and is grubstaked. The other has college covered in a separate account, plus a smaller grubstake. Each will graduate with 5 figures in the bank and no debt. Much better than what I had at that age.

Here's my issue: I've always been a big believer in tax-defered savings. I maxed out everything and then started an annuity to sock away even more. Now, when considering ER, I face the task of getting from 52 to 59 1/2 to be able to tap the tax deferred accounts.

I currently save around $80,000 a year, so my net worth is growing fast making ER look stupid, but the job is taking too big a toll anymore. I have calculated I could live on around $45,000/yr without a lot change (lower taxes and expenses). As mentioned above, I only have around $120M liquid. I could take the pension as an annuity which would get me around $29,000/yr. That would make my $120M last around 7 years, maybe.

How do I look? Any suggestions or direction changes to take? I'm still taking the job a day at a time, so no hurry. But, I do not like the look of what is happening to the pension lump sum calculations in the near future. Significant hit if I would choose that option........

Thanks for any replies and suggestions!!! Bet I post more frequently in the future.

 

[Nords]

Welcome to the board, Zaq. It looks like you're there... even if the home equity is already counted as part of that $1.1M.

If you don't care about the job anymore, then perhaps it's worth looking at what pays more money: the lump sum now, the lump sum later, the annuity now, or the annuity later.

As for the tax-deferred investments, have you looked at a 72(t) withdrawal plan?

 

[Rich_by_the_Bay]

Welcome to the board.

For clarity, I am going to assume that by "M" you meant thousands, or K. Not knowing if your home equity is included in your 1.1mm number I'd guess that with your very low expenses and paid medical, FIRECalc will say you are good to go.

At a safe withdrawal rate of 4% and a sensible portfolio you can take out $44K per year, more than you apparently need.

Now the trick is to diversify and allocate your assets sensibly. Lots of good threads and books about how to do that. So, keep reading, play with FireCalc like crazy, and dive in. Sounds like you've earned it.

 

[zaqxsw]

Thanks for the feedback! My home equity is excluded from the $1.1MM financial assets and "M" does mean thousands, MM millions (something from work).

 

[Southpaw]

Color me jealous.

Bein' just a youngun', I know nothing about the 72(t) withdrawal plan, but it's sure worth looking into.

If the job is really taking too heavy a toll on you, then I say find a way to go for it. You've accomplished a lot. It stands to reason you'll accomplish this too.

 

[Martha]

You could roll the 401k into an IRA. IRAs allow early distributions without penalty if you follow the 72t rules on substantially equal payments. Here is a link that explains what you can do: http://www.retireearlyhomepage.com/wdraw59.html

 

[yakers]

Hey zaqxsw, STOP IT!

You have been daydreaming too much and productivity is way down. Back to work guy.


Your boss

 

[astromeria]

I would ditch the "intolerable" job. Then, after a few months or maybe a year of R&R, exercise, and restoring your health sanity, consider the possibilities. Perhaps a low-key semi-retirement job would suit you better than complete retirement. Or volunteer work. It isn;t just full-time stressful job vs complete retirement.

When my job was becoming a drag, I switched to part-time for 3 years and then fully retired. My husband switched from a stressful job (he was laid off--Silicon Valley in 2002) to more suitable work as a college instructor. We're both happy with our choices.

Ooh--gotta run. DH is home (just one class on Friday mornings this semester). We're going out to lunch

 

[zaqxsw]

Funny yakers.

I like this board already.

Thanks for all of the input. Big decision, as you all know.

 

[zaqxsw]

Martha, thanks for the link. I'm going to study up on the 72t rules this weekend.

My wife is getting nervous............ : P

She might have to go back to work.... We agreed she should quit in 1984 with the the first kid. I was making enough. 2nd kid 20 mos. later. Kind of thought she would go back to work from boredom after the kids were older. Boy, was I wrong. She had already discovered ER and wasn't giving it up!!!!

Hard working lady who I am very lucky to have and know it. More the handyman around here than I am, and I'm good. I always wanted a partner instead of a dependant, and she is a partner.

Just wish she had a pension............... ; )

 

[mb]

ZAQCSW,

It sounds like the problem that you have is how to get through the next 7 years to 591/2 on an after tax portfolio that is a small fraction of your overall portfolio with minimal impact.

1-First I would suggest running FIRECALC with your aftertax porfolio and options like those that Nords suggested with the 7 year time horizon and see what happens.

If you don't care about the job anymore, then perhaps it's worth looking at what pays more money: the lump sum now, the lump sum later, the annuity now, or the annuity later.

As for the tax-deferred investments, have you looked at a 72(t) withdrawal plan?

2-Second, if you are serious about ERing now and haven't already done so I would immediately cut back before tax savings to just enough to get the 401k match and save the rest after tax.

3-Third, you seem like a good candidate for part-time ER. What if you could make $29k/year working part time rather than annuitize the pension? Is that an attractive option?

4-Another option (maybe the last resort ) is working just one or two more years. For example of you saved $80k after taxes for two additional additional years you would have $280k which would give you $56k/year for the remaining five years to age 591/2.

Good luck,

MB

MB

 

[zaqxsw]

Thanks MB, good advice.

Yes, I've already cut way back on tax-deferred savings and may take it to zero.