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Need A Lot of Help - Can and Should I Retire?
Old 10-26-2021, 06:36 AM   #1
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Need A Lot of Help - Can and Should I Retire?

My wife and I have one of those jobs that you can't return to so our retirement decision is really playing on my mind a lot. I know that may sound unusual but it is the case.

I need a lot of help on the fiscal side and the note "Confused about dryer sheets" is very true. I'm not too bright. All advice welcome!

Currently 48, married with two kids 12 and 15.

. Traditional IRA is $1.3M
. After Tax Saving $1.8M
. Own our own home $600K
. Pension if I retire now is $3500 a month.
. Ignore SS (but if you must know its $2500 a month at 67).

Our projected retirement expenses will be $100K p.a. including taxes.

Question #1: Would you feel comfortable retiring in this situation. Kid's college is already taken care of with a 529. Remember, there is no going back once I retire.

Now this where it gets tricky. From our combined annual salaries we can save about $140K p.a. and the pension grows to $7K a month if we work another 4.5 years.

Question #2: Do we retire now or work another 4.5 years? That will net me another $600K after-tax and pension doubles.

Our jobs can be fun but it's not something we jump out of the morning to do each day. We are mainly doing them because the kids are in school and it's not as though we can travel if we retired. After doing our jobs for 25+ years both my wife and I are tired of it.
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Old 10-26-2021, 06:47 AM   #2
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Have you run your numbers thru FIRECALC? What success rate does that give.

Does the 100K "including taxes" include the income tax on tIRA withdrawals and/or conversions?

https://www.early-retirement.org/for...ire-69999.html is a good place to start.

Are you also asking us "should" you retire? Nobody can answer that one for you.
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Old 10-26-2021, 06:50 AM   #3
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How do you have health insurance covered? Is it in the $100k expenses?

Also - your kids are 12 and 15. I don't know if you want to travel much, but retiring now won't get you much more travel.

So - as to Question 1 - Yes I would feel comfortable retiring now if medical is covered.

As to Question 2 - Although comfortable now, I would work another 4.5 years because you are young enough where the you'll still have a long retirement 4.5 years from now, but with a lot more $. And the kids at 12 and 15 would put a damper on a retirement lifestyle IMO.
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Old 10-26-2021, 06:54 AM   #4
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Pension if I retire now is $3500 a month.

When does the pension start?
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Old 10-26-2021, 06:57 AM   #5
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A decision only you can make.

Some people here need a 75% prob of success to retire, others 200% or as high as they can get. Asking random strangers online about a crucial decision?

Run FIRECALC and decide if you can live with that historical result.

Most of us retired with little to no chance of resuming our established career, that's not unusual at all.
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Old 10-26-2021, 07:11 AM   #6
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Have you run your numbers thru FIRECALC? What success rate does that give.

Does the 100K "including taxes" include the income tax on tIRA withdrawals and/or conversions?

https://www.early-retirement.org/for...ire-69999.html is a good place to start.

Are you also asking us "should" you retire? Nobody can answer that one for you.
Yes, FireCalc says I'm fine.

Yes it includes all income taxes.
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Old 10-26-2021, 07:11 AM   #7
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When does the pension start?
As soon as I retire.
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Old 10-26-2021, 07:14 AM   #8
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How do you have health insurance covered? Is it in the $100k expenses?
Thank you for asking that. It's a big uncertainty for me. My companies retirement benefits includes health insurance (I pay a premium for this). The $100K expenses DOES cover the health insurance premium, but the health insurance aspect of my retirement is NOT guaranteed so it could change.

Currently the premium is set at about $1000 a month. I'm not sure how far that would get me on the exchange.
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Old 10-26-2021, 07:15 AM   #9
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Yes you probably can retire right now.
$100k-42k(pension)/3.1mm=1.9% WR. Pretty safe.
You could easily manage your MAGI (because you already have a lot in after tax accounts)to get some ACA credits for the next several years health insurance unless you already have that covered by some sort of retiree benefit?
Would that pension amount still increase if you retired now but deferred taking it for several more years? That is usually how most work so you could delay and receive more than you think even if retiring now?
If so you could spend down some of the after tax account allowing you to get ACA help and get a larger monthly down the road.


I wouldn't ignore SS but consider it a nice bonus down the road.
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Old 10-26-2021, 07:18 AM   #10
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Assuming your expenses are based in fact and actuals from real complete outgoings over the past couple of years, and include solid estimates for health insurance, including that it typically goes up quite a bit every year, and that you have a good buffer for the types of activities two teenagers might need, then you should be good to go.

All things equal, no in your shoes I would not work another 5 years for extra pension.

You have $3m invested and a decent pension. Assuming you have a good AA - that's the only missing part here?

Other than that, break out a calendar with your wife and figure out the best date to retire. A lot of companies stack bonuses, HSA, 401k matches, unused vacation, and things at ends of years or quarters, so there's often a lot of extra $ to eek out by picking the right date. For me, based on what my MC did, that meant April 1 was the best date, head and shoulders above 12/31, almost half the years comp loaded in the first quarter.
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Old 10-26-2021, 07:26 AM   #11
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Suck it up and go another 4.5 years. You won't be unsure as you are now.

I think you'd be fine calling it quits right now. However, for the additional 4.5 years, the payoff is enormous. With double the pension and the additional $600k, you'll have so much more flexibility in retirement and ability to pass what remains to the kids
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Old 10-26-2021, 07:30 AM   #12
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Just very rough numbers:
After tax $1.8 x .04 = $72K/yr
Pension $3500/mo = $42K/yr
Combined just those two is $114K/yr vs your projected budget of $100K/yr.

So even before you tap the pretax IRA funds or start SS, you are in relatively safe numbers. If you need additional money than the after tax and pension provide, you can take more from after tax; or start a 72t type withdrawal from IRA. Assuming some good investment on the IRA it should grow to approx double in the time from current 48 to 59 years age. So that provides more security if you just leave it and let it grow. Now you have additional SS to add in another 8 years if you wait until FRA at 67.

Assuming your numbers for budget are accurate, and you have taxes and health insurance covered, it seems you are good to go.

The bigger question is what benefit to working longer? Of course there is a large increase in pension, and even more into savings. It makes retirement at that point one of being closer to fat FIRE where you can do more and higher cost travel. Or have a second vacation home, or what you want to spend on. You will have a lot more with a little shorter retirement. Remember you can add years to your retirement, but you can't add years to your life. We all have an expiration date. Do you have desire to leave a bigger inheritance for your kids or charity? If so then the working longer makes that easier to accomplish.

Can you work somewhere in between the current and 4.5 years from now and retire then with a pension between the current $3500 and $7000 at 4.5 years from now? That may be a consideration to give you a bit more savings and income. While still retiring at for example 50 years old.
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Old 10-26-2021, 07:49 AM   #13
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Remember you can add years to your retirement, but you can't add years to your life.
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However, for the additional 4.5 years, the payoff is enormous. With double the pension and the additional $600k, you'll have so much more flexibility in retirement and ability to pass what remains to the kids
Thank you. This summarizes the question nicely. Is 4.5 years of my life worth $600K + $35K*25 = $1.5M (assuming I live to 78).

The challenge in answering is that it's not 4.5 years where I can do what I like. I'll still have to pick up and drop off the kids, take them to football practice etc. And those of you with teenagers know, they aren't the adorable fuzzy things they were at 5. I would pay $1.6M to experience those years again! I love them, but ...
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Old 10-26-2021, 07:56 AM   #14
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Old 10-26-2021, 07:59 AM   #15
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. Pension if I retire now is $3500 a month.

Now this where it gets tricky. From our combined annual salaries we can save about $140K p.a. and the pension grows to $7K a month if we work another 4.5 years.

Question #2: Do we retire now or work another 4.5 years? That will net me another $600K after-tax and pension doubles.
Is the pension tiered, or would it gradually increase the longer you work? If it's the latter, you have a comfortable middle ground available of working another year or two to give yourself a margin for safety, but if it's tiered and you don't retire now, you'll probably put a lot of pressure on yourselves to finish the whole 4.5 years.

We're in a slightly similar position, although without the pension. Our one kid is in college, so although we have enough to maintain our lifestyle as it is, we're hoping we can be LESS frugal in retirement and travel more, or maybe build a lake house. So we've decided to work until the kid is done with college, since some of the tuition is coming directly our of our income.
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Old 10-26-2021, 08:01 AM   #16
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Thank you. This summarizes the question nicely. Is 4.5 years of my life worth $600K + $35K*25 = $1.5M (assuming I live to 78).
$1.5M seems abstract to me, unless you are looking at buying something like an expensive house. Would it make more sense to you to think of it in additional yearly income? Assuming your numbers here are correct, you would have $35K pension + $600K*.04 = $59K. Is it worth 4.5 years of your life for $59K more spending per year?

Having more buffer is comforting. Being able to afford some luxuries is nice. At some point having extra money to spend gives diminishing returns. Where that point is for you is something you need to think about.
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Old 10-26-2021, 08:21 AM   #17
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It's not at all unusual for people to hesitate before making major life changes like retirement. I think most of us have worked through the same thought process you're going through and we've all had to make our own decisions about whether to retire and when.

I do want to throw out a few more things to add to your decision process though.
  • You say you "can't go back" to your job once you retire. While you might not be able to go back to the exact same job in the same place, there are other ways to make money if you want to. Think about cutting back the existing job to part-time, consulting, teaching, etc. You might want to keep licenses or skill sets current for the first couple of years, depending on what profession you're in. Or you can go in a completely different direction. I know a computer networking expert who's currently working at an ice cream franchise that one of his friends just bought; and another friend does bookkeeping and taxes for a couple of local businesses. For myself, I have found a few volunteer opportunities that keep me engaged just enough, while still allowing me to enjoy being a hermit when I feel like it.
  • Unless your job requires you to sign a contract, you have more options than just working 4.5 years longer or retiring right now. You can leave after one more year, or 18 months, or when the youngest starts high school, or whatever other milestone makes sense for your family. The savings and pension should continue to increase until you actually leave.
  • Finally, being around more during your kids' teen years can be just as valuable and rewarding as being there for their early childhood. In the long run, it may be even more meaningful to them to have you at all the football games and driving the car pools.
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Old 10-26-2021, 08:27 AM   #18
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Hi AverageGuy.

I retired cold turkey at age 50, nearly 6 years ago. I had a job that paid well but was causing health and personal problems. I had to retire or my life was going to suffer severely. I did the right thing.

That said. If I had a job that I could have tolerated (not liked, just tolerated) I would have stayed a few more years even though I was financially set.

I stayed til the youngest graduated High School. With children in school you will still have a structured lifestyle and you may as well keep working and stacking up some extra $$$. You'll be plenty young in 4.5 years.

One other observation, once your children get to high school age you won't see them much. Make the most of it.
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Old 10-26-2021, 08:43 AM   #19
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And those of you with teenagers know, they aren't the adorable fuzzy things they were at 5. I would pay $1.6M to experience those years again! I love them, but ...
+1000

Truer words have never been spoken (at least in my experience with 3 boys).
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Old 10-26-2021, 08:44 AM   #20
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Also - your kids are 12 and 15. I don't know if you want to travel much, but retiring now won't get you much more travel.
There's a lot more to retirement than travel.
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