Retiring at the end of 2019/1st quarter 2020?

[SunnyOne]

Hello there,

Starting this week I'm eligible to retire, get a pension and take my healthcare with me at the employee rates.

I've decided to stay in the job until the end of 2019 in order to get my annual bonus (paid out in December if you are still an employee) and to earn a bit more pocket money for 2020 vacations.

That said, if I stay just long enough into 2020, I could put my entire paycheck toward my 401k contributions for the 2020 year and my HSA as well.

Are there any other considerations to the timing of this event that I may have missed? Reasons to stay into 2020 (beyond just more pay)? Thanks

 

[CardsFan]

Be careful with HSA contributions. If you will continue with an HSA plan, that might be fine. If your retiree medical converts to a non-HSA plan (mine did), then you are limited to a pro-rated portion of contributions.

 

[Aerides]

It all depends on how your MC is structured. For mine, most of our bonusing was loaded in 1Q, and you had to be an employee on the last day of any Q to get the 401k match for that quarter. So, 4/1 was always the earliest (and best) date in any year to retire.

Bonuses paid in Feb, another profit sharing in Jan, HSA company-credit in Jan, and yes like you in my last year I put most of each paycheck into my 401k to max that out early. Each month came with a credit of vacation time that was paid out too.

 

[Dalmore]

Be careful with HSA contributions. If you will continue with an HSA plan, that might be fine. If your retiree medical converts to a non-HSA plan (mine did), then you are limited to a pro-rated portion of contributions.

I agree. I haven't dealt with HSA going to retirement yet, but I know that when I left IBM a couple years back, I lost all my unused HSA funds.

 

[CardsFan]

I agree. I haven't dealt with HSA going to retirement yet, but I know that when I left IBM a couple years back, I lost all my unused HSA funds.

I think you are confusing an FSA with a HSA.

An FSA has lower contribution limits and does not require you have a qualifying high deductible plan. It does, however, require you use the funds in the year you contributed, or lose them.

A HSA has higher contribution limits, but you must also have a qualifying plan. The HSA funds can carry forward indefinitely, even if you change plans and no longer have the ability to contribute. If you change plans mid year, and the new plan does NOT qualify, you are limited to the amount you can contribute based on the number of months you qualified for the HSA.

 

[Dalmore]

I think you are confusing an FSA with a HSA.

Acronyms, you have to love them. It was always referred to as "healthcare spending account" vs "dependent spending account". As I think back, at a high level they would mention Flex Spending Accounts.

 

[Andre1969]

I used to be of the attitude that when I decided to retire, I wanted to wait until early April. My rationale had always been based on a few things...
1) My birthday is in April, so it would be a nice birthday present to myself.
2) I look at Spring as a time of rebirth, so I thought that seemed like a great time to start a new chapter of my life.
3) I tend to get a bit "meh" during the winter, and suffer a bit from the sunlight deprivation stuff, so I didn't want to associate ending my career and starting retirement during that kind of period. I was worried I'd associate it more with "death" than "rebirth".
4) I usually get a bonus in March
5) I usually get a raise in March, and that means if I stick it out until then, when I do retire, they'll pay out my vacation pay at the higher rate.
6) One more year to contribute to SS
7) One more year to do a Roth IRA
8) One more year to contribute to my 401k. I could even ramp up my contribution rate and probably come close to maxing it out in a little over 3 months.


But then, I started thinking more into it, and have decided that I'll probably just retire when it feels "right", and I started picking at my rationale. For instance.
1) What's wrong with an early birthday present?
2) The older I get, the more the old adage of "there's only so much time left" really rings true. So if I get to my comfort point, why waste any more time w*rking than I really have to?
3) I'm gonna get the sunlight deprivation thing and that "meh" attitude every winter, regardless. So if I'm not dealing with it at retirement time, it'll get me the following fall/winter. Plus, there is the bonus of not having to get up and go to w*rk in nasty weather.
4) My yearly bonus is usually $800-1000. That's not going to make or break my retirement.
5) The leave I have saved up would be worth maybe $400 more, if I waited until I got my next raise. Again, not going to make or break me.
6, 7, 8) At this point in my life, an extra year of paying into SS, another year of maxing my 401k, and another year of doing a Roth probably doesn't make much, difference, either.

 

[NoiseBoy]

Here are some things that I am considering for getting done early on in my retirement year:

1. Use my annual vision benefit
2. Use my annual dental benefit. I also got the crown my dentist said that I needed taken care of already.
3. Work enough months to meet the Soc Sec requirement for "substantial earnings" to eliminate a WEP year.

At my megacorp, the bonus is paid in March to those who were employed on 12/31, so that won't be a factor in my decision, unless I end up working past July or August, which is not the plan. The 6% 401k match vests monthly. There is an annual additional contribution, but again, you have to be employed on 12/31 to get it, so it won't be a factor either.

I'm in an HSA and stuffing as much in as I can in my final year may make sense, but I don't plan to maximize my 401k that year. My thinking is that I'd rather have the case.

The traditional sweet spot at my megacorp is January 31st because we get our vacation time allocated at the start of the year, so people can stop coming into the office in late December, but not start drawing their pension until February 1. However, #3 above means I can't go that route.

 

[Spock]

I agree. I haven't dealt with HSA going to retirement yet, but I know that when I left IBM a couple years back, I lost all my unused HSA funds.

when I left IBM, my HSA was mine.
IBM had a couple of other med spending TLAs (three letter acronyms) for retirees (that I didn't pay attn to because I didn't qualify for them) that were "use it on IBM ins plans or lose it". Perhaps you're thinking of one of those instead of the HSA.

 

[LarryMelman]

But then, I started thinking more into it, and have decided that I'll probably just retire when it feels "right", and I started picking at my rationale. For instance.
1) What's wrong with an early birthday present?
2) The older I get, the more the old adage of "there's only so much time left" really rings true. So if I get to my comfort point, why waste any more time w*rking than I really have to?
3) I'm gonna get the sunlight deprivation thing and that "meh" attitude every winter, regardless. So if I'm not dealing with it at retirement time, it'll get me the following fall/winter. Plus, there is the bonus of not having to get up and go to w*rk in nasty weather.
4) My yearly bonus is usually $800-1000. That's not going to make or break my retirement.
5) The leave I have saved up would be worth maybe $400 more, if I waited until I got my next raise. Again, not going to make or break me.
6, 7, 8) At this point in my life, an extra year of paying into SS, another year of maxing my 401k, and another year of doing a Roth probably doesn't make much, difference, either.

I agree, when you are sure that you're way past the finish line, it just seems like artificial torture to force yourself to keep working for an assortment of inconsequential perks. Staying a few more months to qualify for a pension or retiree health care would be different, but a few extra dollars is inconsequential. And time marches on no matter what.

 

[Andre1969]

I agree, when you are sure that you're way past the finish line, it just seems like artificial torture to force yourself to keep working for an assortment of inconsequential perks. Staying a few more months to qualify for a pension or retiree health care would be different, but a few extra dollars is inconsequential. And time marches on no matter what.

Yep, and that "time marches on" was really the wakeup call for me. I'm only 49, but as time marches on, it seems I'm becoming more and more aware that there are only so many good years left.


We used to have this one lady at work, a government secretary, who worked until she was around 77. She had 41 years in, or whatever was just one year below what you got for your max, under the old system. Initially, she wanted to stay one more year, but then it hit her...she'd have to pay in another year, and I think there was some kind of health insurance cost that would go up if she didn't retire. Her benefit would have been like 2% greater, if she stayed for another year. But, at that age, let's say you only have 10 "good" years left...that would have been 10% of her remaining life used up still being tethered to w*rk. So, she decided to bail.

I think she's around 84 now. Last time I heard, she was going fine, enjoying retirement, but was starting to slow down. Honestly, she probably could have retired years before, but she was of that old fashioned mentality where you get your life and identity wrapped up too much in your j*b. To be fair though, they were giving her a pretty flexible schedule, one of those 9/80 work weeks. And she took a lot of vacations, so I guess she did enjoy the best of both worlds for awhile.

 

[LarryMelman]

I used to enjoy working. I decided on my career at about age 13 and I have had a good run. It's only in the last year or so that my work environment (the people I work with) has become toxic, which has probably finally motivated me to get off the treadmill. I still enjoy the work itself, I don't need to put asterisks in the words "work" and "job" and etc. But I no longer enjoy it, that's for sure.