What would you do, re-enter workforce or not?

[Desertdawg]

Me, 58 in August. Laid off my job of 15 years to due a sale in November 2017. I was retained for 1 year then unexpectedly laid off November 2018. New ownership was difficult to work for so I was relieved as a great job was made way too stressful. Difficult time finding decent paying work in my locale, outside sales and sales management. Spent the past 6 months skiing 5 days per week. So much fun!! Actively looking for work as well. I’ve had interviews but I have not shown much interest because the jobs either pay 40% - 60% of what I previously made, want me to work in an office, I have not done this in 18 years, or in industries I have no desire to work in.

Wife, 63 in August. Retiring June 30.

Current retirement savings.
Me
· $270K 401(k) 80% stock 20% bonds @ Fidelity
· $40K Roth IRA Schwab Intelligent portfolio
· $60K IRA Schwab Intelligent portfolio
$370K total

Wife
· $180K 457(b) 80% stock 20% bonds
· $190K TSP 80% stock 20% bonds
· $21K IRA Schwab – 100% stocks
Plan is to move the balance of wife’s 457(b) into TSP in June. Started paperwork this week.

$390K Total
Family retirement total $760K

Other cash
Cash in checking/Savings $92K
Non retirement stocks $98K
Total retirement/ cash assets $950K

Home value $400K - $34K owed = $366K

Wife receives $2100 per month pension with 50% survivor benefit effective July 1. Very generous COLA adjustments for life.

We both plan to take SS at 67
Me 2028 $30K annually
Wife 2023 $15K annually

Debt

· $34K house. Loan at 3.785% currently paying $1550 per month including tax and insurance. Payoff in 29 months. My piece of mind plan would be to pay this off upon retirement thus lowering monthly expenditures.
$30K on a car, $600 per month. Purchased in April 2018. Job paid car allowance so we purchased a new car as I drove 30,000 plus miles per year and my previous car was 12 years old. Loan is 2.9%. Can likely sell for $30K but would still need a car. Probably need to spend $20K for a used replacement.

My idea to payoff house is to lower monthly expenses, I have every penny earned/spent in Microsoft Money since 1997 so I know our expenses.
Non-discretionary expenses, including car payment but no house payment but including taxes and insurance
· $70K before taxes
Wife wants to travel so if we match our typical annual vacation expenses need $86K before taxes.

I’ve run Firecal, multiple scenarios, with all parameters entered. I get 100% success rate for 30 years at $88K annually. I’ve worked with both Fidelity and Schwab advisors and they both agree though both say do not pay off the house. Not paying off the house would require pre-tax income of $111K for 29 months then $86K annually.

Health insurance is $300 per month until Medicare as wife is a retiring Fed.

All child-rearing is complete.

Should I join my wife in retirement, or her join me or continue to search for work and put in 2-3 more years?

 

[HI Bill]

I would pay off the house, especially if your earnings are greater than 3.9%. This is more of a emotional, than rational action, and many here have had many discussions about whether to do this or not. If you do this, I'm guessing that FIRECALC will still give you a 100% success rate. I'd pay off the house using part of the checking/savings, and give my two week's notice!

 

[Ducati52]

Based on your numbers, it looks like you can pull the plug if you want to. Having the insurance locked down prior to Medicare is a *huge* factor, IMO.

But since you seem to be on the fence, my question would be: is that a matter of economics, or is it you're not sure you're ready to stop working? If it's the later, is there something -- full-time or part-time -- that you'd be more passionate about? You mentioned you skied every day for six months -- any thoughts on working at the ski resort during the season, earning some extra $$ and getting a free season pass? The extra income can be nice buffer against the mental challenges of "no more paychecks for the rest of our lives?!?!?!"

Normally I'm not a big fan of taking retirement funds out to pay off the house, but since you have so few payments left, in this case I think it makes sense.

The $600 car payment is a tough one. If you really can sell it for the loan balance, I think I would, but I'd buy something in the $10k range. Neither one of you will be commuting to work, so you really don't need a $20k car unless you have some sort of specialized needs. But if you really like the car and it's something you want to keep, it's certainly not going to blow a hole in your retirement budget.

 

[gwraigty]

If you haven't had a paycheck in 6 months and are being particular about taking a job that pays 40%-60% of what you used to make, then it doesn't seem as though you really need to return to work, for money anyway. If you have a need to work for other reasons, then you'd be willing to accept less money. I'm guessing you have no true desire to work, so you might as well stop looking/pretending to look.

Why $92K in checking/savings? What yield are you getting on that?

 

[Sunset]

OP - I feel you are close, but it could be tight.
I put your numbers in firecalc with $86K spending and it showed 99.2% success.

Turning down jobs that pay 60% after 6 months, means you don't really want a job. Nothing stops you from taking that job, and keep looking for a 100% job. After all the best next employee is someone already working.

FA's always tell people to not pay off the house, as that keeps more money invested and they make more money by you having a larger pile under their thumb. So pay off the house, it's a bad debt as it's not deductible at all.

Your 30K car is super expensive especially for someone not working, and planning retirement. Sell it, and buy a 2 yr old Camry still under manufacturer warranty. You don't need anything fancy as you won't be driving everyday.

 

[Sunset]

I would be pretty nervous about retiring at this time, without a big cushion, as the market has done great the past 10 years, and everyone is talking about a big downturn coming.
It's the danger of sequence of return risk that could cause people "just able" to retire to end up penniless in a couple of decades.

 

[brucethebroker]

Have you considered a PT job, making enough to pay your mortgage and car payment each month? Perhaps something that you would find interesting, even fun? If you could gut it out for even a couple of years, may be enough extra income to pay off both loans.

Or start a "hobby" business: fun and slightly profitable, with great deductions.

The latter has been great in my case, providing just enough wiggle room to not have to worry about finances.

 

[Dtail]

I took a package just short of 56 y.o., figuring I could find work. Looked for 15 months without success, despite many contacts in the industry. Discovered I could retire at 57 with huge influence from this site even though a lurker at the time.

I would go for retirement, especially since the wife is retiring. Yes we could be near the top of a bull market, but many folks also stated that concept in 2014.
As long as you have some flexibility in discretionary spending and a Plan B if things really go south, go for it.
Time left on this planet is more important than monies.

 

[Aerides]

It's a little tight, and (despite the past few days) the market is quite high right now. If you'd had those numbers in December I'd feel more positive. I don't think you can shave 8% of your savings and still get 100%. And that could happen easily in a short bear.

In your shoes I would take a 40% paycut and work in an office for the next 18 months (and use that time+money to pay off the car and house so neither are in your equations on day 1 of ER). That will give you a little buffer, while reducing your pre-SS window.

 

[bada bing]

If it were me, I'd take an attractive job if one came up that was interesting and paid enough to delay any savings withdrawals for a couple more years. I wouldn't worry about matching previous earnings, more towards covering current spending.

You look good now, but you'd look bulletproof in a couple more years with all debts retired.

 

[Mdlerth]

To thine own self be true

If you haven't had a paycheck in 6 months and are being particular about taking a job that pays 40%-60% of what you used to make, then it doesn't seem as though you really need to return to work, for money anyway... I'm guessing you have no true desire to work, so you might as well stop looking/pretending to look.

Turning down jobs that pay 60% after 6 months, means you don't really want a job.

Sometimes we know the truth about ourselves, but need affirmation before we can accept it.

More number-crunching is unlikely to drive your decision, but some honest introspection might. Good luck!

 

[Desertdawg]

Thanks for the responses. The responses mirror my thoughts exactly. I've been lurking on this site and others for the past 6 months. Lots of excellent info and insights.

My reasons for not being 100% all in on pulling the trigger are as some of you have noted.
Recession looming? Economic indicators are pointing to this
Still owe money on a car, I would not have purchased had I known I was going to be laid off. Do need AWD to get to skiing. Resorts are 25 and 50 miles away so looking at 7500-10000 miles per year just to ski
House payment. House is 28 years old. Windows and heater have been replaced in the past 5 years. Still a 1990's kitchen and bathrooms. Our plan was upgrade these Fall 2019, this was before I got laid off. If not working I could do some of the work.

I'm definitely ready to quit working. In the past 6 months of unemployment boredom has not been a problem. I have plenty to keep me busy and a bucket list of low cost or free things to do. Give me a mountain bike, kayak, kite-surfer, hiking boots or backpack and I'm good. Wife not so much. With my wife being 5 years older, we would like to do lots of traveling before she gets "too old"

On the flip-side, reasons to work are to pay off debt, employment during recession, and redo the kitchen/bathrooms. I figure I could handle 2-3 years with the right job

I will take the right job for 70% of previous income. I'm in contention for one right now.

If no full time work pans out wife and I have discussed both part time work and "hobby" income

I feel comfortable having $90K in cash. I've read it's good to have 1-3 years expenses in cash to weather a potential downturn. I plan to put 50%-60% in a CD at 2.4% or open a rolling market type account similar to Schwab Purchased Money funds which currently pay 2.26% which I can link to a Schwab checking account so that most or all of the balance earns the 2.26%.

Mdlerth nailed it.

"Sometimes we know the truth about ourselves, but need affirmation before we can accept it."

"More number-crunching is unlikely to drive your decision, but some honest introspection might. Good luck!

 

[Sunset]

Ally bank is easy to use, has savings account rate of 2.2% and 12 month CD at 2.7 %
plus when opening an account for CD, if you change the CD selection, they have a hidden CD for 15 months at 2.8%

https://secure.ally.com/open-account/create-accounts

 

[ziggy29]

On the flip-side, reasons to work are to pay off debt, employment during recession, and redo the kitchen/bathrooms. I figure I could handle 2-3 years with the right job

It looks like your numbers will work, but if you really want to do some kitchen and bath remodels, yeah, "one more year" may not be a terrible idea in this case.

I feel comfortable having $90K in cash. I've read it's good to have 1-3 years expenses in cash to weather a potential downturn. I plan to put 50%-60% in a CD at 2.4% or open a rolling market type account similar to Schwab Purchased Money funds which currently pay 2.26% which I can link to a Schwab checking account so that most or all of the balance earns the 2.26%.

That's close to what we are doing, including the Schwab checking and money market funds. We have about $110K in cash, but almost all of it is earning at least 2%, sometimes a little more. Part of the reason we are keeping this much in cash is because when we bought our house last September -- we plan to retire in place here when my wife is ready to retire (probably in 2028 when she turns 60) -- we took out a $100K mortgage because special tax laws concerning clergy income made it advantageous for us to have a mortgage payment rather than buy the house outright. We'd like to retain the ability to have enough "dry powder" to pay off the house if need be. So there are times when we feel like we are way too heavy in cash, but under the circumstances we don't want a situation where she leaves the ministry before we expect, and for the market to be down enough at that time that we'd have to "sell low" to pay off the house.

 

[FreeBear]

I'm definitely ready to quit working. In the past 6 months of unemployment boredom has not been a problem. I have plenty to keep me busy and a bucket list of low cost or free things to do. Give me a mountain bike, kayak, kite-surfer, hiking boots or backpack and I'm good. Wife not so much. With my wife being 5 years older, we would like to do lots of traveling before she gets "too old"

On the flip-side, reasons to work are to pay off debt, employment during recession, and redo the kitchen/bathrooms. I figure I could handle 2-3 years with the right job

I will take the right job for 70% of previous income. I'm in contention for one right now.

To me, this is the most important thing: time is running out. Most of our 60 and early 70's something friends have/are facing serious health issues that slow them down, at least temporarily. So I agree that you should get traveling now, while it's still fun and you both have the energy, health, and money. Worse case, there is a small chance money could be tight, you'd probably still last for decades. Enjoy now while you can!


I'd keep/buy whatever car you need for skiing, since this seems so important to you. I'd also pay off the house since you don't own that much; this is more emotional than economic. Still, I'd delay major remodeling until you are both on or at least near SS. This moves you at least 5 years into retirement, where the sequence of return risk is less or at least better known. Besides, you may decide to move/downsize.


Something to also keep in mind is that your Firecalc numbers don't account for the probability of death before running out of money. Accounting for eventual death, your financial plan is even stronger since there is a finite and growing (with time) possibility of death before the end of the financial plan. Also, if needed, you can take SS earlier than planned in a downturn.

 

[RAE]

To me, this is the most important thing: time is running out. Most of our 60 and early 70's something friends have/are facing serious health issues that slow them down, at least temporarily. So I agree that you should get traveling now, while it's still fun and you both have the energy, health, and money. Worse case, there is a small chance money could be tight, you'd probably still last for decades. Enjoy now while you can!

I'd keep/buy whatever car you need for skiing, since this seems so important to you. I'd also pay off the house since you don't own that much; this is more emotional than economic. Still, I'd delay major remodeling until you are both on or at least near SS. This moves you at least 5 years into retirement, where the sequence of return risk is less or at least better known. Besides, you may decide to move/downsize.
[/QUOTE ]


+1, agree with this advice. Time becomes more important than money at some point, and I think you are probably at that point, especially if your wife wants to do some traveling and you have plenty of active hobbies to keep you busy. And as FreeBear says, I would pay off the house and delay the remodeling for a while, if it were me. With health insurance covered, you should be in good shape, as long as you monitor your expenses and be prepared to adjust as necessary as time goes on.
.
One last thing that I would do (others may disagree) is lower your stock % to about 60% (from 80%), for better protection from a market downturn. Personally, I would not be comfortable with the 80% in retirement, but that's me......others would probably be okay with it.