11 Years Later - Imminent Retirement and OMY Thoughts

[progmtl]

A recent "One More Year" (OMY) thread had me thinking about my current situation. I've been meaning to post since I am nearing ER and I value the inputs on this forum.

I took a look at my posting history and realized that I only ever posted in 2014 (!!). Here is my intro thread: 40yo, Still Grinding Away, Future Has Promise

I've been lurking for a LONG time. So I guess I'll give an account of what happened since 2014 and where I am now.

In short, little naive me in 2014 had no idea of the crapstorm that awaited me.. 2015 divorce! Wife had been cheating and life turned upside down. At the time of divorce we split assets and I walked away with no house and about $1m in investments. My daughter was 8 and I became a single dad 50% of the time. Needless to say this was a time of shock, anger, grief, and just trying to cope while reinventing my life. I rented for 2 years and then bought a modest home in my same town, keeping my daughter in the same school district (as was stipulated in the divorce).

I won't go on too much about the personal stuff. Life goes on, you heal, you try new things. Eventually I met my current wife in 2019 and we got married in 2022. I also added an addition onto my house and now it is extremely suitable for our needs - I love it! My daughter is now off to college and I have an adult stepson.

--- Financial/ER Stuff ---

I am now 51. I've been working in IT for nearly 30 years. My post in 2014 mentioned how burnt out I was. Yup, I have persevered another 11 years in this career and the burnout level is getting critical! The good news is that after subtracting what I will owe for my daughter's college expenses, I will have a little over $4m invested. My (second) wife has her own assets, approaching $1m. We handle our money separately. I pay 95% of the household expenses and she pays for some of her own things (car/phone/clothing). This arrangement works for us and we plan to continue this even when I am retired.

So I have $4m. Only debt is about $200k in mortgage debt at 2.875% interest ($988 monthly payment) so I will just pay monthly and keep this debt. I can earn 3.5% - 4.25% in CDs and online savings accounts.

My plan is to have about $100k annually to spend in retirement. I think my current spend rate is actually a little bit less than that. And there is some fluff in it. I'm thinking I could manage my taxes such that I need about $130k (or at most $140k) gross income to achieve $100k net income. About 70% of my assets are in taxable brokerage/savings accounts. I would plan to live off those assets until age 59.5 and then start pulling from my 401k (has about $1.1m now) and filling up the lower tax brackets. I may delay taking SS past age 62 while pulling from the 401k to be tax efficient and increase my SS payments.

The biggest risk/unknown is health insurance. My wife works full time making about $120k (and building her own wealth rapidly since I cover most of our expenses). She plans to continue working for at least 8+ years, according to her. So we can get health insurance through her employer at a reasonable cost. I am aware that my retirement might at some point trigger her to want to retire, and then we will both need to rethink health insurance costs. But I think we could still manage it. Also, she is able to get health insurance (at a bit higher cost) if she switched to working part time in her job - so that is another option for her/us.

Firecalc gives us 100% success rate. I have about 80% in stocks and will likely pare that down only a little as I raise more cash for retirement risks (market crash). I held through the 1999/2000 and 2008/2009 downturns. It will be scarier if it happens when I'm retired, but I am confident that I will switch to consuming my cash and stay the course.

Right now I'm debating between giving notice in Jan 2026 and retiring in Feb. Or waiting until Nov 2026 which would allow me to vest some stock (currently worth about $65k) plus everything I save between now and then. But I am finding the job to be really stressful and I think I want out - for my mental health - ASAP. Which would be Feb 2026. So there's the OMY aspect of this post. But I think I am at least 80% leaning towards getting out in Feb.

This is really long so I'll stop here for now.

 

[aaronc879]

Sounds like you are set financially and the job is hurting you physically(mentally) so i don't see a reason to work past February.

 

[zangbao]

I don’t think I could endure the critical burnout stress for 11 months in exchange for $65K knowing that I already have enough.

 

[progmtl]

Thanks @aaronc879 and @zangbao . One side of me says it's only an additional 9 months of work - and you get $65k in stock plus a bit more savings in the meantime. But the other side says I don't need it and it won't really change anything about my retirement.

But really, I think mental health (which yes, does affect my physical health) needs to win here. I've always been the guy who stoically sticks it out and powers through the obstacles. But I'm tired of all that - at least in the career sense. Math says I've "won the game" so I think it's time to stop playing. I am very aware of the non-financial hurdles of retirement and that will be the next challenge. Finding meaning, keeping some semblance of structure perhaps. But I have been working non-stop for a very long time (since 1996) with only 3-4 weeks vacation per year and I am just done.

Also, one other thing I should note is that my career does not offer the glide-path to retirement (like perhaps the legal or medical profession might?). Like, work part time or do some consulting with my company. I'm in the cloud computing space with one of the major players and it is all-in, or all-out. There are no part time workers. There are no consultants. The culture is intense.

 

[zangbao]

Time to find out who you are outside of work. If you haven’t done that already the road to self-discovery is always an adventure.

 

[street]

It really is a big deal giving that notice. Only you know what is best for you. As far as your finances and your plan going forward you are in great shape, IMO. Wife stays working is a huge deal and you can refuel and start your new journey in life. Nothing says you can't go back to work in some degree with a different company of related field.

Good luck I wish you the best in your decision.

 

[progmtl]

Time to find out who you are outside of work. If you haven’t done that already the road to self-discovery is always an adventure.

I love this @zangbao and this is the mindset I am now in. And there is even apprehension and anxiety about it. But I think the time is now for me to take the leap.

 

[progmtl]

As far as your finances and your plan going forward you are in great shape, IMO. Wife stays working is a huge deal and you can refuel and start your new journey in life. Nothing says you can't go back to work in some degree with a different company of related field.

Thanks @street . Yes, the plan assumes that I will never earn another cent working and it even works in the absence of SS (per the calculators, anyway). So I do feel that it is pretty safe!

 

[street]

Yeah you will be fine and great shape if you decide to leave.

 

[livingalmostlarge]

Is there any chance your finances could change in the future? Could you need to support the current wife? What happens if she chooses not to work? How much does she add to the budget?

 

[progmtl]

@livingalmostlarge She seems to be pretty adamant about continuing to work. But right now, I mostly cover all the essential house expenses. She pays for her car expenses, cell phone, clothing, beauty supplies. Occasionally she picks up groceries or takeout food.

If she chose to stop working, we would have to have a serious talk about health insurance costs - that's the big one. But if we add her assets (about $750k plus more than $300k in another country with some impediments to access) to mine, we really should be able to cover everything. A better path for her would be to work part time - we could still get health insurance through her employer. I'd be willing to do that if I had a sane job that allowed part time work.

So there is some risk of her stopping work, but I think we could still make the budget work.

The other risk that I didn't mention - and that I have already experienced in the past - is divorce. If we get divorced, I lose money. Presumably I would lose half of what was accumulated since marriage in 2022. I have thought about that, but I think I would still be able to get by.

 

[livingalmostlarge]

What is the numbers to support two people without her working? Or working part time? What if she doesn't want to work? Is it a deal breaker? What if she can't work?

 

[livingalmostlarge]

Also what happens upon death. Have you discussed life interest in the house?

 

[Gallaher]

Yes, your last point, divorce. If you’ve been divorced you are statistically more likely to get divorced again. Hopefully you won’t. Maybe you signed a prenup.
For me, this early retirement has been way easier and more pleasant than I expected. Also, way cheaper, not that we suffer frugality much.
I wish I had retired sooner…could have. Also, encourage you to retire ASAP. You can’t get more time.

 

[Exchme]

Congrats on healing from the divorce, rebuilding your life, finding happiness and reaching financial security. You have only great choices ahead of you.

It seems likely that your best financial plan would be to wait until 70 to claim SS if you are the higher earner, look at opensocialsecurity.com and remember to scroll to the bottom and click on various points on the graph to get the difference in lifetime value from different claim age combinations.

I am thinking that you should run a holistic calculator. It would tell you to spend down taxable first and leave as much protected from tax drag as possible for as long as possible as tax drag can be a return killer. If you pull money out of tax deferred early, it should likely be for Roth Conversions with taxes paid from taxable. Roth Conversions protect your assets from tax drag even better than tax deferred. If you don't already do it, you should generally put your fixed income in tax deferred so the taxation of the investment returns (ordinary income) matches that of the account, leaving stocks with their lower tax drag, LTCG tax rates and faster growth for taxable and Roth.

 

[progmtl]

What is the numbers to support two people without her working? Or working part time? What if she doesn't want to work? Is it a deal breaker? What if she can't work?

Also what happens upon death. Have you discussed life interest in the house?

@livingalmostlarge I guess I might lump these two things together. If I die, she'll inherit a lot and also my daughter should be just fine (also my ex has plenty of money to support my daughter).

If my wife dies or quits work or can't work - I suppose the financial ramifications are similar in those cases. If she chooses not to work or can't work then she will need to contribute a bit to the household, at least to help cover her own health insurance. She has enough money to do so. And I would have enough to cover my share as well. I haven't dived too far into the numbers - I did do some research on ACA costs in my state (CT) and they are high! But in a pinch, moving to another state is an option. Actually there are many options, including picking up part time work at a place that offers health insurance.

We do need to figure out all the details of wills and estates and how our children also factor in. But anyway I think we have enough money and flexibility to make things work. As for the house, if I'm gone it can be hers.

 

[progmtl]

Yes, your last point, divorce. If you’ve been divorced you are statistically more likely to get divorced again. Hopefully you won’t. Maybe you signed a prenup.
For me, this early retirement has been way easier and more pleasant than I expected. Also, way cheaper, not that we suffer frugality much.
I wish I had retired sooner…could have. Also, encourage you to retire ASAP. You can’t get more time.

No prenup, just a calculated risk. No risk, no reward. We shall see how things go. But I have been betrayed before and will not turn a blind eye to red flags in the future.

ASAP sounds about right for retirement, for exactly the reason you mention. I have had some minor health issues recently, and I've also discovered that (surprise!) the transition from 40s to 50s is a lot more obvious and noticeable in terms of health than the transition from 30s to 40s was! Time > Money.

 

[progmtl]

Congrats on healing from the divorce, rebuilding your life, finding happiness and reaching financial security. You have only great choices ahead of you.

Thank you. This was the greatest challenge of my life thus far (and for that I count myself lucky!).

It seems likely that your best financial plan would be to wait until 70 to claim SS if you are the higher earner

It seems like a good idea to defer SS while I drain my 401k, for sure. Thereby eliminating or reducing the effect of RMDs later on. Roth conversions are another way to pull that 401k money out to a more tax-friendly place, but as long as my wife is still working I may not have much leeway to do conversions in the lower brackets (married filing jointly and all). But I'm a long way off from age 62 and I will evaluate things as they happen over time. If the market crashes terribly then maybe starting SS is a better idea than pulling from my 401k. I guess we'll see.

If you don't already do it, you should generally put your fixed income in tax deferred so the taxation of the investment returns (ordinary income) matches that of the account, leaving stocks with their lower tax drag, LTCG tax rates and faster growth for taxable and Roth.

Yes, that is exactly what I have been doing all along. My only fixed income that is in taxable accounts is cash. Right now I am building cash for my daughter's college expenses (already covered) and my retirement expenses (also mostly covered - in case of market crash).

 

[Koolau]

Of course, anything can happen, but, in general, I don't see anything serious standing in your way. I agree that health insurance is the scariest issue for many of us. Of course, I'm on MC now and have much less angst over insurance (heh, heh, just my actual health)!

 

[walkinwood]

Get a subscription to an online program like Pralana Gold (there are others too ...search in this forum) and plug in your numbers. It is a good exercise to get you to dive into your expenses and plans. While no program will give you a crystal ball, these programs are great to get a rough idea of what your taxes and other future expenses will be. Also great for what-if comparisons.

I started using one a couple of years ago and find them useful. They didn't exist (to my knowledge) when I ER'd in 2008. In the scheme of things, the cost of these programs is neglibible.

 

[MBAustin]

Congratulations on navigating a lot of "stuff" over the past decade. Personally, I think you are good to go. And I suspect you actually could find some related part-time w*rk if you want to - my guess is that your skillset is more transferable than you think it is (you've been in IT for much longer than cloud computing has been around, so you've got other skills to build on. Thanks for the update and best wishes - keep us posted!

 

[progmtl]

Get a subscription to an online program like Pralana Gold (there are others too ...search in this forum) and plug in your numbers. It is a good exercise to get you to dive into your expenses and plans.

Thanks, that's a good idea. I'll explore some software options.

 

[progmtl]

Congratulations on navigating a lot of "stuff" over the past decade. Personally, I think you are good to go. And I suspect you actually could find some related part-time w*rk if you want to - my guess is that your skillset is more transferable than you think it is (you've been in IT for much longer than cloud computing has been around, so you've got other skills to build on. Thanks for the update and best wishes - keep us posted!

Thanks so much! It's been quite the journey - both work and the other "stuff"! I have no idea what kind of part time jobs might be out there, but if I get the itch in the future maybe I will look around. But first I need a LONG rest!

 

[Diogenes]

A recent "One More Year" (OMY) thread had me thinking about my current situation. ... I walked away with no house and about $1m in investments. ...

So I have $4m.

Normally I'm Mr. OMY around here, but your case merits giving strong consideration to retiring as soon as possible. I quote the above snippet for a reason. After the trauma of divorce, you were left with around $1M. Your expenses presumably rose, and your performance at work - hence raises etc. - probably didn't exactly burgeon. And yet, a mere decade later, you've quadrupled your wealth. That is.. incredible!

Given such elasticity and poise, the risk of not-recovering from some stock market disaster, or other future disaster, is low. This instills confidence. The psychological basis for retiring is strong. The financial basis is already strong. The conclusion is to give oneself the grace to go ahead and do it!

 

[progmtl]

Given such elasticity and poise, the risk of not-recovering from some stock market disaster, or other future disaster, is low. This instills confidence. The psychological basis for retiring is strong. The financial basis is already strong. The conclusion is to give oneself the grace to go ahead and do it!

Thanks so much for your comment! Elasticity is a great term. I am capable of living on less than I do, without much "hardship". I am also capable of pulling in a small amount of money (part time work that may be fulfilling, like giving music lessons) without much burden. I do believe I can adapt to most scenarios.

I recently did ask myself how the heck did I go from $1m to $4m in 10 years?! The answer is that, for one, the US stock market has roughly tripled in that time. That certainly helped my $1m become about $3m. And I suppose I have added enough over the decade to, with some returns along the way, fill in the final million. I've also been fortunate in the past 4 years or so to have increased my income by a lot. I never thought I would ever earn more than $300k in a year but I have done so for 3 of the last 4 years. My extra money has gone right back into savings and investments (except for the addition to the house! ).