Am I ready?

[Beachbound]

Long time member and first post. Probably too long and not enough info- but it’s my start! So much great information here, I always feel so unprepared, and un-ready to make the big jump!

I’ve been with a large company just over 28 years now- great salary, nice annual bonus- but the job is hard both physically and mentally. Your never off- never away and if it’s not email, text, or just being in the building- it’s 24/7.

Always told myself I would retire at 55. That time is now finally just 3 months away- and the panic of being ready is setting in. It’s so hard to walk away from a big salary- but I know life is short, and this is the kind of job that seems to age me more everyday. I don’t want to wait to retire, and then only a few years of true enjoyment in life.

No kids, wife currently works too, that would retire at the same time at 56.

The short of it-

900k in 401 all pre-taxed
160k in investment acct paid out and taxed once retired
60k stock options invested right away and cashed/taxed
120k cash

Pension available at 55- most likely wait until 65 to claim, which would be about $45,000 non cola. Can claim at 55 around 29,000- continues to grow the longer I wait to start.

Social security for both at 65 would be about another $40,000 based on current estimates.

No debt except mortgage- but still owe $480,000. House is on my 5 years old- so no major repairs along the way. Could sell house for 1M, downside and pay cash for smaller home in areas we would like to move (NC, TN, etc). That’s the plan 2-3 years after retiring. Enjoy the big house for a while-close to family- then get back to where we prefer to live and previously lived before here.

Currently live in FL with aging parents (87/83). They are in great health now- but I know their time is not forever, and would love to spend more time with them. I wouldn’t sell current house, or move from state until they would either move with us for in house care- or not need our help.

Basic Expenses now are $90,000 and there is certainly some fat to trim if needed. The current house payment/taxes, that’s a big chunk. Mortgage isn’t that bad, but taxes, HOA is $10k a year. Once we own a home outright from further sale- pension, SS- it will cover our basic expenses and more. Looking back, we’ve had years where we spent 100K or even 120k- but I can track those and see what caused the upswings, large amounts (move to florida, improvements on home, car, etc). The monthly/yearly expensive don’t vary greatly, and I’ve tracked to know what we will always have-need to for future, etc.

Enough cash, influx of funds to easily get from 55-57. Then would have to start pulling from 401k. No health coverage from company- so would go cobra for 2023-then move to AcA plan in 2024.

No fancy plans- not trips to Europe needed. We’re fine hanging around the house, gardening, time with friends, family, etc. we’ve always been homebodies and never in to any expensive entertainment or hobbies. We’ve made small salaries and we’ve made large salaries. We adjust our spending as needed while ensuring we saved along the way. I can think of toms of dough we blew up along the way, and certainly wish we had it back now.

My biggest concern- will we run out? I feel fortunate with a pension and SS, we have that for the rest of my life (and spouse). So we will never be OUT of money even if the 401k is depleted faster than we plan. Based on. Y current health/habits- I honestly don’t see 90 in my future. I want my life back now- but don’t want to be stupid and have worked hard my whole life to have a miserable retirement. How do I balance enjoying each day without just being stupid and jumping ship to soon.

All advice is welcome. I can rationalize anything and think all this will be no problem- then w-years down the road think- OMG- WTH did I do?

Thank you all!

 

[qwerty3656]

It looks good to me - like you say you are fortunate to have the pension and SS - plus equity in the house at some point. No kids eliminates some possible expenses.

I would make sure you run Firecalc.

 

[bigcmagor]

I had similar numbers at 55 and also felt a desperation to retire due to work stress. I was able to semi-retire at 56 and fully retire at 59 with a much-improved base. If I were in your shoes and a glide path retirement was not an option, I would consider selling the house and paying cash for one now. It's going to be uncomfortable consuming your savings paying for the house you're in. My parents are also in their mid 80's and since their health turned, it's been one hell of a ride. I've spent 11 of the last 12 weeks with them tackling various health challenges. You'll be glad you are available to be there for them when that time comes.

 

[Beachbound]

Thank you for the responses. I wish a glide path was a possibility, but unfortunately it is not. I may have been unclear earlier as well- my parents still live in their own house close by and are still independent for the time being. Selling my home now, would force the move away from them, or cause me to buy a smaller house close by- then a smaller house again once I am no longer needed in FL.

 

[Surewhitey]

Sounds solid with the assumption that you will decrease your expenses by $20k/year after your home exchange (no note & lower expenses / maintenance).

Pension & SS sounds like most is covered after 65, just gotta cover the next 10 years, right? Inflation is a minor concern if not under control.

 

[WhenIsItTime]

Thank you for the responses. I wish a glide path was a possibility, but unfortunately it is not. I may have been unclear earlier as well- my parents still live in their own house close by and are still independent for the time being. Selling my home now, would force the move away from them, or cause me to buy a smaller house close by- then a smaller house again once I am no longer needed in FL.

Will your current investments net of tax cover your spend until age 65 when you prefer to take pension and SS? Seems a little thin for my comfort zone.

I encourage you to use Firecalc or similar to explore assumptions and variables. It's a great exercise and capability to ensure you own the answer as to whether you are ready.

 

[pacergal]

Welcome to the Forum!

As others have mentioned, definitely run Firecalc.
Also answer the questions in the Forums, Early Retirement FAQ section:
"Some Important Questions to Answer Before Asking - Can I Retire?"

And feel free to ask any questions here. I have found so many folks who are very helpful.

 

[Beachbound]

Thank you all- if my plan works as I have it- my 401k monies would continue to grow for 2 years, then I would need to pull from ages 57-65. And could always take pension or SS earlier-but want that to build as well. Taxes, inflation, growth- all big on my worry list. I have played around with fire calculator a bit, but definitely need to dig in more and ensure I am entering all the right data/dates.

Also- when I do retire, I will get a large amount from my stock options, esop that I won’t need for at least a year. What the best investment option there for short term growth without too much risk and being able to access 1-2 years out without more penalties.

 

[trumpeting_angel]

Do run Firecalc. And while you’re at it, try a few others. Not the ones that you can complete on one page, but some of the more detailed ones.

I was able to move from an increasingly hectic and pressured job to working part-time in laid-back Vermont for a couple of years before I pulled the trigger. And I still suffered the panic of having no income!

Now I’ll be 70 in July and start SS, an important part of my plan. I did have a couple of part time, simple retail jobs. In the meantime. That small amount of income kept my anxiety down. I had purchased my house with cash, and that was a huge help with the anxiety of going for several years without income.

It is always scary to stop working and rely on your “best – laid plans“ rather than a steady paycheck. Do a little more planning, with FireCalc and other calculators. Make sure that you feel certain before you jump.

 

[Beachbound]

Thanks so much trumpeting-angel! Love the name! I agree that maybe part time, non-managerial, low stress work may be the necessary thing we end up doing in between things if needed. Certainly would be more than capable, and I’ve done all sorts of those jobs many times before I found my long term career.

Also, today just happened to be pay day and my heart skipped again saying how can I “walk away” from this and go to zero earned. Then I realized what I am “walking towards” and my heart beats with excitement. I’ve always been a responsible kid, a responsible adult-and want to be a responsible retired human being as well. Like I said- my current job is not just mental stress, but physical as well. So 28 years of that takes its toll. On your feet all day, so by the time I get home- the only energy left is the couch then bed, then up early to do it all again. I want to make sure I retire early enough to still enjoy things I want to do, which are really just the simple pleasures of life with family and friends.

Thanks for all the advice and shared experiences!

 

[Healthy Lifestyle]

At 55 years of age, maybe you could find a stress-free part time job with medical insurance for a few years then the road looks much easier for you.

 

[ut2sua]

Enough cash, influx of funds to easily get from 55-57. Then would have to start pulling from 401k. No health coverage from company- so would go cobra for 2023-then move to AcA plan in 2024.

My biggest concern- will we run out?

OP, If I were you, I would have a more conservative AA for my 401k investments (more on the fixed income side vs stock) since you may need to draw from your 401k $ in fairly short term (less than 3 years is short term for me). This would lessen your concern to run out of $ early in case of a prolonged and severe bear market. Unless your 401k plan allows withdrawals after 55, you may have to draw equal amounts in at least 5 consecutive years to avoid early withdrawal penalty (before 59.5), so it may be good to check with your 401k plan. If you quit tomorrow, ACA may be much cheaper than Cobra for 2023.
Good luck

 

[trumpeting_angel]

I think your stress level and the physical beating you take from this job are really important considerations. I didn’t retire until 66 (but they still let me post here!), however the transition to part-time work made those extra years so much easier. My previous job involved traveling to different courts to evaluate defendants under considerable time pressure. After decades in the work, I no longer felt sick awaiting cross examination, but it still required lots of preparation and thinking on my feet. Leaving the court allowed me to work in my profession in a much less stressful context. I loved my work, but it wasn’t until I had left that I realized how much pressure it involved. Like so many jobs, it had slowly gotten worse over the years, and had become almost unmanageable.

Later, when my retail weekend jobs were stressful, it was still fun. I worked in a garden center, and later in a ski shop: my two passions!

AARP has a calculator that looks simple and straightforward. Newretirement.com has a detailed calculator that can trial different scenarios. Their paid calculator is very detailed and has great, research-based planning tools. Other calculators have been recommended here in the past - use the search tool. I like to look at a decision like this through multiple lenses. I like Firecalc, but I liked seeing what different methods show.

My method of setting up a retirement I could have faith in involved focusing on the recurring expenses: housing, transportation, and food. I have no mortgage, which has been extremely valuable in my peace of mind. (And yes, I ran the numbers. All I can say is, it’s been completely worth it.). But enough rambling on. Glad my earlier comments were helpful!

 

[HI Bill]

I'll second running FIRECALC. 5% of your stash is only $62K per year, so without running FIRECALC, I'd say it's risky, as you're way under $90K. Will you be required to pay for any of your parents' expenses? What about new car purchases? Other eventual emergencies?

 

[SJhawkins]

OP, all I can say is I'm about one year behind you, have a stressful job that you never really get time off from, the emails and text never stop and if your take a week off you just come back to a bigger pile, I feel your pain.

Been with the company for most of my career as well, its a real pull from both ends to keep rolling on or retire. I'm really on struggle bus on when to change direction. I can see where people get caught up in the OMY deal almost by default.

Good luck and keep us posted, maybe you will lite a fire under my backside!

 

[Beachbound]

Thank you all for the comments and suggestions. Fire calculator does give me 95% success with an 88,000 yearly spend. I think I’ll need more than that yearly while still in FL, but less once a house is paid off in NC. It would be an adjustment for sure financially. I have fallen in to the “if I want it get it” and could have saved much more over the years. The good side, is I’m not someone who wanted expensive things. So being able to curb that- may be comparison shop more on the basics, is something I like to do- but never took the time with the crazy job. I know I’m ready to retire mentally, physically-no concerns about how I will fill my time or what I will do. Time with my parents now is a huge part of that- but really turning in my notice and saying, ok now live the life you want- scary. [emoji6]

 

[Koolau]

I only read your intro one time, so forgive me if you answered already: Is your wife on board with what ever life-style changes might become necessary? If not - you need to rethink. Otherwise, you can MAKE it w*rk! I'd also recommend going to ACA as soon as your income permits it. COBRA can be extremely expensive.

One other possibility would be to "downsize in place" if that is possible. I completely understand not wanting to leave your parents behind but there are housing options at less than $1mil - likely within a few miles of where you are now. Yes, that might mean two moves before you reach the place of your dreams, but the savings could be very significant. We downsized from a really nice 4BR tri-level (for when we had kids) to an old farm house rental (for 2 years) prior to our final move, once parents were all gone, pets were gone, kids were gone.

Keep in mind, we are all spit-balling here and are not experts, so hire an expert if you need help with the calculations (though I think FIRE Calc is very good.)

Best luck and do keep us posted! I'm guessing any downside of Retire Early will more than make up for the loss of income. As always, YMMV.

 

[SelioDarvin]

Hey there Beach bound! Congrats on your first post and on being a long-time member of the forum. Your story is relatable, as we all feel a bit unsure about making a big change, like retiring.

 

[Beachbound]

Thank you all so much for the advice and comments. I really appreciate it…. 75 days and counting to my original planned date. Still so undecided. I know the smart thing would be to wait another year or two- build more cushion into my plan, have more certainty about how to fund my “bridge years”. But then- every time I am off for a day, I just dread going back. And the job is going well- so it’s not a bad boss, or bad place. But it’s the job I’ve done for over half my life- and I’m just so ready to be done! Thanks again for the comments- all are welcomed and I learn so much from each! Great group of folks here with tons of experience and financial smarts!

 

[Healthy Lifestyle]

Thank you all so much for the advice and comments. I really appreciate it…. 75 days and counting to my original planned date. Still so undecided. I know the smart thing would be to wait another year or two- build more cushion into my plan, have more certainty about how to fund my “bridge years”. But then- every time I am off for a day, I just dread going back. And the job is going well- so it’s not a bad boss, or bad place. But it’s the job I’ve done for over half my life- and I’m just so ready to be done! Thanks again for the comments- all are welcomed and I learn so much from each! Great group of folks here with tons of experience and financial smarts!

Good Luck Beachbound,

I was and am in the same situation but I did retire at age 66 three months ago.
I went out with my old work team recently, and I told them that the grass is greener on this side of the track and enjoying my retiree life. I have no interest in going back to work at this time.

 

[kgtest]

Selling the home before you have lived in it will trigger some capital gains (on the gains from the sale of course), so make sure you Sell it 25months after your original closing date.

 

[Koolau]

Selling the home before you have lived in it will trigger some capital gains (on the gains from the sale of course), so make sure you Sell it 25months after your original closing date.

Or, at least run the numbers and see what the taxes will cost. Could be worth it.