Burned out enough to catch Fire

[sansha]

I'm 59.5, and have worked in IT and software development for 30+ years. Single, no dependents. Have 900K in stocks/bonds/liquid assets in a 45/40/15 mix. A 200K house, paid off, and a paid off car. No debt. I have been doing some home improvements this year, but I can and have lived pretty easily on 30K since I just need taxes, insurance, utilities, food and some fun. I've priced out marketplace health insurance, and am okay with that expense. No pension package, but can expect about 20K in SS at 62.5, if I choose to take it, and probably will unless taxes make me delay that.

Earlier this year, I spoke to a financial adviser. I am naturally resistant to sales pitches. They started off telling me I was okay to retire, based on my figures and projected expenditures, then recommended I go the annuity route and resorted to sort of scare tactics on why I should keep working. I guess to keep funding that annuity for them to manage.

I am not even slightly a financial whiz, but I think I don't need that kind of money managing. The thought of it makes me uneasy as opposed to keeping it in my own imperfect hands. I've played with the financial calculator and even tweaking the scenarios, to spend more a year, and assuming I never have any extra income - my scenarios at the low end of spending for 28 to 30 years run to 98% and even with another 20K a year of spending in expensive years are not bad. I have plenty of home hobbies to keep me busy without going outside of my projected budget. Maybe after a year, I might look into some indulgence, perhaps leasing a horse, or getting another dog, I don't anticipate a lot of high end pleasure spending.

I've been trying to hang on at work, even for a few more months, but not sure how long that can continue. (Management issues, nepotism, etc). Naturally I'm nervous about going from saving to spending. Given the financial adviser went from "of course you can retire" to "don't retire without us managing your money and even then don't retire at all", I got my confidence a bit shattered.

I have been a workaholic so I have a lot invested in my job. But none of those long days or contribution to the company's present status are valued by the new management -- or the old for that matter, because now they are heading out the door too, they have a convenient memory about what I have done. Because of my efforts, and now that the company is making $$, when for years I worked 18 hour days to build it up, part of me thinks I should stay to earn the reward of my efforts. But I think the stress and negative effect on my health is past the point that it is worth it.

I'm conscious of that fact that the extra years of earnings may be taking more of a toll on me than the salary is worth. After all, the years between 60-70 are pretty precious, given as we grow older, maybe our health after 70 may not let us do what we could a decade earlier.

That's the thinking that makes me ready to pull the trigger. But retiring early, giving up a job, is to many's thinking such a no-no. But I am ready, except for the fear and guilt

Any thoughts or advice?

 

[Totoro]

Don't listen to the advisor.

If you spend 33k annually in the next three years, then start SS, you'll have:

• a paid off house
• 800k money reserves (900k - 3x33k)
• 20k income, inflation protected

Let's say you up your spending to 40k. With 20k SS that's 20k left to finance from your reserves of 800k.

If you manage to invest that 800k just enough to keep up with inflation that'll finance 40 years of spending. Are you planning to live up to 102 years old?

Not to mention your spending will likely drop as time progresses and there is a good chance you'll have some real return. And you say you are spending 30k, not 40k (10k after SS means 80+ years of buffer!).

So fear and guilt are pretty poor advisors here. If you are ready to go, go.

 

[Another Reader]

I have been a workaholic so I have a lot invested in my job. But none of those long days or contribution to the company's present status are valued by the new management -- or the old for that matter, because now they are heading out the door too, they have a convenient memory about what I have done. Because of my efforts, and now that the company is making $$, when for years I worked 18 hour days to build it up, part of me thinks I should stay to earn the reward of my efforts.

But I am ready, except for the fear and guilt

Any thoughts or advice?

No one cares about what you did, except you. The company only cares about what you can do for it in the future. There is no "reward" for your past efforts.

Guilt? Why? Fear I can understand, but not guilt. You provided this company your full efforts for the duration of your employment. That's the most the company should expect.

In your shoes, I would look carefully at the recent years of your spending and saving. I would not go with only $900k and $20k in future Social Security (that seems low for the years worked) and a tight budget. I don't think you have adequately considered health care costs for one thing. The deductibles and co-pays could consume a huge amount of your income in any given year. You have not considered car replacement. It's cutting things too close for me.

 

[cooch96]

I think you can do it. War game the scenarios a bit with bad case, added health care costs and if you're still over 80% chance of success, bail out. Your life and health are precious and finite.

Your instincts with the financial advisor are superior, I dare say most fold under the scare pressure. It sounds like you're savvy about asset allocation and are able to manage and educate yourself on money affairs.

Be proud of yourself. It sounds like you are in a much better place than most.

 

[WestLake]

If you did OMY, how much could you save for a cash cushion?
I just told another poster 48 is kinda young. 59 1/2 is not as far as "early retirement". I'll be 58 next year so I know. I would jump today except for the cash cushion - I need to do some home renovations and buy a cool retirement "capstone car".


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[Senator]

After all, the years between 60-70 are pretty precious, given as we grow older, maybe our health after 70 may not let us do what we could a decade earlier.

This is the part that many people who plan on retiring at a later age miss. Make sure you run many calculators.

At nearly $900K, that's $30K for 30 years if it's in a show box. Add in SS, and you have plenty.

You can also do a few side hustles if you needed.

 

[Whisper66]

Congratulations on your clear thinking. As other point out, you look good to go if you wish to from a financial viewpoint as long as you are fully comfortable with your expense levels. That's a relative low expense level but one that some others on this board are able to live within. With that expense level, a FA would be a significant cost adder if they are charging the typical fees of x% of your assets. I also talked to several FA before I retired and chose to manage my own finances based on learnings from this board and years of managing them before retirement. Have found it very comfortable for me to do it myself even though I don't spend much time / effort. Best of luck in your decision.

Edit: You will hear lots of varying opinions on asset allocation, here's just one since you asked for feedback. I would consider if your 55% bond / liquid asset allocation is tying up too much money (10+ years of expense money) in low yielding assets. I would think about shifting a chunk of that money into stocks during a market dip sometime My personal action was to shift my excess funds into blue chip dividend paying stocks at the dip in August this year. My target was to have at least 3 yrs of liquid assets or bonds available but no more than 30% of my total assets there. Just one person's thoughts.....many other's choose differently based on their comfort with risk levels. No right answer here.

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[Cobra9777]

Assuming your expenses are as you say, then you're ready to go anytime. Tell the advisor to get lost.

As others have suggested, I would study your expenses much more closely to make sure. You said the $30K includes "taxes, insurance, utilities, food and some fun." Maybe it's just the way you worded it, but that doesn't strike me as a well-thought-out, comprehensive list of expenses. Have you tracked actual expenses in Quicken or Mint or something similar? Do "taxes" include income tax? You said you're "okay" with health insurance premiums but it's unclear whether that's included in the $30K. What about periodic home improvements, major repairs, new roof, etc? Where are car expenses... insurance, gasoline, maintenance, registration, new car at some point? Travel? Clothes? Cell phone? Out-of-pocket medical/dental/vision?

Also, you're single, no kids, worked 30 years as a software developer, and only have $900K accumulated?? That seems to imply that you spent a lot more than $30K/yr in the past. Or maybe the situation has changed.

Not trying to be negative, but check your expenses carefully, including what changes after you retire. IMHO, analyzing expenses is the crux of retirement planning. Lots of threads here on that topic for you to peruse. If your comprehensive expenses are more like $50K, then it's still do-able, but a lot tighter, with less spending flexibility, and that's something you should fully understand before pulling the trigger.

 

[Amethyst]

This. I thought I had an excellent handle on our expenses...until I started spreadsheeting everything. We learned that we spent more on "miscellaneous stuff" than we had thought. Also, maintenance and unexpected repairs (and not just to the house and car - teeth come to mind) can mount up fast in some years.

A Have you tracked actual expenses in Quicken or Mint or something similar? .

 

[NW-Bound]

... Single, no dependents. Have 900K in stocks/bonds/liquid assets in a 45/40/15 mix. A 200K house, paid off, and a paid off car. No debt. I have been doing some home improvements this year, but I can and have lived pretty easily on 30K...

Should be feasible, particularly now that you can get ACA.

I would still make sure that there are no forgotten items if you have not made a detailed tracking of expenses.

 

[MBAustin]

Welcome sansha! You've already received some good advice here: you don't need the advisor; you should have actual detailed records on your expenses and include emergencies such as major home repairs, car replacements, etc.; and you are right to be considering the value of your quality time in your 60s.

If you haven't seen them yet, there are two excellent resources here that might help you finalize your decision:

http://www.early-retirement.org/forums/f47/some-important-questions-to-answer-before-asking-can-i-retire-69999.html

and

Early Retirement FAQs - Early Retirement & Financial Independence Community

 

[sansha]

Thanks to all who have replied.

As for health care, I did check my state's health care marketplace, and I can get a plan (Blue Cross Bronze, I think it was) for less than $350 a month. The first $6000 of health care expenditures would be on me, and after that, everything is covered at 100%. Since I am on no prescription meds, and I rarely if ever see a doctor - maybe every few years for a cough, I think that will serve me well. After my income goes down, post retirement, under the ACA, the cost for the same plan is less than $200 a month. I haven't factored in dental, but even with that, it seems quite reasonable.

As for the spending, I have kept pretty close track of my spending. It's pretty easy to do, since I pay almost everything on one CC that yields cash back, and of course have that set up to pay the balance in full automatically. My calcs include real estate taxes.

My spending estimate can be cut even more if I am ruthless. When I first moved to my house, my salary was $30K, and out of that, I paid for the mortgage and a car too. I've been through lean years and fat - and when I first bought my house I was very house poor. And my spending has at times been lean and at times fat. But part of that has been compensation for stress at work. If I cut back to the bone, I have gone through years where I spend less than 30K sans emergencies. If I have an emergency of 10K perhaps every three years, my assets I think can cover that.

I put a new roof on, upgraded windows, 15 years ago and did about 10K in new items (water heater, laundry tray pump, washer, new tires on car, new doors) this year, planning to do it while I was still on salary. If I stayed another year, I might build a garage, etc, but I think I can fund some of that anyway, even post retirement, if I decide to.

As for being on a tight budget, I have a small house, so utilities are not large. I keep my house at 62 in the winter, and in summer, I hate AC, and only use it a few weeks. My taxes and homeowner/car insurance are the biggest chunk of my post retirement spending. I have more than enough clothes, shoes, toys to last me the rest of my life, so apart from food, utilities, taxes, insurance, I don't think I need much spending . I splurge on kindle books, sometimes crafts (but have enough of those to keep me busy till I die). I have a very bad parrot and a very large dog, and they add to the food budget, but I don't think food is going to break me. I don't much care for travel, but even if I budget $2000 for a house on the beach for a week once a year, that's doable. My car only has 30K miles on it, and has two more years on a warranty plan. I do spend $100 a month on cable, and would keep that, at least for a while, but I don't have an expensive cell phone or plan. I like to walk and garden, but those aren't big ticket hobbies. Horses are a big ticket hobby, but I wouldn't buy or lease one for the first year. To see how my plan is working, I'd rather cut than expand and just use the time to decompress. I'm not sure what I would need to spend much more $$ on, post retirement. I've read others who need $80K a year to live their lifestyle, but I just don't see needing that. I'd be more into simplifying my lifestyle and reducing to essentials, than increasing spending. As for income taxes, my income is probably not going to be so very high post retirement that it seems within my spending range.

Have I forgotten anything? For those that think my budget is tight, I'm not seeing where the missing stuff is.

 

[sansha]

As for why my assets are not as fat as they could be, I went to work for a small software company 15 years ago. It offered me no retirement while we were "building the company". It didn't even pay me for six months, which caused me to have to dip into my savings. All while I was working huge overtime to develop the product. Now that it is solvent, the principle brought in a relative, (never around before) who has hired a consultant, and more staff. The fact that I went poor for years and worked 10-18 hour days to get it to where it is, is conveniently discounted. Yes, I wasn't smart in that, but I knew the risks. While I am disappointed - I had known failure, or the selling of the company might have happened, I wasn't planning on nepotism and this kind of overspending and discounting past efforts once the owner has two nickles to rub together. That's part of the reason I'm both reluctant to leave but also is causing me stress to stay.

 

[kimcdougc]

Sansha,

Looks good to me. My DH had the same feelings you had about staying at work. He retired in February of this year at the age of 57. Everyone who sees him now tells him how young he looks. Guess those 60 hour weeks at work had taken a tole on him. Now if you ask him, do you miss work the answer is NO!.

You only have one life and time grows short to enjoy it. Go for it and enjoy your retirement. Just my 2 cents.

 

[Brat]

As others have written you can retire but it looks to me that you have the talent and energy to work as a consultant. Before you leave build a contact list at home in case you get bored and want to explore professional opportunities.

As a consultant you can establish a SEP IRA to which you can contribute 20% of your earnings. Also, as a consultant, you can pick & choose your projects. Generally speaking a company cannot keep someone in consultant status more than a year without converting them to employee status. This issue can be finessed if you have more than one client.

Retirement is both an economic and social adjustment and many of us have friendships rooted in our profession. Be open to leveraging those relationships after 'retiring'. As you doubtless know software development skills can get stale quickly so pay attention to developments in the field.

 

[Whisper66]

......Have I forgotten anything? For those that think my budget is tight, I'm not seeing where the missing stuff is.

Sounds like you've covered the bases! Keep expenses under control and you're good to go if you wish. Congrats.

 

[2017ish]

This. I thought I had an excellent handle on our expenses...until I started spreadsheeting everything. We learned that we spent more on "miscellaneous stuff" than we had thought. Also, maintenance and unexpected repairs (and not just to the house and car - teeth come to mind) can mount up fast in some years.

Yep--I'm glad to have found out before retirement that I need a sufficient amount of dental work to add up to more than what I paid for my new car in 2013. (Granted, it was/is a very cheap car, but sheesh.) Makes me want to grind my teeth--but that's apparently what got me to this position!

 

[Walt34]

I can't add to what they others have said but wanted to point you to this list of questions that you need to have good solid answers to:

http://www.early-retirement.org/for...re-asking-can-i-retire-69999.html#post1399715

 

[Brat]

While you are considering retirement be sure to take advantage of the provisions of your current medical coverage. Get a through physical, get dental work done if you have dental coverage. There is no reason to leave anything on the table.

 

[Independent]

Regarding expenses, I posted a list of average (mean) expenses for older single people here: http://www.early-retirement.org/forums/f28/average-spending-singles-74505.html

If nothing else, I think it's a nice checklist to make sure you haven't overlooked some category.

 

[Calico]

Thanks to all who have replied.

As for health care, I did check my state's health care marketplace, and I can get a plan (Blue Cross Bronze, I think it was) for less than $350 a month. The first $6000 of health care expenditures would be on me, and after that, everything is covered at 100%. Since I am on no prescription meds, and I rarely if ever see a doctor - maybe every few years for a cough, I think that will serve me well. After my income goes down, post retirement, under the ACA, the cost for the same plan is less than $200 a month. I haven't factored in dental, but even with that, it seems quite reasonable.......<snip>

Have I forgotten anything? For those that think my budget is tight, I'm not seeing where the missing stuff is.

You can't necessarily count on this pattern continuing after age 60. It is amazing how quickly and unexpectedly health issues can crop up. If you had to cover the deductible in full every year until medicare age, could your budget handle that? The same goes for dental expenses - some forum members have stories to tell that would curl your hair.

Have you tried plugging in ages 60-64 in the ACA calculator, to see if it makes a difference in the premiums?

Not trying to be negative here; I just wonder if you are being realistic about your expenses, particularly when you no longer have access to employer subsidized health insurance.

I could easily live on 30,000/year, but I live in a low COL area of the south. Do you intend to stay in Washington, D.C.? If you can maintain the standard of living you want for 30,000/year in that area I am impressed. That shows a lot of self-discipline.

Good luck to you whether you pull the plug now or wait a while. I agree that the stress at the job is a quality of life issue, and all the money in the world won't be enough if you stay so long it ends up compromising your physical and mental health.

 

[FreeBear]

I have been a workaholic so I have a lot invested in my job.

Sansha, sorry about all the pain at w*rk. Seems like you gave most of your adult life to this company and feel left out in the cold. I'm glad that you have savings so that you have real options.

On the financial side, sounds like you have a reasonable understanding of your expenses. Based on savings & expenses, I think you are in good enough shape because a) you are very close to early SS, b) you are close to Medicare, c) no wife or dependents presumably means that you don't need to leave a large estate and you're not putting anyone else at risk financially.

Actually my biggest wonder is not financial, but rather how you will make the mental adjustment from the workaholic role to something else. It's great that you have pets to keep you company and some hobbies, but will this occupy enough time and provide enough purpose, focus, structure and even social contact?

It first this many not be an issue, as you'd probably just what to decompress. However, at some point later you may feel a need for something more. Then you may need to proactively rebuild your life to meet your desires and needs. Just be aware that it's easier for some than others. These will have to be faced at some point, regardless of when and how you retire. So dealing with them on your own terms by your choosing retirement (instead of being pushed out) is good.

After all, the years between 60-70 are pretty precious, given as we grow older, maybe our health after 70 may not let us do what we could a decade earlier.

Agreed! We have many older retired friends. The ones in their 60's, even their 70's, love it. We don't know anyone raving about their 80's, assuming they even make it there. Time is precious...

Oh, stay away from committing money with those financial advisors. Their fees can easily add 25% or more to your yearly costs (eg 1% fee on a 4% SWR). I could't afford to use a FA; I managed my own $$$ and have been retired 9 months now. Life is great, good luck!

FB

 

[sansha]

Thanks for all the replies.

I don't think I'll have any problems transitioning to retirement. I'm as much of a workaholic in my personal interests as I am in work, and I am itching to have time for them.

Re costs, yes, I agree it is not like retiring with a pension and full healthcare and a fat nest egg as some more provident people have. Who knows, after a year I may find other work. But right now, I'd like a break. Even if I do take a 100K or so to fund myself for the next 3 years, by 62, I'll have 800K times 4% = 32K plus the 20K from SS a year, which is 50~K. So if I budget for 30-40K and have 50, that's a cushion for emergencies/expenditures. Whole families live on less than that a year and without a paid for house.

Health care is a huge concern of course. If I get drastically ill, well, I may not need that 30+ years of future income anyway. And those kind of catastrophic costs have bankrupted those with fatter nesteggs than mine.

I'm looking at the difference between working the next 7 years to Medicare and having that much less of life to enjoy, perhaps dropping in the traces, or just saying enough is enough.

I think I am at the latter. I like my work well enough, but not the management. I've worked since I was twelve, worked 3 jobs, the equivalent of full time while in college. Worked full time in addition to FT grad school, and then worked 35 years after that.

I've worked as opposed to live. I may only have a few good years yet. Every year is more of a gamble. Except the gamble now seems more weighted toward life bailing on me than money running out. I've reached that point of being fed up for not giving the life I want a chance, because of old fears of running out of $$. And from guilt. Coming from depression oriented parents, the guilt of giving up a good paying job is major. It's stay to 62, but if I would reach 62, it would be stay till Medicaid. And then stay till full SS. Yes I could (and am still) saying one more day, one more month, just hang on.

But I feel like a person who has lived for years in a cage and now that I have the resources to get out of the cage am afraid to reach for the door, because who knows what might happen on the other side. Surely I'm not the first feeling this way.

I understand the mentality of saying "stay till you are sure". Stay till you have more. But what I want more of now, is time. And given what may run out first, time for a full life may have hit that tipping point where it could more easily run out before $$.

 

[Evergreen]

But I feel like a person who has lived for years in a cage and now that I have the resources to get out of the cage am afraid to reach for the door, because who knows what might happen on the other side. Surely I'm not the first feeling this way.

I feel EXACTLY the same way as you do, I feel as if I have been tied to the job by a chain and I now have the resources to cut the chain, I'm so scared to reach for the cutters!

It is what I want but I'm almost embarrassed to do it!

Help!

 

[REWahoo]

But I feel like a person who has lived for years in a cage and now that I have the resources to get out of the cage am afraid to reach for the door, because who knows what might happen on the other side.

No risk, no reward.

I feel EXACTLY the same way as you do, I feel as if I have been tied to the job by a chain and I now have the resources to cut the chain, I'm so scared to reach for the cutters!

Both of you sound like prison 'lifers' - you'd rather stay in jail than face trying to make it on the outside. From my perspective, that's pretty sad.