Hello, I’m from Pennsylvania, aged nearly 55.

[MrBojangles]

I joined this forum as I’m tired of the rat race and would like to retire sooner rather than later. I’ve taken measures to do this, like saving the maximum for retirement, long term investments in the stock market, etc. The biggest hurdle, and I don’t know why it’s this way in an affluent country as ours, is Medicare isn’t until age 65, you can’t tap into retirement funds without penalty until age 59 1/2, and no social security until age 62. It frustrates me to no end this is so, we should be enhancing all of the aforementioned so it’s commonplace for folks to be fully retired at 50 or even 40.

Fortunately, I have a Federal pension coming at age 60 as well, I left the Federal government almost a year and a half ago as I didn’t see this early out coming as it was before Trump, pay was so poor I found I was actually worth more elsewhere, and I got sent repeatedly to an assignment that wasn’t my own 3 hours away and lived out of a hotel most of the time and any complaints were. Et with if I refused to cover this unfilled vacancy it was insubordination.

Before this recent market downturn I had nearly $3 million saved, but most is in retirement funds and a TSP. Since the market downturn it’s now less.

I have no kids, owe $140k on my house, and a wife 10 1/2 years younger than me. The reason why we never had kids is, despite the supposed security of the Federal government and WFH options, I never could get those, and being away from home a lot with no family in the area to help made this a scary proposition. With my wife’s student loans, a stay at home mom option didn’t seem like it would work.

I have spent my whole life saving for this (about 750k is in stocks and bonds that aren’t retirement funds but capital gains are a concern) and it will be unsettling to draw money down and see my balance diminish.

My wife still owes on student loans, I think these will be gone on less than ten years.

I’d like to retire at the end of 2027 at age almost 57 1/2.

I don’t know…any thoughts?

To be honest, I never actually thought I would be working this long to begin with. My approach—and don’t try this at home boys and girls—is I wrongly reasoned all these baby boomers would be retiring in huge numbers and there would be few to fill their shoes which meant, I thought, high paying corporate jobs. For me, things were so bad I had no other option than to work for the Federal government as no corporate job offer ever came my way and it’s only now that I find I’m worth something in the real world. I was a GS 12 with the government in the end and now earn a third more than I did when I left that stint.

Thoughts?

 

[TickTock]

You've done very well on saving and investing! What are the total household expenses - that, compared to your savings and how you expect spending to change in retirement, will give you a good idea of how you're doing re: retiring at 57 1/2.

Welcome to the forums!

 

[brett]

I had the financial ability to retire in my very early fifties. I was not ready. I waited until I was 58 and do not regret that decision.

I truly believe that once you are past the financial issue you should work out IF you are truly ready to retire and what you plan to do with your retirement.

 

[braumeister]

I don’t know…any thoughts?

The first things you should look at here:

Some Important Questions to Answer Before Asking - Can I Retire?

And when you get to the FIRECalc part, be sure to read all the instructions for using it.

Beyond that, ask anything here. You'll almost always get plenty of answers, and many of them will be excellent.

 

[Out-to-Lunch]

Welcome aboard!

 

[pacergal]

Welcome to the forum.
Agree with braumeister-- run Firecalc to see where you are for you spending/budget, and answer those questions--they will get you thinking about multiple aspects of retirement
Does your wife plan to continue working if you retire early? What will that look like for you both?

Lots of knowledgeable folks here, ask any questions, someone (or many) will answer!
We are a friendly group.

 

[YellowSubmarine]

I joined this forum as I’m tired of the rat race and would like to retire sooner rather than later. I’ve taken measures to do this, like saving the maximum for retirement, long term investments in the stock market, etc. The biggest hurdle, and I don’t know why it’s this way in an affluent country as ours, is Medicare isn’t until age 65, you can’t tap into retirement funds without penalty until age 59 1/2, and no social security until age 62. It frustrates me to no end this is so, we should be enhancing all of the aforementioned so it’s commonplace for folks to be fully retired at 50 or even 40.

Fortunately, I have a Federal pension coming at age 60 as well, I left the Federal government almost a year and a half ago as I didn’t see this early out coming as it was before Trump, pay was so poor I found I was actually worth more elsewhere, and I got sent repeatedly to an assignment that wasn’t my own 3 hours away and lived out of a hotel most of the time and any complaints were. Et with if I refused to cover this unfilled vacancy it was insubordination.

Before this recent market downturn I had nearly $3 million saved, but most is in retirement funds and a TSP. Since the market downturn it’s now less.

I have no kids, owe $140k on my house, and a wife 10 1/2 years younger than me. The reason why we never had kids is, despite the supposed security of the Federal government and WFH options, I never could get those, and being away from home a lot with no family in the area to help made this a scary proposition. With my wife’s student loans, a stay at home mom option didn’t seem like it would work.

I have spent my whole life saving for this (about 750k is in stocks and bonds that aren’t retirement funds but capital gains are a concern) and it will be unsettling to draw money down and see my balance diminish.

My wife still owes on student loans, I think these will be gone on less than ten years.

I’d like to retire at the end of 2027 at age almost 57 1/2.

I don’t know…any thoughts?

To be honest, I never actually thought I would be working this long to begin with. My approach—and don’t try this at home boys and girls—is I wrongly reasoned all these baby boomers would be retiring in huge numbers and there would be few to fill their shoes which meant, I thought, high paying corporate jobs. For me, things were so bad I had no other option than to work for the Federal government as no corporate job offer ever came my way and it’s only now that I find I’m worth something in the real world. I was a GS 12 with the government in the end and now earn a third more than I did when I left that stint.

Thoughts?

Actually, unless things have changed, you may withdraw for your tIRA earlier than 59.5 yo. You must establish life expectancy per government tables; and you can not change the course. In any case, medical care is expensive and that may be the biggest drawback. I retired at 59.5; and at 73, I never touched the IRAs as I had other savings. My health insurance was grand-fathered in with the lower rating system as we had a HSA/high deductible for many years. But still the cost was over 1k/month in 2011, and it didn't get any cheaper. Deductible was over $5500 back then....hence that was appx. $18000 before any coverage kicked in. Lucky we had decent health.

 

[MrBojangles]

Actually, unless things have changed, you may withdraw for your tIRA earlier than 59.5 yo. You must establish life expectancy per government tables; and you can not change the course. In any case, medical care is expensive and that may be the biggest drawback. I retired at 59.5; and at 73, I never touched the IRAs as I had other savings. My health insurance was grand-fathered in with the lower rating system as we had a HSA/high deductible for many years. But still the cost was over 1k/month in 2011, and it didn't get any cheaper. Deductible was over $5500 back then....hence that was appx. $18000 before any coverage kicked in. Lucky we had decent health.

As I look into this, what is Obamacare? I feel like this was created promising free health care for all and isn’t?

I actually looked into this about the time I was leaving the Federal government and that’s a call list you don’t want to be on. They harass you.

 

[Koolau]

Welcome to the Forum. I'm not certain I follow exactly your assets, but caught $3Million at least. That certainly should be enough to get you close to Financial Independence IF your spending is controlled accordingly.

FIRECalc is the place to start to check your financial readiness. Check back often with specific questions. Best luck!

 

[MrBojangles]

Welcome to the forum.
Agree with braumeister-- run Firecalc to see where you are for you spending/budget, and answer those questions--they will get you thinking about multiple aspects of retirement
Does your wife plan to continue working if you retire early? What will that look like for you both?

Lots of knowledgeable folks here, ask any questions, someone (or many) will answer!
We are a friendly group.

I dont know what my budget is or will be, that’s part of the problem.

I have the house that will be paid off in 5 years. I have between 700 and 800 k not in retirement funds, but two problems with spending that. It’s in stocks and subject to capital gains and my wife wants to use that to get a place at the beach someday.

I should mention that it’s only since 2017 my investments took off. My wealth was much more modest before then.

And, I’ll admit I really have a warped sense of reality when it comes to money and wealth. I grew up lower middle class in an area with trust fund babies and I don’t feel like I’m particularly wealthy. Maybe I am, maybe not. My parents told me that wasn’t the real world, and I thought they must be joking. A boss I had once came from old money and a newspaper article stated he and his siblings inherited $4.4 million in 1936 so what was that worth in the late 80s? By the way, I highly recommend coming from inherited wealth, LOL! Having said that, I never inherited one red cent.

A few things—if I can withdraw earlier than 59 1/2, do I want to?

Also, just curious, being mostly a Federal employee, do the jobs I was seeking in 1992 right out of college even exist, or did they ever, nice relaxed job, high pay, country club membership, mostly WFH? I’ve never had any of that, but that was the original goal. I’m surprised with how good corporate profits are now that’s not commonplace. Also think Mad Men, Don Draper’s lifestyle, comes and goes as he pleases…

 

[MichaelB]

As I look into this, what is Obamacare? I feel like this was created promising free health care for all and isn’t?

I actually looked into this about the time I was leaving the Federal government and that’s a call list you don’t want to be on. They harass you.

The PPACA (Obamacare) is a series of regulations designed to ensure you have guaranteed access to an individual health insurance policy that meets a series of standards of coverage.

If your employer offers a health insurance benefit you probably don’t need an ACA policy, and in any case, would not be eligible for premium assistance.

If not, you would be eligible for a policy and also means tested premium assistance.

 

[Koolau]

Funny you mention Don Draper. DW and I just started watching the boxed set of "Mad Men." Never really watched it when it came out. Very interesting.

My suggestion to you is to determine as nearly as possible what your spending will be in retirement. It's not a trivial exercise because it's not as easy as saying "Here is what we spend now. I'll multiply by 75% and that will be my spending in retirement." That approach is too simple. You need much better numbers.

I think you have realized that the BIG issue is likely to be health care in retirement. Many folks here can help you with ACA (aka Obama Care). From what I understand, the discounts can be quite good if you can control your income to low enough levels.

I was blessed with supplemented health insurance from Megacrop.

In any case, we're here to help.

 

[MrBojangles]

With regards to health insurance that’s the big hurdle. I can get it for life starting at age 60 since I had 25 years of Federal service, but I don’t want to work that long.

My wife will have to work until at least 55 when her student loans are paid off.

The ideal answer would be for me to get health insurance through her but her boss is an ass and is too cheap to pay for it and her attitude is to get it through your spouse’s employer, which is the situation currently.

 

[jazz4cash]

You are in a fantastic situation, you just haven’t figured it out yet! You are in the right place. I didn’t see the Age 55 Exception rule mentioned but I skimmed quickly. It enables you to access retirement accounts at age 55 with no penalty.

 

[MrBojangles]

You are in a fantastic situation, you just haven’t figured it out yet! You are in the right place. I didn’t see the Age 55 Exception rule mentioned but I skimmed quickly. It enables you to access retirement accounts at age 55 with no penalty.

I believe that’s for accounts with employers that you are employed by in your 55th year. The bulk of that is with an employer I left at age 53. Now I could tap this retirement account I am currently funding before age 59 1/2. It just sucks that l might have to.

For me, I’m better off than most due to prior Federal employment.

It’s absolutely ridiculous that for most, any hope of retirement is at age 62 at the earliest, and yet there’s no Medicare until age 65. So retirement really is no earlier than age 65 for most. And, anything less than age 70 for social security is reduced, no matter what they say, so full retirement really isn’t 67 like they say.

I just can’t believe I’m having to write this when I see such tremendous wealth in this country and yet folks have to work seemingly forever and yet have to ask can I afford to retire.

And I did it by living frugally. We go to the beach during the off season for only a few days, stuff like that. No European vacations for the summer despite wanting to do just that. Being employed also makes this unrealistic. (I love the UK, BTW!)

OTOH, I don’t understand how folks with good jobs are so broke. You don’t need to eat out every meal, you don’t need new clothes all the time, a vacation 4 times a year to exotic locations, private schools for the kids, a Mercedes. I’ve never spent more than $27,512 fir a vehicle…

 

[pb4uski]

I joined this forum as I’m tired of the rat race and would like to retire sooner rather than later. I’ve taken measures to do this, like saving the maximum for retirement, long term investments in the stock market, etc. The biggest hurdle, and I don’t know why it’s this way in an affluent country as ours, is Medicare isn’t until age 65, you can’t tap into retirement funds without penalty until age 59 1/2, and no social security until age 62. It frustrates me to no end this is so, we should be enhancing all of the aforementioned so it’s commonplace for folks to be fully retired at 50 or even 40.

Fortunately, I have a Federal pension coming at age 60 as well...

I have spent my whole life saving for this (about 750k is in stocks and bonds that aren’t retirement funds but capital gains are a concern) and it will be unsettling to draw money down and see my balance diminish.

My wife still owes on student loans, I think these will be gone on less than ten years.

I’d like to retire at the end of 2027 at age almost 57 1/2...

Thoughts?

Are you sure that you don't want to change your screen name to Mr. Debbie Downer? I'm mostly kidding, but there are "solutions" to your frustrations with little effort.

First, as has been mentioned by others, many here who retire early rely on ACA subsidies to make health insurance more affordable until they are eligible for Medicare at age 65. They manage their income to get certain levels of subsidies toward health insurance.

SEPP aka 72t plans allow you to access retirement savings before 59-1/2 if needed but since you have $750k saved outside taxable accounts to get you to 59-1/2 in ~4 years you shouldn't need a SEPP/72t unless you're living really high on the hog.

You seem to fear capital gains but have you really studied it? For a married couple under 65 in 2025 they could have up to $30,000 in ordinary income and up to $96,700 in a combination of qualified dividends and LTCG and pay $0 in federal income taxes! That's $126,700 of total income and $0 income taxes... I love America! And that's gains... so the proceeds from sale which could be used for spending would likely be much higher. So why the fear?

The key input that you haven't disclosed is how much you need to live on in retirement. However, according to FIRECalc if one had $3 million and a 45 year time horizon (from 55 to 100) and a 60/40 AA (not sure what yours is) you could withdraw as much as $106k a year with 95% success ($101k for 99% success rate). And that doesn't even consider what you will be receiving from your federal pension and/or social security!

It's really unclear to me what you are complaining about. You have the world by the gonads and could probably retire now if you really wanted to. Stop complaining and start thinking!

 

[38Chevy454]

Welcome to the forum. Several items, some mentioned by previous replies.
1) you need to know your budget. Take the time and figure it out.
2) while paying taxes isn't anyone's top things to do, at least long term capital gains have more favorable tax rates.
3) you can do 72t withdrawals from your pretax retirement accounts. Look it up and be aware you have several rules to follow, but it does allow you to withdraw without the 10% penalty.
4) learn about ACA health insurance. Or if you are retired, go on wife's plan even if it has more employee cost deduction.
5) once you know budget, run Firecslc and other retirement planning programs to see where you are with regard to financial standpoint.
6) retirement does take a change in mindset from accumulation to withdrawal. You've been saving your whole career, now you're not and taking money out.

 

[MrBojangles]

I am probably better off than I think. But I know my wife would really like a beach place at 600 to 800k.

My expenses are low if I want them to be. My wife likes to go out to eat once a week, house payment is $2027/month, then utilities, and taxes of about 10k a year. I enjoy things like fly fishing and going to the VFW or American Legion for a beer. I’m an expert on some aspects of American antiquities and sometimes buy and salt away in a safe deposit box but could always sell at a profit and curtail that in lean years or buy with intent for immediate resale.

I also have a rental property that will need $250 k in improvements in the next 5 years or I sell as is. Tenants are rough on places that aren’t their own. I’ve learned to rebuild a deteriorating wing might cost $300 to $500 a square foot. I’d like to do one story with loft, 24 x 24 but that’s more than the property cost me in 1995.

 

[Diogenes]

To be honest, I never actually thought I would be working this long to begin with. My approach—and don’t try this at home boys and girls—is I wrongly reasoned all these baby boomers would be retiring in huge numbers and there would be few to fill their shoes which meant, I thought, high paying corporate jobs. ...

Indeed. One reason that I got entranced by early-retirement is that after decades of waiting, I'd given up, on the prospect of ever occupying one of those plum posts held by the older generation. Those folks, bless their collective hearts, burst onto the scene in the 1970s, when I was in elementary school... and haven't left.

I don't mean a wholesale inter-generational swipe, of course, but isn't it astounding how un-FIRE is the predominant mentality of such large swath of society? Sandwiched between co-workers easily young enough to be one's children, who berate one as the office-geezer, and co-workers old enough to be one's parents, who really are geezers, one feels strong desire to just give up, exiting the "rat-race" not necessarily from distaste for the work itself, but from demographic frustration.

 

[jazz4cash]

I am probably better off than I think.

Definitely!
I think you may be misunderstanding how the age 55 rule works. I don’t wanna get too detailed but it only applies to a employer plan that if you separated at age 55 or above. If you left at 53 you could roll those funds into a new employer plan. The current plan would have to permit roll-ins. Worst case get a job that permits roll-ins, complete the roll-in, resign. Get creative!

 

[pb4uski]

I am probably better off than I think. But I know my wife would really like a beach place at 600 to 800k.

My expenses are low if I want them to be. My wife likes to go out to eat once a week, house payment is $2027/month, then utilities, and taxes of about 10k a year. I enjoy things like fly fishing and going to the VFW or American Legion for a beer. I’m an expert on some aspects of American antiquities and sometimes buy and salt away in a safe deposit box but could always sell at a profit and curtail that in lean years or buy with intent for immediate resale. ..

WADR, you really need to do better than that in terms of defining your expenses. Many of us here have kept close track of what we spend that informs what we need to live well in retirement.

A top down approach would be to look at your take-home pay for 2024 less what you saved from that take home pay... the difference was presumably spent. A bottoms up approach would look at numerous categories of expense and figure out what you expect to spend in each category.

Our biggies are property taxes (2 homes), health insurance (Part B and Medigap for 2), income taxes, travel, dining out and food.

 

[pb4uski]

... I know my wife would really like a beach place at 600 to 800k. ...

Just be aware... vacation homes are expensive. That $600-800k invested in abeach place means $600-800k that isn't earning income so at 5% that's $30-40k a year of opportunity cost. Then there is property taxes, association fees if applicable, utilities, maintenance, etc. so add another $10-15k so that's $40-55k a year. Even f you use the beach house 6 months a year that's $6.7-9.2k a month. Offsetting that is any appreciation but it is hard to count that since it doesn't help pay the bills.

All of that said, we have vacation homes but our eyes are wide open that it is expensive and luckily we can afford it. I think it is smarter to rent if you can.

 

[MrBojangles]

Indeed. One reason that I got entranced by early-retirement is that after decades of waiting, I'd given up, on the prospect of ever occupying one of those plum posts held by the older generation. Those folks, bless their collective hearts, burst onto the scene in the 1970s, when I was in elementary school... and haven't left.

I don't mean a wholesale inter-generational swipe, of course, but isn't it astounding how un-FIRE is the predominant mentality of such large swath of society? Sandwiched between co-workers easily young enough to be one's children, who berate one as the office-geezer, and co-workers old enough to be one's parents, who really are geezers, one feels strong desire to just give up, exiting the "rat-race" not necessarily from distaste for the work itself, but from demographic frustration.

Amen. I hear ya!

When I was in college in the late 1980s and early 1990s, I saw the very first of the early retirement Baby Boomers living the good life. Some had campers and just traveled to every game of my Alma mater. They seemed to have bucks to be able to do that. I thought, here’s a generation who will all retire early. Just get an easy liberal arts degree (I started out business and I got the worst advice of my life ever from a college counselor—corporations love liberal arts graduates) and have companies beg for me to work for them due to few applicants. It didn’t work out that way. I’m amazed at how COMPETITIVE it is out there. Yes, I wonder why I’m at work with so many surrounding me who could be my kids and yet some old enough to be my parents. I got nowhere with the Federal government as many wouldn’t leave and there were few plum positions available and many who wanted them.

I have what I have due to frugality, investing, and a few good stock picks (and a lesser number of awful ones). It’s okay, but not what I planned on. I had more of the high paying corporate job stock options get rich quick approach in mind.

And, if I had my ideal job, it would have been doing what the Keno twins on Antiques Roadshow do for a living. But they had skills I didn’t have as teenagers and better degrees than I did, and, even so, one of them started after college on the loading dock at Sotheby’s. I can say I sent my resume to Sotheby’s and Christie’s…

I actually went back to school after 9 years with the Federal government due to zero advancement potential, and those around me going nowhere unless, and I’m not being racist, just telling it like it was, checkmarking certain boxes. I went back to the Federal government as my degree still didn’t land me a corporate job and things were bleak when I got out in 2008. Too many folks not retiring soon enough, and too many folks wanting good jobs. I worked in slaughterhouses, and so did many of my colleagues nationwide and we all wanted that easy WFH GS 15 job.

 

[MrBojangles]

WADR, you really need to do better than that in terms of defining your expenses. Many of us here have kept close track of what we spend that informs what we need to live well in retirement.

A top down approach would be to look at your take-home pay for 2024 less what you saved from that take home pay... the difference was presumably spent. A bottoms up approach would look at numerous categories of expense and figure out what you expect to spend in each category.

Our biggies are property taxes (2 homes), health insurance (Part B and Medigap for 2), income taxes, travel, dining out and food.

I just spend what I spend and invest what’s left over in the stock market. I’ll have to start tracking it.

 

[MrBojangles]

Just be aware... vacation homes are expensive. That $600-800k invested in abeach place means $600-800k that isn't earning income so at 5% that's $30-40k a year of opportunity cost. Then there is property taxes, association fees if applicable, utilities, maintenance, etc. so add another $10-15k so that's $40-55k a year. Even f you use the beach house 6 months a year that's $6.7-9.2k a month. Offsetting that is any appreciation but it is hard to count that since it doesn't help pay the bills.

All of that said, we have vacation homes but our eyes are wide open that it is expensive and luckily we can afford it. I think it is smarter to rent if you can.

The plan is to rent it out peak months and use it the off season. I’m not particularly keen on even doing that, but it would make my wife happy.