I am 47 years old from California...Can I pull the plug now???

[U5512]

Hello!

I am 47 years old from Southern California. After 17 years of working as a manager in the manufacturing environment, I am so tired and stressed out due to personnel, equipment, quotas, and other issues so I am wondering if I have what it takes to bail me out for good!!!

I am single but I do have a steady girlfriend for the past 2 years. She works and lives with her elderly mother at the moment. She will be moving in with me sometime in the future but she does work and has income and I will not ask her to contribute anything to lower my monthly expenses.

I have ZERO credit card debt. The only debt I have now is the $150K mortgage that I refinanced 2 years ago at 3.75%. Monthly payment is only $700 a month and the property is currently valued at $325K. I have 28 years left on the mortgage and I intent NOT to pay it off anytime soon as I plan to have mortgage interest helps offset the annual income tax from 401K withdrawal.

Now the numbers:

$750K in 401K with Vanguard and $40K in bank accounts.
$3K TOTAL monthly expenses that I included $300/month for ObamaCare.

I intent to draw SS at age 62.

I love antique / vintage items and over the years I have paid roughly $200K for them. Since it is a hobby that gives me a lot of enjoyment and stress relieve, I do not expect to liquidate anytime soon and I DO NOT want my antique collection to be counted in the equation.

So, do I have what it takes to bail me out?

Thanks in advance!!!

 

[Lakewood90712]

Welcome to E-R . Org.

Posting on a Sunday night is usually an indication of job stress I.M.O.

I am not the best on finances, but with the limited info provided , I don't have a l good feeling about your current plan. For example , $300 for healthcare is very optimistic, even using covered ca.

Most factory managers I have known have multiple talents, and business connections that could be useful in another field.

Think about a year off and working a few more then in another field.

Just my 2 cents worth.

 

[cooch96]

I feel for you, but back of the envelope calculation of 4% SWR and you don't seem to be quite there. Double check with firecalc. You may be so sick of your current position, you may be willing to gamble on a low (e.g. 50-50) chance of success.

Taking a year off and finding another line of toil sounds like a better compromise.

Godspeed.

 

[pb4uski]

You have two issues. The first is that you don't quite have enough. The second and more important issue is that you don't have penalty free access to your tax-deferred funds.

Let's put you mortgage off to the side since it will eventually end when you finish the payments or sell. Excluding your mortgage, you have $640k of retirement funds and $27,600/year of living costs, which translates to a 4.3% WR. Including your mortgage it is a 4.6% WR. For someone retiring at 47, a WR of 3-3.5% would be more appropriate which would be about $1 million.

Second and more importantly, almost all your funds are in tax deferred and you don't have penalty-free access to them until you are 59 1/2. However, you might be able to do a SEPP and gain penalty free access sufficient to meet your needs.

Finally, your $36k a year estimate of expenses might not be sufficient. Does it include federal and state income taxes on your withdrawals from tax-deferred accounts? Periodic auto replacements? Periodic major home repairs (new roof, AC, etc.)

The good news is that you are well on your way. You can refine your plan using Quicken Lifetime Planner if you have Quicken Deluxe (or higher) or firecalc. If your job is making you miserable, look for a different/better job. Perhaps you could work in a store that deals in vintage or antique items.

 

[MikeWillRetire]

Run firecalc. Include social security, and your numbers will probably look pretty good, but keep in mind that social security may be lower in the future, so be conservative. Also, i agree with seriously looking into your estimated expenses, and make sure it accounts for future cars, house repairs, appliances, etc.

 

[militaryman]

I think if you could downsize the home and eliminate the $700/mo mortgage and pickup a 20 hour per week job @ $10/hr that it would work --- as is I think it's very sketchy

 

[PhrugalPhan]

Not that you asked... and not that it will affect your numbers much, but.... I would consider reviewing your collections and seeing if there are items that don't fit into your wants any more. If there are, selling these items can pay for future purchases, and you'll have a better collection going forward - a win-win.


I only say this as that's the phase I am in now. I am still upgrading, but my sales of unwanted items are more than covering all my costs going forward, and having less items about helps with clutter issues.

 

[ivinsfan]

Not that you asked my opinion, but if you sign-up for a full time live-in and ask for nothing in shared expenses you are going backwards to FIRE. If she works and has money why would she NOT contribute to monthly expenses..?would she buy the groceries and pay for your social events, or just be a permanent guest?

Also you mentioned your antiques cost you 200K and your home is worth 325K, this number seems a little out of whack, you choice what you spend your money on, but number like this won't get you to FIRE anytime soon. If you are an expert in the field you might make some extra money buying and selling, but buying and keeping will slow down your long time plan.

 

[pb4uski]

Additional thought... if your soon-to-be live-in GF will contribute something reasonable to living costs rather than living with you rent-free then that will likely make a big difference for you. Even if she only contributed $500/month that would significantly reduce your WR.

 

[karen1972]

Just my opinion, your short to fully retire given the numbers you showed and just the number of years you have to factor for ..too much uncertainty. I'm 42, pay $265 for insurance which doesn't cover eye or dental, so you still have to factor in co-pays, etc.. so at a young age, i'm still budgeting $500 a month and any extra goes into a health account because obviously at some point I'll need it...can't stay healthy forever.


As for your live-in GF.. when the money starts draining out of your account, you may regret the 'no expenses'. my live-in BF didn't pay anything towards the house, as it was in my name, so I paid mortgage, taxes, repairs..but he shared in the living costs and shared in the house work, so that means, food, utilities, and entertainment expenses. Now that we moved to an apartment, its 50/50 on living expenses and each to their own on discretionary. Just a thought because utilities, food, etc will go up with living together so sharing that cost will keep your budget in control.
Given your timeframe as others say, try to target closer to 3-3.5% WR.. I wouldn't feel comfortable under $1M.

 

[U5512]

THANK YOU all for your comments!!!

It looks like I am not quite there with the numbers I needed to be FI, and therefore I need to re-evaluate what I want to do for the next 3-5 years be able to pull the plug!!!

Yes, I have thought of working in another field for less money and stress free which translate to higher quality of life. I will begin to work on my resume and start looking around!!!

My total monthly expenses of $3k do include $500/month for federal/state income tax. As far as my antique collection goes, I started collecting when I was a teenager so the $200k value is pretty much a lifetime accumulation, and yes it is worth more than my current outstanding mortgage balance. As far as home ownership goes, I purchased this property 12 years ago.

I have thought about me moving out and rent a smaller place, which will reduce my monthly expenses by a few hundred dollars. I can rent out my place for $1600-$1700 (it's a three-bedroom house), and get me a one-bedroom apartment for around $1000.

Thanks all!!!

 

[papadad111]

... And a place to store the antiques ?

 

[U5512]

... And a place to store the antiques ?

Most of them are small/miniature items so they don't take up much room. In fact, since they're small I have stored half of my collection at my bank super large safety deposit box, which I don't pay any fees for as part of my mortgage refinancing package.

 

[daylatedollarshort]

Yes, I have thought of working in another field for less money and stress free which translate to higher quality of life. I will begin to work on my resume and start looking around!!!

Downshifting can sometimes be a lot easier than 100% retirement. If you work 20 hours and have 20 hours free, you use the free 20 hours for more low stress DIY projects, home cooking and price shopping that may lower your expenses further, making it easier to live on just the 20 hours of salaried work.

Just taking one of our cars to a dealer further out of town saved $400 on some recent work. When we were both working full time we would not have had time to price shop or drive to the out of town dealer.

 

[racy]

....I am single but I do have a steady girlfriend for the past 2 years. ... she does work and has income and I will not ask her to contribute anything to lower my monthly expenses.

What? are you crazy?! I married a working girl because I needed 2 incomes to support my lifestyle!
I made a good choice: I'm retired and she's still working.

 

[U5512]

Downshifting can sometimes be a lot easier than 100% retirement. If you work 20 hours and have 20 hours free, you use the free 20 hours for more low stress DIY projects, home cooking and price shopping that may lower your expenses further, making it easier to live on just the 20 hours of salaried work.

Just taking one of our cars to a dealer further out of town saved $400 on some recent work. When we were both working full time we would not have had time to price shop or drive to the out of town dealer.

I am completely agreeing with you about the downshifting as I am READY for it!!! I have had several discussions with family members about downshifting and or working in other fields that are stress free, and I still have the income (but much lower) coming in so I don't spread myself out thin. I love DIY projects as I repair most if not all my car/home repairs.

 

[ivinsfan]

Well, numbers are one thing and lifestyle, living expenses and hobbies are another. If you don't wish to compromise anything in the latter, you'll have to work on the former, which is making more money and staying at your job....you make the choice.

We can all give you all kind of tips, but if your mind is made up, it's made up. A lot of us are curious why a grown employed woman shouldn't contribute to her living expenses. Do you think you will happy if you can't add to your antique collections, because I don't see a lot of money in your budget for that. Life long habits are hard to break.

 

[haha]

I am completely agreeing with you about the downshifting as I am READY for it!!! I have had several discussions with family members about downshifting and or working in other fields that are stress free, and I still have the income (but much lower) coming in so I don't spread myself out thin. I love DIY projects as I repair most if not all my car/home repairs.

There are no human interactions that are stress free. Some are less stressful than others, most of the time. Just getting less money does not mean that you necessarily get a less stressful environment. it just means that it will have to go on longer.

Also live-in partner that doesn't pay suggests some issues/attitudes that you might want to look at. One of the best places for a girlfriend is often near but not in your house.

Ha

 

[Al18]

U5512,
I think you're close, but need more money outside your 401K. Many, but not all 401K plans allow you to make withdrawls penalty free if you separate from service during the year you turn 55 or after. If you withdraw prior to 55, you'll owe a 10% penalty. Also IRS rules require your 401K provider to withhold 20% for Federal Taxes. If you want to retire before 55, you'll need to save enough so can live off your non-retirement savings until you reach 59 1/2.

 

[petershk]

To echo what others are saying. I think your are either there or close depending on your flexibility.

I think a bigger factor is your personal relationship. FIRE implies significant lifestyle assumptions. For example you have a huge amount of savings but a comparably cheap lifestyle. It's "weird" to have 800k but drive a 6 year old car, avoid expensive restaurants and vacations and not buy the latest stuff. Is she excited by this, tolerant of it or annoyed?

My SO is more hardcore about saving than I am. We never fight about money or spending. We just "click" in that area. I can't imagine what it would be like if we didn't.

Other factor will be kids. They eat time and money and provide amazing returns but add on both sides.

If you get married, see eye to eye on finances and don't have kids... You can probably sell your house now, move someplace cheaper and be ok. Or you can stay where you are work a but longer and be ok. Or you can quit your SO can work for a while and then join you. Lots of wiggle room.

Kids will probably change that math .

In any case you are in much better shape than the vast majority... So it's only a a matter of time

Sent from my HTC One_M8 using Early Retirement Forum mobile app

 

[jim584672]

According to the 72t calculator you could pull 29k penalty free a year out of 750k at age 47.
So just get your living expenses down and take the plunge. Don't blame me if it all goes wrong.

 

[Marketwatcher]

According to the 72t calculator you could pull 29k penalty free a year out of 750k at age 47.
So just get your living expenses down and take the plunge. Don't blame me if it all goes wrong.

Could you provide a link to the 72t calculator? Thanks.

 

[jim584672]

Could you provide a link to the 72t calculator? Thanks.

72t on the Net | SEPP, 72t, and /72q Distributions