Brian_W
Confused about dryer sheets
Hello, I'm Brian and I live in the Phoenix area. I joined early-retirment.org about 3 years ago to start learning more about early retirement as my wife and I approached some key milestones in our life such as turning 50, paying off our house, and sending the kids off to college. However, I was laid-off from my job as a Software Architect 6 weeks ago. I technically "retired" from my employer because I had 29 years of service and was retirement-eligible, but it doesn't come with any significant benefits like a pension or subsidized healthcare. I did get a nice severance, but it would've been the same if I hadn't been retirement-eligible.
I am 54 and my wife is 53 and we've been tossing around the idea of early retirement for a couple years, playing with retirement calculators, and just trying to understand the logistics of early retirement. Our loose plan was to retire in 2027, but now we are taking a much closer look.
Here is the data:
Net worth of approximately $4M.
Assets:
- Tax-deferred IRA/401K: $1450K
- Roth IRA/401k: $70K
- Non-qualified Investments: $800K
- HSA: $30K
- Cash: $490K
- Primary residence: $645K
- Rental house: $575K
- Farmland: $45K
Liabilities/Debt:
- None/$0
Current Income
- $50K/year from wife's home business. She want's to work until 60.
- $7K/year in dividends
Children:
- 21-year-old grad student we expect to support through 2024. Has full scholarship covering tuition and room&board.
- 19-year-old college freshman we expect to support through 2026. Has partial scholarship and we're paying about $10K/year
Current Expenses:
- About $65K/year, not including expenses for the 2 children.
Budget:
- Our goal for a retirement income is to cover our expenses and have a $20K travel budget, so about $85K net.
Other noteworthy details:
- When our kids move out, we plan to sell our primary home and move into the rental. The rental is smaller, single-story, and lacks a swimming pool, so lower utilities/maintenance/taxes/insurance will drop expenses by over $4K/year. The proceeds from the primary residence should be around $550K and would be immediately invested into taxable accounts.
- Lack of passive income is a perfect storm right now. Dividend income was $17K/yr until March when my largest dividend investment cut the dividend by 70%. Farm rental income is normally around $2K/year but in 2020, I promised it to my 87-year-old uncle (and farm co-owner) until he dies. We're not receiving rent from our rental house because we started a remodel recently to get it how we want it (or more accurately, how she wants it
) when we move in.
- I now have penalty-free access to about $1M in my 401(k) because I was terminated in the calendar year I turn 55.
We met with our CFP at Fidelity and we're good for a $120K/year gross income. Firecalc says the same with 100% success. However, health care is not fully factored into our expenses. We've had health insurance through my employer with no monthly premiums for 27 years and we use it a lot. We hit the $6K deductible on my employer's HDHP every year and I expect we would still reach it every year with a $15K deductible. I have free COBRA until April 2024 and I can extend for 6 more months for $2100/month. After that, we're on our own. My employer offers a retiree health care plan that is identical to the plan we have now. It's $2550/month for my wife and I (plus $1250/month more to add the kids). I checked Healthcare.gov a couple weeks ago and the costs also seem unreasonably high. I need to get health care figured out. Am I really looking at spending $300K-$400K on health insurance over the next 10 years before Medicare eligibility? The retirement picture isn't quite as rosy if we need $160K/year gross for the first 10 years.
A voice in the back of my head says I need to go back to work, but I'm trying not to get into the one-more-year mindset, although I wouldn't mind finding a job that I really love and working for 3 or 4 more years as was the original plan. I just don't want to turn into my dad, who kept working while drawing Social Security because he needed the money (which is mostly true). He finally retired at 75 due to health reasons, then was barely mobile afterward. He passed almost 6 years after retiring and never got to do any of the things he planned to do in retirement.
I'm from rural western Missouri and my wife is from Stuttgart, Germany and we've been married for 27 years. I do a lot of gardening and handyman type work for my neighbors for fun. It used to be a way to de-stress from engineering work. Together, my wife and I like to do outdoorsy stuff like hiking and camping. We also travel to Europe one or two times per year in the off-season to visit my wife's family & friends and try to vacation a week or so in some European city or country we've never been to.
I am 54 and my wife is 53 and we've been tossing around the idea of early retirement for a couple years, playing with retirement calculators, and just trying to understand the logistics of early retirement. Our loose plan was to retire in 2027, but now we are taking a much closer look.
Here is the data:
Net worth of approximately $4M.
Assets:
- Tax-deferred IRA/401K: $1450K
- Roth IRA/401k: $70K
- Non-qualified Investments: $800K
- HSA: $30K
- Cash: $490K
- Primary residence: $645K
- Rental house: $575K
- Farmland: $45K
Liabilities/Debt:
- None/$0
Current Income
- $50K/year from wife's home business. She want's to work until 60.
- $7K/year in dividends
Children:
- 21-year-old grad student we expect to support through 2024. Has full scholarship covering tuition and room&board.
- 19-year-old college freshman we expect to support through 2026. Has partial scholarship and we're paying about $10K/year
Current Expenses:
- About $65K/year, not including expenses for the 2 children.
Budget:
- Our goal for a retirement income is to cover our expenses and have a $20K travel budget, so about $85K net.
Other noteworthy details:
- When our kids move out, we plan to sell our primary home and move into the rental. The rental is smaller, single-story, and lacks a swimming pool, so lower utilities/maintenance/taxes/insurance will drop expenses by over $4K/year. The proceeds from the primary residence should be around $550K and would be immediately invested into taxable accounts.
- Lack of passive income is a perfect storm right now. Dividend income was $17K/yr until March when my largest dividend investment cut the dividend by 70%. Farm rental income is normally around $2K/year but in 2020, I promised it to my 87-year-old uncle (and farm co-owner) until he dies. We're not receiving rent from our rental house because we started a remodel recently to get it how we want it (or more accurately, how she wants it
) when we move in.- I now have penalty-free access to about $1M in my 401(k) because I was terminated in the calendar year I turn 55.
We met with our CFP at Fidelity and we're good for a $120K/year gross income. Firecalc says the same with 100% success. However, health care is not fully factored into our expenses. We've had health insurance through my employer with no monthly premiums for 27 years and we use it a lot. We hit the $6K deductible on my employer's HDHP every year and I expect we would still reach it every year with a $15K deductible. I have free COBRA until April 2024 and I can extend for 6 more months for $2100/month. After that, we're on our own. My employer offers a retiree health care plan that is identical to the plan we have now. It's $2550/month for my wife and I (plus $1250/month more to add the kids). I checked Healthcare.gov a couple weeks ago and the costs also seem unreasonably high. I need to get health care figured out. Am I really looking at spending $300K-$400K on health insurance over the next 10 years before Medicare eligibility? The retirement picture isn't quite as rosy if we need $160K/year gross for the first 10 years.
A voice in the back of my head says I need to go back to work, but I'm trying not to get into the one-more-year mindset, although I wouldn't mind finding a job that I really love and working for 3 or 4 more years as was the original plan. I just don't want to turn into my dad, who kept working while drawing Social Security because he needed the money (which is mostly true). He finally retired at 75 due to health reasons, then was barely mobile afterward. He passed almost 6 years after retiring and never got to do any of the things he planned to do in retirement.
I'm from rural western Missouri and my wife is from Stuttgart, Germany and we've been married for 27 years. I do a lot of gardening and handyman type work for my neighbors for fun. It used to be a way to de-stress from engineering work. Together, my wife and I like to do outdoorsy stuff like hiking and camping. We also travel to Europe one or two times per year in the off-season to visit my wife's family & friends and try to vacation a week or so in some European city or country we've never been to.
