Just turned 50. Am I ready to “retire”?

[CO-guy]

Hi and thank you to all who take the time to read and assist others on this forum.

I recently turned 50. For much of my life I had planned to retire by 45. My parent was a self-employed workaholic (and avid saver), who passed at the age of 45 after a years-long battle with cancer. As a workaholic myself, I feel like I’m running on borrowed time. Thankfully, I’ve been putting money into retirement accounts annually since filling out my first I-9 at age 15.

So about me: I’ve been an educator for 15 years (second career). My partner is also an educator and is 9 years younger than me. No kids. We enjoy spending most of our free time outdoors and live in a small community way up in the Rocky Mountains, which allows us immediate access to outdoor recreation. We enjoy travel, and occasionally take an extravagant trip, but most of our travel is to spend time with family and we are otherwise quite thrifty.

We purchased the “ugly” home one the block when we moved to Colorado and have always shared one (modest) vehicle. Over the past 15 years we fully renovated our home, added two accessory dwellings, and have nearly paid off our original mortgage. No car loan and no student loans. We have invested heavily in our home and home values in our area have gone up dramatically, but we also have other retirement savings as follows:
• Home = $925k (remaining mortgage = $137k)
• TIAA = $412k
• IRAs = $96k
• Money market, cash, bonds… savings = $110k
• Other investment accounts = $34k
• Pension = My partner will be pension eligible in 9 years (50% salary)

In my current educator role, I earn approximately $65k/yr and my partner earns $45k/yr. I also started an online consulting business several years ago and, excluding 2020, earned an average income of ~$55k for the past 5 years working part-time. We have one long-term rental and one rental that we use for short-term guests and for family/friends visiting. Deducting housekeeping and general upkeep, net rental income on our accessory dwellings is roughly $25k/yr.

Day to day, we are frugal. The total for mortgage, taxes, utilities, insurance (car+home), etc. is well under $3k/month. Even with groceries, travel, vet bills, donating to local charities, showering nieces and nephews with gifts, medical co-payments and other unexpected costs, we have spent under $4k/month on our total living expenses for at least the past decade ($43k/yr for 10 years). Initially this was out of necessity as my job paid $45k/yr and my partner was renovating our home full-time, but it has put us in a position to begin thinking about retirement.

My partner is supportive of my plan and they plan to continue working for at least another 9 years. Their job is secure and offers excellent health benefits along with a pension. I plan to continue consulting part-time and managing our rentals, which is why I put the word ‘retire’ in quotes. I’m eager to spend more time enjoying the outdoors and doing more charity work here in our community. However, I’m wondering if I’m financially ready to quit my main job after this year. I lost over 80% of my consulting income in 2020, which was a good reminder of how unreliable consulting work can be, but I have worked hard to develop a large and diverse pool of clients to limit those risks in the future. Plus, between my partner’s salary, rental income, and consulting work, our net income is roughly double our current expenses without my main job.

So am I financially ready to “retire”? Can I let those saving grow, maybe even contribute, while losing the 9-5 next year? What am I missing? What’s the upside of working for another year or two? Thanks to all that care to offer help.

 

[ivinsfan]

As an educator you should have the option of going back to the work force if need be. I think that's a pretty good safety net.


I don't know what your present consulting income is but would it be more stable to pick and choose fill in or sub teaching jobs to get you where you need to be? IMO your non home assets are a little light.


Nine years is a long time.. you use the word partner is this a legal partnership? It does make a difference in planning IMO.

 

[Dtail]

Welcome to our wonderful site.
Your assets could be a little low for an early retirement.
However I would encourage you to throw all your info into the retirement calculator "Firecalc" attached to this site. We can assist you with any questions on the use of or interpretation of the results.

 

[RetiredHappy]

I pay full freight for my health care which runs about $15K a year now and going to $20K before Medicare kicks in. Have you looked at how much health care will cost until Medicare kicks in, unless you are on your partner's health insurance? You can play with Healthcare.gov/ACA if you cannot be covered under your partner's plan.

For me, your assets could grow a bit more to be safe.

 

[CO-guy]

Thank you so much for your responses! Yes my partner (spouse) and I are legally married. Currently my partner is on my insurance, but we would switch our healthcare coverage to their insurance while they continue working. Further, should they decide to retire in 9-10 years, their pension plan comes with reasonable pre-medicare family healthcare plans to cover the retirement to age-65 healthcare gap.

This year my consulting business will bring in at least $68k with a broadening portfolio of clients to limit fluctuations in yearly earnings. That's more than I earn from my full-time job, though a bit less than the total compensation when including healthcare and employer matching for retirement. I would continue consulting part-time as I have been, so I would expect this revenue stream to continue and $55k/yr seems like a fair conservative estimate.

Looking at the numbers (rental income + spouses income + consulting income - living expenses), it appears that I can continue saving for retirement while our investments grow for another decade. Maybe consulting part-time isn't truly being retired, but for me, going from 60-70 hours of work per week to 20 would certainly feel like retirement.

In spite of the fact that my current job is stable, I will eventually leave. Part of me curses myself for agreeing to remain for another year and thinks I should just go for it. But there's another part of me that worries that we haven't saved enough to let those investments grow on their own and that I should keep working for another 2-3 years. I agree that 9 years is a long time, and so I'm wondering what unexpected expenses I'm missing. I'll try firecalc and would welcome any additional suggestions.

 

[ivinsfan]

My comment about 9 years was mostly about your spouse continuing to work. You can trim expenses but losing income is harder to plan for. Illness happens, divorce happens, death happens. I agree you can't plan for everything but a Plan B in the back of your mind can be reassuring.


With your numbers your real estate could be the backup Plan B. Selling, relocating somewhere or lower COL is all possible. At 50 I think those things are easier to adapt to then when you older.

.

 

[pacergal]

Under forums tab, check out early retirement FAQs and answer the questions in the sticky:
Some Important Questions to Answer Before Asking - Can I Retire? Answering those questions really helped me in my planning.
Some folks don't consider part timers as retired, but my thoughts are Retirement is whatever you want it to be!

 

[CO-guy]

Thank you so much. This is all really helpful. The FAQ sticky is actually what motivated me to create an account and post to this forum. FIRECalc was very informative. Reassuring to know that if everything continues as planned, the numbers are there.

My better-half agreed to take a back seat to my career when we first relocated. They took several years off of their own career track renovating our home, picking up odd jobs here and there, and finding their passion; career-wise and with snowboarding. They are eager to take the career lead now and for me to have that freedom. Perhaps they would feel differently if all I did was drink beer, watch sports, and sit on the couch, but I don't do any of those things. Rather, I'm on several non-profit boards and have become heavily involved in developing successful grant writing programs within the organization I oversee. I also spend a heck of a lot of my limited free time on skis or on my mountain bike, or hobbling around the neighborhood with my dogs when I've been injured.

The rental income we developed is part of our backup plans in case one of us dies before the mortgage is paid off. Both of us have a plan B to sell everything and retire somewhere in Latin America: Which was my plan A up until I met my partner 20 years ago. That might still be our plan A if we get tired of living in the mountains and have looked at Panama and Columbia for future relocation. Though we're sickeningly happy together, even after a year of Covid, that's a good point about divorce and what the next decade might bring. What we have saved currently can't fund two separate retirements. That's something we should talk about. My own parent was self-employed and self-insured. Their two-plus year battle with cancer sapped them of every penny of savings. However, we are fortunate to have insurance plans with a low max out-of-pocket ($2k) and we have looked into supplemental critical illness and disability insurance.

As I said, part of me thinks I could "retire" now, and part of me thinks our modest 'egg' needs a few more years of heavy investment to safely support our long-term needs. Like, why not wait until the house is paid off? So death, divorce, long-term/chronic illnesses. I've been managing properties since I was 15 and so I'm familiar with the life-cycles of everything from appliances and paint to roofs, furnaces, windows, and floors. What else am I not considering? Also, once our mortgage is paid off (78 months to go!), we expect that our annual living expenses will drop from our 10-year average of $43k/yr to under $30k/yr. However, we have kept the $43k figure in our calculations to account for increases in taxes, insurance, and general cost of living 7-10 years from now. Thoughts?

Thank you all again for your help. You've given me at least one scenario we haven't considered

 

[Jenna]

It's always good to make sure you could make it even if your "partner" was not by your side. This could mean a lot of different scenarios. We have provided for this with life insurance as we depend on a pension that will go down for the remaining spouse

 

[CO-guy]

Thanks Jenna. All but one of the outcomes on firecalc had us above the line, but it's less clear for other scenarios. Starting to agree with ivinsfan and RetiredHappy that my savings, particularly non-retirement (cash) savings, is still a little light, but I'm close! Thank you all again. Without this site, it's just me and a spreadsheet wondering.

 

[Jim59]

At such a young age are you really ready to retire ? That would be my main concern if I was you.

 

[CO-guy]

That's my main motivation. Unless my goal is to work until I croak, I'm going to need to transition to some sort of retirement pretty soon.

Though I appreciate the folks that view retirement as an end to their professional careers, continuing to consult part-time is part of my retirement plan. So .5 jobs rather than 1.5 jobs.

 

[skyking1]

That's just it, you are not really retiring when your consulting brings in more cash than the 9-5 job.
I read through and concur with being a little retirement cash light, but if you have your medical costs with a good plan B, it looks better.

 

[flyingaway]

I think the OP will be OK because of the side job.

 

[teetee]

1.5 M net worth with more than half in real estate for two is a bit shy to live on for the next 30 years or longer with 45k expense a year.

Maybe do semi retirement until you are withdrawing the pension / SS and just leave the current asset alone? That would require both of you have 45k / yr income for the next 25yrs.

 

[CO-guy]

I think you're right, flyingaway. I started my side-business in 2014 when I was looking for an out from my job (love students, can't handle the persistent toxic work culture). My consulting work could easily be a full-time gig, but I am fortunate to be able to pick and choose my projects and cap my time.

At this point I think I'm going to reassess the plan in May 2022 and potentially postpone "semi-retirement" until June 2023. Not ideal for my physical and mental health, but that would give us time to increase our liquid assets to over $150k, get the TIAA to over $500k, and bring us within striking distance of paying off the home (4.5 more years).

With the mortgage paid off our rental income would cover our monthly expenses including home maintenance. Healthcare would be covered through the better-half's employer, and, between their job and my consulting, we would have an additional $100k/yr to continue to save (or spend) until they are ready to retire. Even if consulting fizzles after a few more years, we should still be in solid position for the better-half to join me in 2030.

So class of 2023?

 

[ugeauxgirl]

You're working two jobs and asking if you should quit one, scale back a little and enjoy your life more. In your situation, I would absolutely do that.

 

[Time2]

I might have a hard decision about whether to tie up $750,000 in my home when I could have that working for me over the next 20 years. A 3% mortgage vs 8% in the market is $37,500 a year, plus $12,000 in dividends.
(invested in VTSAX)

Easier to get the mortgage while you are still working.

 

[CO-guy]

Agree that the time to refi will be in the next 1-2 years, and there are some real advantages to using that equity, in addition to the rental income we're already generating.

I've been reading more about people's retirement "glide paths" and mine just seems a little bit longer than some others. So my final approach is likely another 2 years of teaching and consulting part-time followed by several more years of part-time consulting once I leave teaching. If I live much longer than that, I can finally start tapping retirement savings and, who knows, I might even become eligible for social security one day.

 

[Sunset]

....
I've been reading more about people's retirement "glide paths" and mine just seems a little bit longer than some others. .....

You can always find someone who retired earlier, or just never worked at all.

We didn't retire until close to 60, and I still did some consulting for years as I enjoyed it.

So my thoughts are any retirement before 60 is early. Better to have a successful (well funded) retirement, than to be forced to work after 15 yrs of retirement because of bad decisions.

I know a couple that retired early, without enough saved, and had to un-retire

 

[Koolau]

Assuming you and partner are on the same page about YOUR retirement AND you are both okay with being flexible (in spending and all that entails - like maybe skipping the nice trip one year) I think you COULD retire. I wouldn't but I'm very risk averse. My point, if retirement is important for your sanity, you have the basics to make it work - if you are spending-flexible (or part time w*rk - or even going-back-to w*rk flexible.) Lot of folks here retired quite a bit later and/or had significantly more than they needed. It was sort of a "no brainer" to retire. I would suggest in your case, it's a "use your brainer". You'll have to "manage" your retirement but I think it's doable. YMMV of course, so be CERTAIN partner is on board. Best luck and keep us posted. We love to help and we love to hear success stories!

 

[CO-guy]

This is absolutely OUR financial plan even if I'm the planner. I'm definitely risk averse which is why I really appreciate the responses since it helps to think these things through.

What I've concluded is that waiting only one more year might be too much risk for me. I'll reevaluate in May, but given the numbers, two years (really 22 months) looks like a solid target.

Classes start tomorrow, so this is definitely the most stressful time of the year when I'm juggling multiple consulting projects (program evaluations, accreditation reviews, and other technical triage work). Reassuring to think that I'll (hopefully) only have to deal with the inevitable "job-job/consulting-job" collision one more time after this Fall.

 

[happyhere]

Hi and thank you to all who take the time to read and assist others on this forum.

I recently turned 50. For much of my life I had planned to retire by 45. My parent was a self-employed workaholic (and avid saver), who passed at the age of 45 after a years-long battle with cancer. As a workaholic myself, I feel like I’m running on borrowed time. Thankfully, I’ve been putting money into retirement accounts annually since filling out my first I-9 at age 15.

So about me: I’ve been an educator for 15 years (second career). My partner is also an educator and is 9 years younger than me. No kids. We enjoy spending most of our free time outdoors and live in a small community way up in the Rocky Mountains, which allows us immediate access to outdoor recreation. We enjoy travel, and occasionally take an extravagant trip, but most of our travel is to spend time with family and we are otherwise quite thrifty.

We purchased the “ugly” home one the block when we moved to Colorado and have always shared one (modest) vehicle. Over the past 15 years we fully renovated our home, added two accessory dwellings, and have nearly paid off our original mortgage. No car loan and no student loans. We have invested heavily in our home and home values in our area have gone up dramatically, but we also have other retirement savings as follows:
• Home = $925k (remaining mortgage = $137k)
• TIAA = $412k
• IRAs = $96k
• Money market, cash, bonds… savings = $110k
• Other investment accounts = $34k
• Pension = My partner will be pension eligible in 9 years (50% salary)

In my current educator role, I earn approximately $65k/yr and my partner earns $45k/yr. I also started an online consulting business several years ago and, excluding 2020, earned an average income of ~$55k for the past 5 years working part-time. We have one long-term rental and one rental that we use for short-term guests and for family/friends visiting. Deducting housekeeping and general upkeep, net rental income on our accessory dwellings is roughly $25k/yr.

Day to day, we are frugal. The total for mortgage, taxes, utilities, insurance (car+home), etc. is well under $3k/month. Even with groceries, travel, vet bills, donating to local charities, showering nieces and nephews with gifts, medical co-payments and other unexpected costs, we have spent under $4k/month on our total living expenses for at least the past decade ($43k/yr for 10 years). Initially this was out of necessity as my job paid $45k/yr and my partner was renovating our home full-time, but it has put us in a position to begin thinking about retirement.

My partner is supportive of my plan and they plan to continue working for at least another 9 years. Their job is secure and offers excellent health benefits along with a pension. I plan to continue consulting part-time and managing our rentals, which is why I put the word ‘retire’ in quotes. I’m eager to spend more time enjoying the outdoors and doing more charity work here in our community. However, I’m wondering if I’m financially ready to quit my main job after this year. I lost over 80% of my consulting income in 2020, which was a good reminder of how unreliable consulting work can be, but I have worked hard to develop a large and diverse pool of clients to limit those risks in the future. Plus, between my partner’s salary, rental income, and consulting work, our net income is roughly double our current expenses without my main job.

So am I financially ready to “retire”? Can I let those saving grow, maybe even contribute, while losing the 9-5 next year? What am I missing? What’s the upside of working for another year or two? Thanks to all that care to offer help.

hey, I retired at 57 because my parents died young and i too think i'm on borrowed time (not really)... but didn't want to work and then die. ugh! I sold my house and everything i owned that i couldn't bring with me on a plane (6 trips to purchase property, bring cats, etc.) and left !!
I decided that money didn't matter as long as i moved somewhere that wasn't the US, a new culture and language, and relatively inexpensive. So i came to Costa Rica. I live at the base of foothills with big mountains/reserves to the south and west of my property, and a valley to the north and east. Village of 150, paved road, public buses to bigger towns, 300 yds to main highway, and hospitals/banks/clinics/shopping about 40-75 minutes away in three directions from my house. I gutted and added on to a small house on 1/3 acre. my monthlies are less than $500 usually... nothing to spend on here, and covid put the lid on things for awhile. Very good public healthcare system costs me about $200/month as a gringo with 'rentista' residency status. Private clinics are still FAR less than US healthcare costs, so they are good when you don't want to wait. I work in my garden and yard all day and putsy around the house. I have never been happier!! it's amazing how unimportant all of the 'things' that i left behind are. not just the physical things... but all of that financial planning crap, insturance, and bla bla bla. We don't even have phone bills here, nor Mail... mail doesn't exist... my house doesn't even have an address. Nobody here has anything... and they seem quite happy. Happier than my neighbors back in Philadelphia.
Just saying... you have enough now to come to a place like this or elsewhere in Latin America and live comfortably for the rest of your life; as long as you don't blow it all on a beach property. Dude, i wake up and have coffee every morning watching toucans eating my bananas!! Far better than the morning news, don't you think??

 

[CharlieZulu]

Hey there CO-Guy! Living in CO as well, and have the same observations about real estate. I know it is crazy everywhere, but seems a bit more frantic here.

I am reading the books, "Your Complete Guide to a Successful & Secure Retirement" and "You Can Retire Sooner Than You Think," and I am finding them both helpful in getting my brain around it all. The former takes on the flavor of a dry textbook sometimes. I like them both because they talk about both the emotional and financial considerations of retirement.

In "Complete Guide," the author outlines 4 great questions:

1. Do I have enough? (Financial Security)
2. Have I had enough? (Even though you are successful, your career no longer lights your fire.)
3. What will I do? (The other book talks about this VERY well...in "You can retire earlier..." he calls them "core pursuits.")
4. Does my spouse/partner, or someone else close to me, want me home 24/7?

If you can firmly answer "yes" to them all...with hard data to back it up...go ahead and retire. My sense, from what you posted, is that you may not be able to say that to all 4...but I may be wrong. That is your call alone.

What I have observed lately is what I am calling the "Fidget Factor." We live in an area in CO that has a growing retiree population. DW and I built our dream home here back in 2014 and were the only ones on the road for 5 years. A nice couple bought the lot next door about a year ago, and said they will build in 5 years to retire...they broke ground yesterday. On the other side of us, a similar story...they bought 3 years ago...said build in 3 years...broke ground in 6 months. Point is...once you start moving toward a plan, it may get a life of its own. Build some financial flexibility into your plan...for when this happens. If you are budgeting for retirement, and need to plan to small amounts of money, or must have a side gig to make it work, you might want to pause...just a bit longer. Again, your call. In my "Here I am" post...I looked at only the financial, and not the emotional. After reading these books, I realized that I could not say yes to all 4 questions...so..."steady as she goes"...but DW and I are planning also for the Fidget Factor. We hold all the cards.

 

[CO-guy]

Thanks happyhere. Glad I'm not the only one not expecting to live long enough to collect social security. Your retirement sounds similar to my previous plan A (still plan B). Although we plan on living abroad for some of our retirement, being able to visit family is important for my partner as part of our long-term retirement plan.

Thank you also, CharlieZulu. As far as my own answers to the 4 questions: The only question I can't give a resounding yes to yet is #1.

#2-I'm completely (100%) over my career. Further, continuing on my career path would require relocation. We love where we live and my partner loves their job.

#3-I know exactly what I want to do and have no problem filling that time with both meaningful volunteer work as well as healthy recreation.

#4-My spouse and I support each other no matter what we do. They completely support our next move.

In a year or so my answer to question one will hopefully align with the rest.