Michael Moore
Recycles dryer sheets
Howdy!
Background: I'll be 52 in 4 months, and my sweetheart of 28 years is 53 next month. We're both career Feds (CSRS) who started in 1976 and she was able to take an early out offer last June, and is quite happy being RE'd. My regular retirement date would be 09/2008 at 55 years with 32 years of service.
I've been told that my agency has received early out authorization (no buyout incentives, just an extra reduction for leaving before 55) from OPM, but they are really dragging their feet on announcing it as it would have to end when the fiscal year does (30 Sept). We had an early out last year, but it wasn't offered to my division. If we get skipped again and Operations doesn't a former boss who is Deputy Regional Commissioner has said she thinks she could arrange for me to transfer over just long enough to slip out the door. But if things don't work out I may be stuck for three more years. Early outs in the future seem unlikely unless a lot of my fellow Boomers don't retire as they are expected to do.
If I don't get to retire this summer I'm going to be really PO'd as I've been mentally ready for some time!
We're not concerned about leaving an estate to distant relatives - we plan to use it up ourselves. We're very aware that predicting how long we'll live is hopeless - my Dad died at 72 but my grandmother lived to just past 90, and we've had a spate of friends our age die/get terminal illnesses recently.
Financial info: I've been doing budget/income spreadsheets for some time as I'm fairly analytical in nature, so I think I've got a pretty good grasp on my likely level of expenditures.
Since we've both had similar careers (and no children) we've kept our money separate except for joint expenditures which go into the "bill envelope" and are settled up every month or two. That works for us. We are both able to carry our medical coverage into retirement, and we also have the Federal LTC plans. The household has had some serious illness a few years ago and maintaining medical coverage is a priority consideration. We use Kaiser Permanente as our HMO.
Assets: We paid off our 1100 sq ft 1948 house on the west side of San Francisco several years ago. CMV is in the $500-550K area. Recently we've been doing some of the major things like replacing all the windows and drapes, termite repairs and an electrical service upgrade, trying to get some big ticket items out of the way before the income drops even more. We've got three paid for autos - two cars and a van. I'm considering selling my 2000 Focus when I no longer need to do a 250 mile/week commute, and either fix up my 88 Dodge van some or sell it too and use the money from both to buy a nicer van. I ride/race/build motorcycles as my major hobby so I need a van. I've got 30 or so project bikes, and I've already been trying to decide what of those I can stand to sell.
With my annual leave cash out and current savings I'd probably have about $30-35K cash within a couple of months of retirement. She's a better saver than I and has about 3X that - money market fund, CD and cash. The Thrift Savings Plan at work is about $110K between both of us. We've been paying in at the max including the catch-up amounts though of course that stopped for her when she retired.
Costs: Right now our combined monthly fixed costs look to be right at $2000. That covers the joint expenses: property taxes, house insurance, utilities, food etc. I've got a shared warehouse space for my dead storage m/cycle stuff that costs me $480 a month, and getting out of that is the impetus for selling off a lot of the extra bikes.
With the storage my annual budget for a pretty similar lifestyle, including income taxes, is about $30-31K, less about $5K if I get out of the storage.
Income: In a month my immediate retirement amount should be almost exactly $40K/year. She's about $36K.
After retirement issues: We're leaving the money in the TSP instead of pulling it out and putting it somewhere else. We've had a bad time with mutual funds and the security of our principle is important to us. We put off getting into mutual funds during all the run up, and then put about $40K cash into them and watched significant amounts of it evaporate when things went bust, and we didn't enjoy the experience. We're out of them now. We also got into the TSP late and missed most of those 20-37% annual return years in the mid 1990s. I guess you can say that as investors we're more on the conservative (and not terribly well educated) side.
At 59.5 (or later) we can convert the TSP into an annuity. We figured we'd let the money sit in there and go with the annuity at that or a later date to offset any erosion in the pension amount. I can't get into EBIS from home so I can't come up with an annuity amount, but I think the projection was for about $3-5K a year each at 60 years of age.
Right now we're 50% G (government securities) and the rest in the C (common stock) funds. For the last year the G fund is 4.53% and the C fund is 6.35% for a combined 5.4% return.
I'm uneasy about the state of the national and world economies, and I'm very tempted to wait for the C fund to have a couple of positive months (it has been negative the last few months) and then just switch it all into the G fund where it will be secure. I'm not an investment hobbyist who studies things with any kind of diligence, but there seems to be enough stuff looming on various horizons for me to not want to be in anything that is even remotely volatile should things start to tank.
We don't have any intentions of working after retirement on anything but our own projects. However, as I mentioned I build motorcycles (not choppers - race bikes and vintage bikes) as my hobby and in doing that I've accumulated a pretty good home machine/welding shop. This past year I've spent about $30K on upgrading my lathe and mill to older, high-quality industrial machines, and I'm continuing to spend on tooling with the idea of being set up really well before my "mad money" income drops. While I am buying this for my own projects, there is certainly the possibility of picking up the occasional bit of outside income with them. I won't go looking for it, but if something came up that took 2-3 days a month that would be fine. The milling machine is computer controlled and could be used for doing small production runs.
It looks to me like we're in pretty decent shape, and we should be able to continue adding some to our savings after retirement. We don't live a lavish "keepin' up with the Joneses" lifestyle, but we are accustomed to ordering whatever strikes our fancy if we go out to eat, and buying whatever we want to buy (within reason). We can probably trim a bit of non-essential spending, but we are intending to enjoy ourselves with our hobbies (her's are lapidary/jewelery making and orchids) and if we were going to have to scrabble for every dime I'll just keep on working and add another $10K or so onto my pension.
I think that pretty much covers everything I can think of, and what I'd like is to hear anyone's constructive criticism of our plans as I've laid them out. Is there something obvious I've overlooked, or maybe someone knows where there is a 100% secure investment with a 30% rate of return that we should consider moving our savings into?
thanks,
Michael
Background: I'll be 52 in 4 months, and my sweetheart of 28 years is 53 next month. We're both career Feds (CSRS) who started in 1976 and she was able to take an early out offer last June, and is quite happy being RE'd. My regular retirement date would be 09/2008 at 55 years with 32 years of service.
I've been told that my agency has received early out authorization (no buyout incentives, just an extra reduction for leaving before 55) from OPM, but they are really dragging their feet on announcing it as it would have to end when the fiscal year does (30 Sept). We had an early out last year, but it wasn't offered to my division. If we get skipped again and Operations doesn't a former boss who is Deputy Regional Commissioner has said she thinks she could arrange for me to transfer over just long enough to slip out the door. But if things don't work out I may be stuck for three more years. Early outs in the future seem unlikely unless a lot of my fellow Boomers don't retire as they are expected to do.
If I don't get to retire this summer I'm going to be really PO'd as I've been mentally ready for some time!
We're not concerned about leaving an estate to distant relatives - we plan to use it up ourselves. We're very aware that predicting how long we'll live is hopeless - my Dad died at 72 but my grandmother lived to just past 90, and we've had a spate of friends our age die/get terminal illnesses recently.
Financial info: I've been doing budget/income spreadsheets for some time as I'm fairly analytical in nature, so I think I've got a pretty good grasp on my likely level of expenditures.
Since we've both had similar careers (and no children) we've kept our money separate except for joint expenditures which go into the "bill envelope" and are settled up every month or two. That works for us. We are both able to carry our medical coverage into retirement, and we also have the Federal LTC plans. The household has had some serious illness a few years ago and maintaining medical coverage is a priority consideration. We use Kaiser Permanente as our HMO.
Assets: We paid off our 1100 sq ft 1948 house on the west side of San Francisco several years ago. CMV is in the $500-550K area. Recently we've been doing some of the major things like replacing all the windows and drapes, termite repairs and an electrical service upgrade, trying to get some big ticket items out of the way before the income drops even more. We've got three paid for autos - two cars and a van. I'm considering selling my 2000 Focus when I no longer need to do a 250 mile/week commute, and either fix up my 88 Dodge van some or sell it too and use the money from both to buy a nicer van. I ride/race/build motorcycles as my major hobby so I need a van. I've got 30 or so project bikes, and I've already been trying to decide what of those I can stand to sell.
With my annual leave cash out and current savings I'd probably have about $30-35K cash within a couple of months of retirement. She's a better saver than I and has about 3X that - money market fund, CD and cash. The Thrift Savings Plan at work is about $110K between both of us. We've been paying in at the max including the catch-up amounts though of course that stopped for her when she retired.
Costs: Right now our combined monthly fixed costs look to be right at $2000. That covers the joint expenses: property taxes, house insurance, utilities, food etc. I've got a shared warehouse space for my dead storage m/cycle stuff that costs me $480 a month, and getting out of that is the impetus for selling off a lot of the extra bikes.
With the storage my annual budget for a pretty similar lifestyle, including income taxes, is about $30-31K, less about $5K if I get out of the storage.
Income: In a month my immediate retirement amount should be almost exactly $40K/year. She's about $36K.
After retirement issues: We're leaving the money in the TSP instead of pulling it out and putting it somewhere else. We've had a bad time with mutual funds and the security of our principle is important to us. We put off getting into mutual funds during all the run up, and then put about $40K cash into them and watched significant amounts of it evaporate when things went bust, and we didn't enjoy the experience. We're out of them now. We also got into the TSP late and missed most of those 20-37% annual return years in the mid 1990s. I guess you can say that as investors we're more on the conservative (and not terribly well educated) side.
At 59.5 (or later) we can convert the TSP into an annuity. We figured we'd let the money sit in there and go with the annuity at that or a later date to offset any erosion in the pension amount. I can't get into EBIS from home so I can't come up with an annuity amount, but I think the projection was for about $3-5K a year each at 60 years of age.
Right now we're 50% G (government securities) and the rest in the C (common stock) funds. For the last year the G fund is 4.53% and the C fund is 6.35% for a combined 5.4% return.
I'm uneasy about the state of the national and world economies, and I'm very tempted to wait for the C fund to have a couple of positive months (it has been negative the last few months) and then just switch it all into the G fund where it will be secure. I'm not an investment hobbyist who studies things with any kind of diligence, but there seems to be enough stuff looming on various horizons for me to not want to be in anything that is even remotely volatile should things start to tank.
We don't have any intentions of working after retirement on anything but our own projects. However, as I mentioned I build motorcycles (not choppers - race bikes and vintage bikes) as my hobby and in doing that I've accumulated a pretty good home machine/welding shop. This past year I've spent about $30K on upgrading my lathe and mill to older, high-quality industrial machines, and I'm continuing to spend on tooling with the idea of being set up really well before my "mad money" income drops. While I am buying this for my own projects, there is certainly the possibility of picking up the occasional bit of outside income with them. I won't go looking for it, but if something came up that took 2-3 days a month that would be fine. The milling machine is computer controlled and could be used for doing small production runs.
It looks to me like we're in pretty decent shape, and we should be able to continue adding some to our savings after retirement. We don't live a lavish "keepin' up with the Joneses" lifestyle, but we are accustomed to ordering whatever strikes our fancy if we go out to eat, and buying whatever we want to buy (within reason). We can probably trim a bit of non-essential spending, but we are intending to enjoy ourselves with our hobbies (her's are lapidary/jewelery making and orchids) and if we were going to have to scrabble for every dime I'll just keep on working and add another $10K or so onto my pension.
I think that pretty much covers everything I can think of, and what I'd like is to hear anyone's constructive criticism of our plans as I've laid them out. Is there something obvious I've overlooked, or maybe someone knows where there is a 100% secure investment with a 30% rate of return that we should consider moving our savings into?
thanks,
Michael
