Retire in June or OMY?

[PandaBear]

Should I stay or should I go?? (https://youtu.be/BN1WwnEDWAM)

Dh is already retired. He is 3 ½ years older than me. I work in education, so even though our kids are out of school, my life is about the school year (work days, breaks, etc). Our plan has been for me to work through the 2022-2023 school year and retire June 1, 2023. I have thought about retiring earlier, but basically like my job and the people and really felt I “needed” to work through 2023. So that’s as far as I ever went. Recently, I’ve been feeling “done”. Not unhappy, not hating my job, just “done”.

Both dh and I have pensions and he has SS. His pension is not inflation based. What he has now is what he will have. Mine isn’t either, but I get a small (2%) increase every year based on my initial pension. We also have retirement savings. We will have what most will consider a FATFire (I certainly do), even for a HCOL area.

The factors involved in the decision for me to work longer are an increased pension (about 10K) and medical insurance.

However, I began to really look at our numbers and run FIRE calculator and have realized these two factors play a very small role in success (as determined by the calculator), but they have a big psychological impact.

Even playing with different scenarios, our success rate is about 90%, give or take. For example, our success rate is 89.3 with the lower pension and 90.9 with the higher pension from working through 2023 (that’s based on our pension, SS and retirement accounts). If I throw in our other savings (money we have set aside to help our kids with their first home, wedding account, etc) our success only rises to 91.70. Then if I add in a small annuity and income from a rental in a very LCOL area, it stays the same!

Additionally, while we will have increased insurance expenses by me retiring in 2022 instead of 2023, I actually have a higher pension than my current salary (because I work 50%). So the extra money from the pension balances the increased insurance.

Psychologically, it seems to me that a 10K difference yearly in pension (that’s the difference between 2022 and 2023) should make more than a 1.6% increase in success. But it doesn’t. That’s what’s making me feel like OMY matters, when I guess it really doesn’t. Even though I’m thinking I’m close to being ready, I’m having a hard time leaving that on the table. And dh is having an even harder time with it (although he agrees if I really want to retire, I should).

Other potentially relevant factors:

• Paid off house and no debt
• “Lower” taxes due to Proposition 13 and being in our house 30 years
• Kids out of school
• Modified LTC insurance (we gave up an increase in benefit to avoid an increase in premium about 10 years ago, because we were knee deep in HS and college tuition!). We pay about 2K per year for both of us for a $6000 monthly benefit each, with no time limit and can include care at home, not just an assisted living or nursing home.
• Inheritance: I thought about leaving this off as I am 100% in agreement that no one should count on an inheritance. But it’s extremely likely that this could be from the low to mid six figures. My mom is at that point in her life where she doesn’t spend much money at 85 (she’s a good example of Bernicke’s Reality Retirement Plan) and she has excellent LTC insurance that will cover her (with her current income) unless something drastically changes. And I currently pay for any big expenses (I bought her a new bed for Xmas, for example and pay for 2-3 vacations a year with her) (Note: I want to do this. I don't have to. My mom and dad were great to dh and I as we raised our family and one of the main reasons we can retire so well is I was able to work part time for 15 years when our kids were young, as my mom did my daycare. That means I have 10 extra years towards my pension, which is a big deal in education. 30 years is a magic number. We've always been very close.)
• Lots of wiggle room in the budget (while I planned on multiple “big” vacations a few years ago, I’m discovering that life may get in the way. For example, my 10 year old dog doesn’t do well with us being gone, so I’m not sure I want to leave him right now for 3-4 weeks. And we’re at that age where travel is balanced by weddings and other family events. We used to like to go out and eat a lot, but actually prefer to eat at home much of the time (am I an old fogey now??)
• At this point, there is no way to hit 100% on the calculator by our pension, we need to reduce yearly spending.

I guess my questions are:

1. Would you retire with a 90% success rate, given that it is FATfire?
2. How do both of us overcome the thought of “leaving money and benefits” on the table?
3. Am I missing something?

 

[SnowballCamper]

I guess my questions are:

1. Would you retire with a 90% success rate, given that it is FATfire?
2. How do both of us overcome the thought of “leaving money and benefits” on the table?
3. Am I missing something?

1. I would not, but this is a personal risk decision.
2. When you decide that your time is worth more than the money and benefits.

If you included some numbers on actual spending, and the nest egg, you'll likely get better responses...

 

[mystang52]

I ER'd, while DW continued her job as a teacher for 6 more years. She loved her job, but also needed those 6 years for the retiree medical insurance. In our case, that was required because of my health. We are glad we took this approach. The retiree health benefits are excellent (we live in NJ).
DW, like you, was "done" and thought it was time. But, 1 1/2 years later she is considering going back as a sub. From everything I read in your post, I think you'd be happier doing the additional year.
As an aside, what if you factored in the likely inheritance in FireCalc? Maybe the 90% bump up significantly, and might help you in the decision process.

 

[Lewis Clark]

[*]How do both of us overcome the thought of “leaving money and benefits” on the table?

Every person who chooses to retire is leaving money and benefits on the table. If this thought is holding you back you will never retire. You will keep working until you are no longer able to work.

A better thought would be to use the calculators and your expense records to decide how much you need, then retire when you have enough to be satisfied.

 

[Souschef]

You can be a victim of "mission creep". I was for about a year. I married DW at the end of 2007. I had enough assets for almost 100% in Firecalc. We were both eligible for SS, so no big medical expenses.

My profit sharing was put into my IRA in January 2008. I then waited for my bonus in April. As the year progressed, my BS bucket was filled. I waited until January 2009 to get my profit sharing and pulled the plug.

 

[street]

If you are questioning your retirement I would stay working. You want to be on board 100% mentally and have a well-defined plan if you are going to retire. If you are questioning it stay where you are at and work. Those voices you start to hear will tell you when you should go.

 

[RetiredHappy]

Since you said you are Fatfire but FireCalc is not giving you 100% success rate, there are 2 options: First - keep working and saving until it gives 100% success, Second is to reduce expenses to get you to 100% and you can stop working.

 

[Exchme]

Either you are driving the Bentley because the Rolls is in the shop or something is wrong in the analysis if 10k in yearly pension is not noticeable in the outcome.

The rest of the effects of the OMY being so trivial don't really sound right either, but the pension sticks out as something wrong in the input.

 

[Jim59]

An important question is whether you value money over time ?

 

[OldShooter]

None of these retirement calculators can predict the future. The consequence of this is that spitting out numbers with 1% accuracy is complete nonsense. As a prediction, 90 is the same as 100 and probably the same as 80.

What the calculator is telling you is "Based on history, it looks pretty good." Other possible answers "Based on history, it may or may not be OK" and "Based on history, it doesn't look too good." That's the level of accuracy IMO; three buckets.

There is also no way to validate any of these precise-looking numbers as predictions. The firecalc page even tells you this.

So don't obsess over a number that is nonsense. That is a minor input to your decision.

 

[PandaBear]

1. I would not, but this is a personal risk decision.
2. When you decide that your time is worth more than the money and benefits.

If you included some numbers on actual spending, and the nest egg, you'll likely get better responses...

Dh's Pension 75K per year
SS 27.5K per year
My pension (in June 22) 94.5K per year (in June 2023 104.5K per year)
"Extra" Pension from work: $3800 per year, or a lump sum of 51K (can be rollover) or period certain annuity ranging from 1-10 years)
Retirement Assets 1.9 million
Misc Assets (Funds we'd like to allocate for other purposes for our kids): 300K
Misc Assets (Non retirement funds we'd like to use for extras as we please, n0t tied to retirement budget): 200K
Misc Asset: a condo in a LCOL area, in not the greatest neighborhood (value about 150-175K) and gets about 8K per year. (Not sure how to count this asset in terms of potential income because it could be variable-what if we have repairs, etc)

Current income: about 168K per year (dh pension, SS and my part time salary)
Planned income in retirement: 215K. Accounts for an extra 6K per year for insurance (on top of what we're paying) and a hefty travel budget.

I get 100% success with 183K yearly based on 1.9 million in assets and 87.6% for 215K. (I was slightly off in original post-I said 89.3%-I have a spreadsheet with TONS of numbers!) 183K is not enough for me, and I will admit that 215 may be much higher than we need.....I am anticipating travel costs because I don't really know.

 

[PandaBear]

Either you are driving the Bentley because the Rolls is in the shop or something is wrong in the analysis if 10k in yearly pension is not noticeable in the outcome.

The rest of the effects of the OMY being so trivial don't really sound right either, but the pension sticks out as something wrong in the input.

You are right.....I may be screwing up the calculator. I try, but that's definitely a possibility. And no Bentleys or Rolls.....I have a 2014 Honda Accord and dh has a 2013 Accord.

 

[PandaBear]

If you are questioning your retirement I would stay working. You want to be on board 100% mentally and have a well-defined plan if you are going to retire. If you are questioning it stay where you are at and work. Those voices you start to hear will tell you when you should go.

Thank you. I go back and forth. I'd like to retire and think I am ready, but I guess I'm not sure.

 

[PandaBear]

I ER'd, while DW continued her job as a teacher for 6 more years. She loved her job, but also needed those 6 years for the retiree medical insurance. In our case, that was required because of my health. We are glad we took this approach. The retiree health benefits are excellent (we live in NJ).
DW, like you, was "done" and thought it was time. But, 1 1/2 years later she is considering going back as a sub. From everything I read in your post, I think you'd be happier doing the additional year.
As an aside, what if you factored in the likely inheritance in FireCalc? Maybe the 90% bump up significantly, and might help you in the decision process.

I have really liked my job but now that I'm almost 60, I'm feeling closer to "done". And I do consider I can go back and work a little if I am wrong about being done. Because I have a specialty within education, I would probably be paid my current rate and not sub pay. But that's not a guarantee and I don't want to retire thinking I "need" to sub. I want to be able to leave and not return, if that's what I want.

 

[RetiredHappy]

PandaBear, did you use additional tabs in FireCalc to put in date of when SS will start for your husband, pension numbers etc? At a glance, the numbers tell me that you should get 100% success in FireCalc since 2 pensions are already close to $200K. Also, make sure that you put in a 2% growth on your pension in the tool.

 

[SnowballCamper]

This from Old Shooter is spot on.

None of these retirement calculators can predict the future. The consequence of this is that spitting out numbers with 1% accuracy is complete nonsense. As a prediction, 90 is the same as 100 and probably the same as 80.

What the calculator is telling you is "Based on history, it looks pretty good." Other possible answers "Based on history, it may or may not be OK" and "Based on history, it doesn't look too good." That's the level of accuracy IMO; three buckets.

There is also no way to validate any of these precise-looking numbers as predictions. The firecalc page even tells you this.

So don't obsess over a number that is nonsense. That is a minor input to your decision.

With more income in retirement (in 18 months...) than while currently working, it's a no brainer to retire now. The retirement income appears not to be from retirement account withdrawals, but from pension and SS, unless I'm missing something.

183K is not enough for me, and I will admit that 215 may be much higher than we need

I guess I just wonder how the current income (186k) is enough, but 183k isn't enough (health care maybe?).

I think you're in great shape to retire now, but would suggest that adding a little flexibility in your plans and expectations would go a long way. Maybe gauge vacation spending against the growth in the retirement assets. Good Luck!

 

[travelover]

........How do both of us overcome the thought of “leaving money and benefits” on the table?...........

I've said this before, but I think it rings true. At some point you are trading time you'll never get back for money you will never spend. Your mom is still alive and you can spend more time with her now. You and your husband will never be younger or more capable of doing things together like travel to places you might not want to visit if/when you have medical problems.

I watched as a friend and co-worker stuck around so he could max out his pension at 65. He died at 64. It was sudden and there was no time for catching up. That really made an impression.

Compared to 99% of American retirees, you are golden right now.

 

[cyber888]

Well, IMO humble opinion, you cannot afford FatFire with 90% . Fatfire if you got 100%

 

[PandaBear]

PandaBear, did you use additional tabs in FireCalc to put in date of when SS will start for your husband, pension numbers etc? At a glance, the numbers tell me that you should get 100% success in FireCalc since 2 pensions are already close to $200K. Also, make sure that you put in a 2% growth on your pension in the tool.

I did use the "start here" tab as well as the "other income/spending". Is there another location I missed? The others don't seem to have that. The issue is my pension isn't inflation adjusted, not even at the 2%, because the 2% remains the same amount from the initial pension (it's not cumulative).

I'd love help in finding it, because that would be interesting, but don't know how to account for it.

 

[G POP]

call me curious: Paid off house and your spend is almost 200K/yr? Wow? I have mortgage of 38k/yr, go on 2-3 trips to the Virgin Islands every year, eat out once or twice per week and our spend is nowhere near 200K. This community has taught me that one of the most important #'s regarding FIRE is the expense #. Get a true handle on what the actuals are. Good luck to you.

 

[RetiredHappy]

I did use the "start here" tab as well as the "other income/spending". Is there another location I missed? The others don't seem to have that. The issue is my pension isn't inflation adjusted, not even at the 2%, because the 2% remains the same amount from the initial pension (it's not cumulative).

I'd love help in finding it, because that would be interesting, but don't know how to account for it.

Sorry that I am confused but you wrote "but I get a small (2%) increase every year based on my initial pension.". To be honest, I am not that familiar with FireCalc but my spending is quite similar to yours, about $200K a year and get 100% success in FireCalc. I rely alot on Fidelity Retirement Tool and use it to tweak and update the results regularly.

 

[PandaBear]

call me curious: Paid off house and your spend is almost 200K/yr? Wow? I have mortgage of 38k/yr, go on 2-3 trips to the Virgin Islands every year, eat out once or twice per week and our spend is nowhere near 200K. This community has taught me that one of the most important #'s regarding FIRE is the expense #. Get a true handle on what the actuals are. Good luck to you.

Yeah, we blow through a lot of money, probably too much, even with being in a HCOL area. Having said that, the 215 K is what I want to spend, not what we are currently spending or would have to spend. We also help support a sibling with an adult child with special needs (but nobody knows but us and the sibling). When I started considering retirement back in 2014, we didn't know if we would be able to help and I am grateful we can.

 

[PandaBear]

Sorry that I am confused but you wrote "but I get a small (2%) increase every year based on my initial pension.". To be honest, I am not that familiar with FireCalc but my spending is quite similar to yours, about $200K a year and get 100% success. I rely alot on Fidelity Retirement Tool and use it to tweak and update the results regularly.

I'm sorry I wasn't clear. My pension would be $94836. So I get an increase of $1896 per year. So year two my pension is now $96732. But the following year, the increase remains $1896, based on the initial pension not 2% of the higher amount ($96732). So that $1896 is the increase each year. So as years go on, the actual increase (percentage wise), decreases.

 

[PandaBear]

I've said this before, but I think it rings true. At some point you are trading time you'll never get back for money you will never spend. Your mom is still alive and you can spend more time with her now. You and your husband will never be younger or more capable of doing things together like travel to places you might not want to visit if/when you have medical problems.

I watched as a friend and co-worker stuck around so he could max out his pension at 65. He died at 64. It was sudden and there was no time for catching up. That really made an impression.

Compared to 99% of American retirees, you are golden right now.

You know, that's what I'm really starting to think. My mom is currently relatively healthy, but that can turn on a dime. And if she becomes ill, I'll want to go out there even more often.
I had a college boyfriend die a couple of months ago and just tonight, heard another college friend died last week. Damn!

I know I'm very lucky, in so many ways, family wise and financially.

I am appreciating all the comments in this thread and it's really helping me solidify decisions in my mind.

 

[PandaBear]

This from Old Shooter is spot on.

With more income in retirement (in 18 months...) than while currently working, it's a no brainer to retire now. The retirement income appears not to be from retirement account withdrawals, but from pension and SS, unless I'm missing something.

I guess I just wonder how the current income (186k) is enough, but 183k isn't enough (health care maybe?).

I think you're in great shape to retire now, but would suggest that adding a little flexibility in your plans and expectations would go a long way. Maybe gauge vacation spending against the growth in the retirement assets. Good Luck!

Despite my best efforts (and really, I do try!), I always seem to make things confusing. I'm sorry.

168K is our current income. I want to add 6-7K to that for additional insurance costs and then another big amount for travel. That's why I said 183K isn't enough. I want about 30-35K after tax, so that's why I went for the 215K (I want an additional 36-41K, so I made it almost 50K)

I hope that's clearer than mud!

You are right....I need to really consider better how much I will really need for vacations. Because I very well may be overestimating.