REtiring early at 57 and scared

[InTheBasement]

Hello all, my name is Jon and I am brand new here and am VERY glad to see there is this active forum to help me get along. I have been working since 1983, constantly and in many different occupations. Starting at 16 years old as the cleanup kid in the local supermarket meat department, then 5 years in the US Army followed by 2 years full time college as my only non working break. I am sooooo ready to retire and I think I am financially prepared but it's that fear of the unknown that is there. I am assuming this is a common thing. I'm hoping that I can get some advice and anecdotal evidence that I CAN do this. I guess a major fear is the task of paying for health insurance before I am eligible for Medicare. I have looked into options but have not been able to get a really solid idea of how much it will cost. I will be spending a lot of time reading the existing posts, but please let me know; what were the main issues you have had in early retirement and how did you overcome them?

 

[Major Tom]

Welcome to the forum, InTheBasement. The main issue I grappled with was fear of running out of money. I stopped working at age 45. For the first few years, I was very conservative with my spending, to the point where I was denying myself small (and cheap) pleasures. After a few years, it gradually began to dawn on me that I probably wasn't going to end up in the poorhouse. I slowly began to relax with my spending. At this point, I am confident that I am going to be just fine. Thank goodness, because I'm now 60 and have been doing this for 15 years!

So yes, that has been the main issue for me. As for your health coverage concerns, those are well worth researching, as they can be a major financial factor in the decision to retire. I'm sure others will have plenty to say on that subject.

 

[InTheBasement]

Thanks Major Tom. Not sure if it's appropriate to talk about portfolio values or not, but would you share what you started out with at 45? I am expecting at 57 to start out in the 1.5 million range and I am wondering if that is going to cut it. Have you taken on any kind of supplemental income endeavors in the past 15 years or have you been able to support your retirement on the investments you took into it? My wife and I are not big spenders. We tend to be in the 60K range and Firecalc seems to think it should work out OK. When I used it I only took into account what I have now, and my present spend, not considering any SS income when that time comes.

 

[Bigdawg]

Basement, Welcome. Yes, you can do it. Thanks for your service BTW. I retired last year at 57. I see you mention your spouse. I was going to tell you to go to the VA for medical but that won't help your wife. Also, it has been a long time but if you haven't done it, put in a VA disability claim. I'm sure something is wrong with you, and it may be traced/related to your military service. Good luck to you sir. I stay busy officiating sports.

 

[LateToFIRE]

Welcome to the forum! You're in good company. I recently made the leap myself, though early 60's so not quite so early. Nonetheless, I completely sympathize with the fear factor and spending time here, getting opinions, reading success stories from experienced members, and commiserating with folks going thru the same kind of transitions got me over my OMY ("one more year") syndrome.

Like you, I've been steadily working since I was 13, worked thru college as well, including summers, never had any kind of real break until I quit my job. DW is quick to remind me that even vacations were usually disrupted by work. So, relaxing is just not in my nature. I'm one of those people who needs to be doing something in order to relax, lol. So, I have never really been keen on the idea of retirement, I never really wanted to early retire, and I figured I would keep working up to at least 65, if not 70. Partly, I actually enjoyed career quite a lot, and partly fear of not having enough saved (a notion this forum along with a dozen different retirement calculators have disabused me of). At any rate, I got the message that I was aging out and not moving up any further, that really pissed me off, I calc'd I have enough eff-all-a-yuz money, so I quit. And here I am.

Last pay check cleared a few days ago, so wondering if I'll go into some kinda of crazy panic attack. But, I don't think so. I could go back to work - just yesterday a former competitor called to feel me out for a potential role in their org. Tempting, but I will take at least a few months off to see how this FIRE thing is working before I consider something like that.

My advice to you is run a couple more of the other online calculators if you're feeling nervous, familiarize yourself with the various drawdown strategies, and read up on this forum the range of different approaches to FIRE - some folks able to do so on amazingly little budget, others with fat portfolios, but all able to make it work for them. One other piece of advice, and that is - don't be conservative with FIRECalc and other calc's just to be conservative - there's no reason to leave out SS. These calculators are already building in very conservative assumptions.

 

[Closet_Gamer]

Welcome!

I think you would get some excellent advice on the viability of you plan if you share some details about your situation.

Assets?
Obligations?
Spending plans?

Things like that. Hard to provide solid "you can do it" feedback absent some info.

Congrats on even being in the position to consider it.

 

[Surewhitey]

The elephant in the room is definitely healthcare. ACA is very likely in your future, so research this. https://www.gocurrycracker.com/aca-...lHRyF6TcvLuo4XGdB3H16-8rc_VJA-BXB9J3wEb9C3Ixg has some good info & calculator for a start.

If no kids, you probably won't have any known problems...

 

[TheWizard]

OP says $1.5M with $60K annual spending.
That's right on the 4% SWR for the years prior to SS.

Unclear if that $60k includes healthcare and occasional large purchases like a new car every so often.

Also unclear if recreational expenses in retirement with all the free time are included.

Might be well to sharpen your pencil and possibly work a year or two longer...

 

[Major Tom]

Thanks Major Tom. Not sure if it's appropriate to talk about portfolio values or not, but would you share what you started out with at 45? I am expecting at 57 to start out in the 1.5 million range and I am wondering if that is going to cut it. Have you taken on any kind of supplemental income endeavors in the past 15 years or have you been able to support your retirement on the investments you took into it? My wife and I are not big spenders. We tend to be in the 60K range and Firecalc seems to think it should work out OK. When I used it I only took into account what I have now, and my present spend, not considering any SS income when that time comes.

I don't mind talking about portfolio values but I also like to talk in terms of what percentage my annual spend is, in terms of my total portfolio. The reason for this is that portfolio values and annual spends differ widely from person to person. At the point I began living off my portfolio, I had about $750K, with an annual spend of $18K. This represented 2.4% of the portfolio. I was lucky enough to have retired at the beginning of a long bull market. Over the next few years, I increased my annual withdrawals. I am now withdrawing $27,600 a year, which is ~2.25% of my current portfolio value of $1.23M. With Social Security coming into play in the future, I should be able to increase my annual spend quite significantly in the future, if I want or need to.

 

[Al18]

4% of $1.5M is $60K, so that sounds doable. Does the 60K include Federal and State taxes? Are you going to withdraw it all from a 401K at age 57, or are you going pull some from after tax investments or cashing in some CD. FYI in order to get $60K from a 401K, you’ll actually need to withdraw $75K because 401K withdrawals have a mandatory 20% federal tax withholding. You will likely have 1/2 of that refunded when you file your taxes the following year, but it’s a big hit the first year.

 

[Palmtree]

Welcome to the forum. Like many here we retired a bit early. 55 for me and 52 for the wife, who retired with a modest teacher pension. Fortunately it came with a good health care plan. We were VERY frugal the first 6 years but the market has been good to us so this year we are finally spending at a comfortable level.


At 60K, you are right at the normal safe zone of 4%. If you've not already done so, I highly advise running your numbers at firecalc to get a better picture of what your options are. Look for the link in the lower right side of the screen, under Quick Links.

 

[Dtail]

Check out Healthcare.gov to start getting a feel for your potential medical expenses.
If you can use some dollars from an after tax account as part of your 60k spending, then you can lower your MAGI for AA purposes and qualify for a tax subsidy.
Does your 60k include taxes and some number for medical? Did you factor in SS for your Firecalc calculations?
I retired at 57 and was nervous a bit, but everything is fine 7 years later and would never consider going back to work.

 

[Samething]

I retired at 58. I really wanted to retire at 54 but I felt unsure that I had a large enough nest egg. At 54 my projected withdrawal rate was right at 4%. As it turned out my expenses in retirement are higher than I projected at 54. A lot of that is because I decided to buy a nicer house and participate in more expensive hobbies. I wouldn’t have done that if I got out at 54. Also I feel a lot better about my current 3% withdrawal rate than 4%. For me the decision to work 4 more years was a good one.
At my current age of 63 and Social Security on the horizon I’m feeling pretty confident.
I use the ACA for healthcare insurance. I’m single and my premiums for a gold EPO are just over $400 after subsidies. I had always been very healthy but 2 years ago I had a major health condition that caused me to meet my max OOP so my healthcare costs were @ $14k.
Not trying to talk you into or out of retiring just wanted to give one more perspective.

 

[pb4uski]

Another place to start on health insurance is healthsherpa.com

If you can manage your income, and most early retirees can, then you can manage your income to a certain level of health insurance cost after subsidies (which are based on income).

If you have significant taxable account or Roth money then it makes it easier to manage your income. If all of your stash is tax-deferred, then it is harder.

Most 401ks allow penalty free withdrawals if you leave service after you are 55, but that penalty-free withdrawal option doesn't exist for a traditional IRA.

What's you plan if you retire at 57 for the next few years? How much of your $1.5m is taxable brokerage account or savings accounts, tax-deferred (401k or tIRA) and tax-free (Roth)? The mix might make a difference.

 

[Wile E. Coyote]

Work until you are not scared.

 

[bloom2708]

Scared to retire? April fool's!.

Oh, that was yesterday.

With a little planning and consideration, retiring should not be a scary event. Just the opposite.

 

[OldShooter]

... I am expecting at 57 to start out in the 1.5 million range ...

Welcome. You will get lots of advice and education here, most of it good.

Is this $1.5M investable cash, income taxes already paid? That is best case. Worst case is if it is all in tax-sheltered accounts like tIRAs, 401Ks, etc, in which case federal and possibly state taxes might leave you with around 2/3 investable. Worst/worst case would be that it is taxable and the number also includes the net value of your house. Again, this reduces the investable portion of the $1.5M because you have to live (and pay) somewhere.

 

[Car-Guy]

What's you plan if you retire at 57 for the next few years? How much of your $1.5m is taxable brokerage account or savings accounts, tax-deferred (401k or tIRA) and tax-free (Roth)? The mix might make a difference.

Agree, but IMO, it "probably" will make a difference". Retiring at 57 is pretty young to retire with just 1.5m these days, especially if it's in tax deferred accounts, even with a smaller 60k WR. Why? Because STUFF happens and a ~30 year retirement is a long time for STUFF to happen.

Hopefully the OP is debt free too and his SS payments will be on the higher side when he starts collecting..

 

[TheWizard]

Agree, but IMO, it "probably" will make a difference". Retiring at 57 is pretty young to retire with just 1.5m these days, if it's in tax deferred accounts, even with a smaller 60k WR. Why? Because STUFF happens and a ~30 year retirement is a long time for STUFF to happen.

Hopefully the OP is debt free too and his SS payments will be on the higher side when he starts collecting..

Stuff, yes.
My new Mustang cost almost $50K.
How do you pay for that with a $60k annual budget unless at least $6k of it goes into a New Car Replacement fund?

 

[TheWizard]

Work until you are not scared.

That's reasonably good advice.
Much better to have some padding so that you have flexibility for discretionary spending during the upcoming fun years...

 

[NgineER]

Welcome - you'll get plenty of advice here.
Share as much as you feel comfortable with. The more information you provide the better the accuracy of the responses. Garbage in = garbage out...

Your flexibility will be critical to how well you will do, how much of your spend is core vs. discretional? As others said, taxes is also an expense.
SS will also matter, but having paid in for a long time, you should be sitting pretty.

 

[MarieIG]

Welcome to the ER forum Jon.

It is not unusual to be nervous about retiring. Planning and running the numbers helps. I made a "to do" list before I retired vis-a-vis savings and such, which helped. The below are two commonly referenced links.

Some Important Questions to Answer Before Asking - Can I Retire?

FIRECalc

 

[pb4uski]

Agree, but IMO, it "probably" will make a difference". Retiring at 57 is pretty young to retire with just 1.5m these days, especially if it's in tax deferred accounts, even with a smaller 60k WR. Why? Because STUFF happens and a ~30 year retirement is a long time for STUFF to happen.

Hopefully the OP is debt free too and his SS payments will be on the higher side when he starts collecting..

Like with many of these initial posts, we don't know how much the OP needs to live or what their SS is. If they live very modestly and spend $40k a year and have SS then they are probably all set. If they need $100k for the lifestyle to which they are accustomed then no way. We just don't know.

I have a very modest wealth friend who retired last year but is very frugal and between $11k of rent for the other side of his duplex and SS he is still banking money. If he had posted his particulars here I suspect there wold have been a chorus of you don't have enough to retire but he is thriving.

OP, have you run your situation through FIRECalc?

 

[HI Bill]

...I think I am financially prepared but it's that fear of the unknown that is there. I am assuming this is a common thing. I'm hoping that I can get some advice and anecdotal evidence that I CAN do this. I guess a major fear is the task of paying for health insurance before I am eligible for Medicare.

You need to determine whether you are financially prepared. "I think I am" probably isn't good enough, unless you've nailed down your ER costs and budget, healthcare, and taxes, and verified desired spending levels using FIRECALC and other financial calculators, and obtained results of 95-100% success rates.

I w$rked until I had 98-100% success rates on every calculator I tried, with 50% of my budget being discretionary spending. I used my state's ACA website to determine the cost of health insurance after COBRA (which for my income level in ER ended up being about the same as COBRA).

Yes, there's always unknowns out there. All you can do is plan and prepare, and in most forum member's practice here, over-save a bit to enhance your success rate. My fear was the SORR, but my greater fear was watching a 62-year old friend die just two years after retirement.

After you nail down your expenses, if you need some extra motivation, run the "Rich, Broke or Dead" calculator:

https://engaging-data.com/will-mone...gaging-data.com/will-money-last-retire-early/

 

[brett]

We made the leap at 58/59. Best thing we ever did. Now 71 and in good health. Cannot now imagine working until 65. I was a bit of a workaholic. I simply walked away and neve looked back. My spouse was shocked and did not think it would last. It did.

We changed our home, changed our lifestyle and traveled extensively. Still doing that. Warm places to escape winter and then others on our bucket list.

Came back from Mexico two weeks ago. Going to Morocco for a month of independent travel at the end of this month. Now working on a fall trip.

Our bottom line. You do not know what the future will hold. We want to enjoy what years we have left when we are in good health and have the physical ability to do what we want. We view that as pricesless. No amount of one more year, two more year etc. could ever compensate for that.

We are in the unfortunate position of seeing relatives/friends/colleagues pass away, become immoble, or require memory care. Some of whom were not able to enjoy retirment years.

Be thankful for every day you have. You cannot buy good health, you cannot buy time. Just enjoy. We are fortunate...health insurance costs are not an issue for us.