Retiring early w/ pension to save my sanity!

[drumgal]

Thank you! I will check out the site... The SS website leaves me a bit confused. I have an appointment, but it's a month away.

 

[Gumby]

Welcome aboard, Drumgal. You've got a lot on your plate right now and I hope you aren't getting overwhelmed by us. I certainly understand the need to preserve your sanity, and I think the fact that you have part-time work lined up is a big plus. I have just a few random thoughts.

1. Have you calculated the exact amount of your pension. If I understood correctly, you will be leaving roughly 3 years before your normal retirement age. In my current position, there is a 6% per year (.5% per month) deduction for taking a pension prior to normal retirement age. You should make sure of the amount of deduction for your own plan.

2. I presume the social security will come from credits from employment other than your county job. You can get an estimate of how much social security you will get by going here. https://www.ssa.gov/retire/estimator.html You can calculate the WEP reduction by looking at this https://www.ssa.gov/planners/retire/anyPiaWepjs04.html

3. You mentioned you were a single mother. Were you ever married, and can you get Social Security benefits on the basis of your ex husbands record? Look here https://www.ssa.gov/planners/retire/divspouse.html Note that you may be subject to the Government Pension Offset. See here. https://www.ssa.gov/pubs/EN-05-10007.pdf

 

[travelover]

Thank you! Your words are encouraging...I'm hoping for more posts like these that focus on how I CAN rather than why I SHOULDN'T. *sigh*

You among friends here - we love to see people retire early. But if people here see a legitimate concern, they will say so and that is why I have so much respect for this community. Sometimes it is tough love, but it is love never the less.

 

[drumgal]

Thank you! I am a bit overwhelmed, but determined to take all into account.

I have had the calculations sent to me by PERS and I am aware of the reduction for early retirement. It is pro-rated monthly at 4% for each year under 60. I worked a full 20 years contributing to SS before I became a gov't employee. (Those calculators leave me a bit confused.) I DO have an appointment with SS. I'm thinking I should have some credits, but how WEP affects them, I do not know exactly! Yes, I have been married and will check those possible benefits as well. I'm so grateful for all of this information! Relaxing has been difficult lately...much to think about!

 

[exnavynuke]

I am not a "Librarian", but a "Library assistant." Pay is ok. Not great.

I did awesome things with my money, like travel the world. Nope. Didn't save much, but what great experiences I've had! Do I have regrets? Not entirely. Well, sometimes. And so here I am! Not much I can do about that. I did what I had to do while I was still young. I could never do now what I did then...backpack the Amazon, Safari in South Africa, etc.

My fake smile is starting to crack...I know you are right. I COULD save more, but I want OUT! I need to find a way to make this work

Everyone has things they regret doing or not doing in life, such is the nature of being human and not having the perspective of being old and young at the same time. My opinion is that the choices already made are why I'm who I am today and I wouldn't change them because I kinda like who I am.

As for your situation, I think it was said best earlier in that you should look at this less as a retirement and more as a change in career path. You're moving from a steady job with a steady check and moving to a new life where you're still earning money for a while (months, maybe years) by working but the work and the money is less set in stone. You're moving from working in the library system to working in music and other positions you find (such as the data entry) to fill your time and help bring in some income. Your pension is there to supplement your income until you do retire at some point in the future.

There's nothing wrong with changing careers, and the pension should hopefully afford you the financial latitude to explore these new, less taxing, potential sources of income until you can afford to fully retire.

 

[Johanson]

Hello! I have recently announced my retirement from a County position where I have worked almost 20 years in a public library. My last day will be the first week of July this year (2017)

<snip>

Sounds great perhaps? I hope so, because now that all is said and done I am experiencing major anxiety! Did I mention I hate my present job? Well, I've known for a long time that I needed to leave for health and sanity reasons. I have been enduring this for years.

<snip>

Drumgal, welcome! I have read through this thread and agree with another poster about approaching this as a job change instead of a retirement. I would continue with your plans and look for a full time job that you can work at for another year or two that you might enjoy more and can help you live a better retirement lifestyle.

Also, no disrespect meant to you but when I read your post, this is the first thing I thought of:

 

[Hermit]

Hi drumgal, Welcome to the forum.

Here is my take - When you retire, you will have plenty of time to make enough money to more than cover your former salary. You might want to bring in enough money to add to your kitty by say $5k or $10k per year at least until SS kicks in. That might mean cutting expenses as well as working more. Cutting expenses could mean budgeting and living more frugally than you do currently. If you have the determination to live a lifestyle below your current means, you can do alright. As others have suggested, make sure you understand your future income and expenses plus add in some emergency cash to see where you are at and where you should be in the future. Then see if you can trim your spending without making a major dent in your lifestyle. Some folks think it is a fun game. Check out Mr. Money Mustache. The folks on that forum have made an art of living well and spending little.

Good luck on your future RE and, with a little income help, your FI!

 

[Another Reader]

You will drop to something less than 75 percent of your nominal job income in pension. The good news is FICA and whatever you were paying into the pension plan will go away so maybe your net from the pension will be little better than 75 percent of your current net from the job.

You will pick up a job that might bring you closer to your current net job income. You stated you wanted to live on your pension and save the other income. On your current income, you have not been able to save much. What will be different in your spending that will allow you to accomplish this? In your shoes, I would start the savings plan now, before I retired, to see how much income I can really do without.

The reason I push so hard is that I worked in local government and over the years observed a number of employees retiring before they were financially capable. A few of the better ones (better because we could pick and choose) came back as short term contract employees. They didn't do it because they missed the workplace. They needed the money because they miscalculated their income needs or some unforeseen event undermined their original plan.

 

[Clone]

I would go slow on switching to an HSA. I paid into mine for several years and it was great to have it build up. Then, about 8 years ago, they 'found something' at an annual physical. Fortunately, there is a drug that basically cures it, but I will take that for the rest of my life. We are working at getting the January prescription filled. It will be $4900. Then in February we will pay the rest of the $6000 max out of pocket. If you want to sign up for a high deductible, make sure you have a plan for how to pay that deductible.

FYI, the company contributes $1300 each year towards the HSA. The monthly premium is quite small. I am very fortunate to have the healthcare as part of my retirement benefits. You just need to recognize what the potential total cost can be be.

 

[pb4uski]

I think a central question for you is how much do you need to live in your current lifestyle? If you are currently living from paycheck to paycheck, then it is roughly your annual take-home pay.

Once you have that answered, then what would your annual pension checks be (presumably after taxes) and how much of a "gap" is there? Would your likely earnings from music and data entry be sufficient to fill the gap?

We don't want or need numbers, but I think you get the drift of the things you need to think through.

I think a lot of the discomfort that you sense in some of the responses is that many people here have quite a bit of redundancy in their retirement plans so to have so little (which I suspect is not uncommon in general) is hard for for some of us to navigate.

I think in the end that you can find a way to make it work... particularly given your great attitude.

 

[drumgal]

Thank you! Some new hope has emerged! I know I can't just afford to stop working altogether, but I will much more enjoy working from home (data entry job) and playing music! The pay can actually be pretty decent. I have plenty of room to budget and have already started. I'm SO hoping I can do this! Today, reading these posts has been very important to me!

 

[drumgal]

Thank you! It's a new plan here and I will learn all I can FIRST!

 

[drumgal]

I suppose there are a lot like me that cannot afford to simply retire without a back-up. Pensions are almost unheard of around here anymore, and so I do feel fortunate for that!

Thank you for your kind words and advice! I was about to go crazy today until I found this site. I'm so grateful!

 

[drumgal]

This is a funny video! We've had some crazy things at our branch too...

Between the part-time job I was just hired to and playing music, I think I could be ok. I may not be rich, but I will have TIME. Something I've never been able to enjoy. Thanks for your positive thoughts!

 

[chris2008]

Have you considered to rent out a room via airbnb or permanently? It might help in the transition phase.
It helped us a lot to track spending in writing for years and to live on our predicted ER income before we jumped.
Good luck and enjoy ER!

 

[Diver]

Best to you, drumgirl! If you can start living on your projected pension income now and bank your data entry income between now and July, that will probably help relieve some anxiety. Also, you will understand your SS payments next month after your appt. You already have a part time gig lined up and are determined to make this work, so I think you can do it. I would take the advice on getting a HELOC in place where still working, and thinking about this as a job change, not full retirement. Sounds like you need a steady part time gig until SS to beef up your emergency fund and to help with expenses, but you understand and accept that. You need to do what you need to do for your sanity. I wish you the best. Please keep us updated on your progress. The people here are great, and I constantly learn things from them. You will, too. We each have our own risk tolerance is all.

 

[drumgal]

I appreciate your advice! I am thinking about the HELOC too. I have learned much already from this forum. Some of the tougher advice is hard to swallow, but I need to hear it as well. After a good nights sleep, I have contemplated waiting a few more months. This will be hard, since I've already given notice (I'll have to eat some crow) but not impossible. November is my actual 20 year anniversary with the job. I may still go in July as I had planned. I've been in tight spots before and always manage to land on my feet. I have a longer history of frugal living before I had this job. I will tap into that for now and save like crazy. This forum is priceless to me! Folks like you have really helped me gain some new perspective. Thank you so much!

 

[drumgal]

That is a nice idea too! My house is pretty small though, but it's not out of the question. Thanks for the suggestion!

 

[Earl E Retyre]

Looks like you already got a lot of good inputs from the forum regarding finances.

One big thing you have going for yourself is that it sounds like you are passionate about being a professional musician. It is even in your name (drumgal). So you know what you want to retire to (not just what you are retiring from). Not everyone has a clear sense of post retirement plans. So, I just wanted to point out that you should not underestimate that as a big positive.

I wonder if there are ways you can tap your musical talents for pay in addition to playing in a band. (teaching, working in the drum industry somehow, etc.)

 

[Music Lover]

Welcome from a retired govt worker and amateur musician.

I agree with the others who state that you should be a little wary taking the penalty hit. I sucked it up my last couple years to avoid a penalty, and now that I'm retired there are no regrets. It's forever money that you are leaving on the table that will have to be replaced every single month from a job that pays less and has fewer benefits. It will take a lot of months of part time work to replace the last couple years of full-time work, and more on an ongoing basis to replace the lost pension income for every single month of retirement. Imagine the day that you can retire penalty-free. Then, imagine that day comes but you had retired early and you still have to go to work.

That being said, I'm not in your shoes and can't relate to your situation and how your current job affects you. Perhaps I'd feel differently if I was. Are there any alternate solutions? Perhaps a transfer or a reduced work week that is closer to part time, but still allows pension benefits to accrue?

 

[Sunset]

I appreciate your advice! I am thinking about the HELOC too. I have learned much already from this forum. Some of the tougher advice is hard to swallow, but I need to hear it as well. After a good nights sleep, I have contemplated waiting a few more months. This will be hard, since I've already given notice (I'll have to eat some crow) but not impossible. November is my actual 20 year anniversary with the job. I may still go in July as I had planned. I've been in tight spots before and always manage to land on my feet.

I do notice you are a little loose with facts when it seems small to you, like the debt or no debt question earlier.
The issue is these small fact are incredibly important, like WEP vs full SS.

Here is another one, November is your 20 year anniversary, less than that is 19 years, I'll bet that difference is the difference between:
Pension or No Pension, or
$1,200 per year less for the rest of your life. (30yrs * $1,200 = $36,000)

So if you are still sure to quit, then you should do it after November, or lose a lot of $$$$

 

[Teacher Terry]

I took the penalty with PERS at 58 and it was not that much. 5 years later I don't regret it. Your health insurance may be cheaper if you wait until your 20th anniversary. I know that is true for state workers but not sure about county.

 

[Teacher Terry]

Sunset: I am in the same pension program and it is prorated. So I went a few months before I was 58 and was only penalized for those months and not for the entire year.

 

[Another Reader]

Where I worked last, in California, there was a significant difference in the cost of insurance if you did the full 20. At the time I retired, you got 100 percent of the lowest cost plan to be used toward whichever plan you wanted with 20 years of service. When the agency dumped the retirees a few years later and the cost went up, the 20 year employees still got most of their premiums covered. Right now, the difference between 19 and 20 years is $135 a month for the middle HMO plan. In your case, that amount of money makes a difference.

 

[drumgal]

This is true! We are penalized 4% a year or .33% for every MONTH before age 60. If I go in July, it would be an 11% reduction. Not huge, but there it is...