Square peg looking fwd to ER with kids

[Green Jeans]

Was going to put this in the "children" thread below; but my situation is a bit of a twist (very late parenthood + very early retirement). I'm 50, and retiring this August after 25 yrs gov't service, including 22 federal law enforcement (civil service pension with COLA). We have 3 kids, last born when I was 47; now aged 3, 6 & 9. We're invested pretty well with rental property (4 3-family and 1 single family, almost all paid off); our own home (70K home equity note only remaining) and about 400K in TSP, IRA, UGMA accts.)

Although I gave it a good try in the last couple of years "tracking" expenses I have to say my financial planning came to this: "Net pay seems to cover things, though I can't quite figure out what they all are; and when they stop deducting TSP, TSP catch up, retirement, state tax the net of my pension check will be pretty close.....so....OK!" (I also say a prayer of thanks to my late Uncle John for urging me to take the civil service test.)

However I realize that leaves out some big expenses in future (kid's school and possibly elder - that would be us - health related expenses). I am taking the view this is not worth working til mandatory retirement at age 57 to pile up more money for.

I have a few nagging questions, like, can I do 70K worth of 72(t) "substantially equal" TSP withdrawal from 50 - 59.5 then stop (let rest of money sit in TSP) and avoid early w/d tax penalty? (and would it be a good idea - I would be doing it to pay off 70K remaining on residence). Also, how much to ramp up life insurance to compensate for taking a lesser spousal benefit, and for how long? Also, is it worth trying to shift some $ to Roth IRAs? Long term health are...arggh...scratch that question, don't even want to think about it now, seems too evolving, lack of clarity everywhere.

My larger general question is just seeking some advice, comment, encouragement on the joy () of displacing -- I mean supplementing -- the "at home" spouse; parenting 3 youngish kids; and time/money to enjoy it all. My mother suggested taking the kids out of school and living on a sail boat for a year. I reminded her I hadn't been fond of sailing since I tipped a boat over at age 10 at the town summer rec program. But I would be open to something out of the ordinary for a family experience. (Another reason to retire now, I keep hearing "they won't want to do anything with you soon.")

Jean
(yes, we have a reverse role marriage in that I've been the worker for pay since our first was born and my husband quit to be the "at home" parent)

 

[Nords]

Welcome to the board, Jean.

We're invested pretty well with rental property (4 3-family and 1 single family, almost all paid off); our own home (70K home equity note only remaining) and about 400K in TSP, IRA, UGMA accts.) 
However I realize that leaves out some big expenses in future (kid's school and possibly elder - that would be us - health related expenses).   I am taking the view this is not worth working til mandatory retirement at age 57 to pile up more money for. 

Are you keeping the properties? Do they provide cashflow to supplement your pension? This would be a good time to look into the cash-on-cash yield and whether it's time to raise the rent or start considering where you want to have your equity.

The board is split on ER vs subsidizing a kid's college, but the concensus appears to be that kids get more out of the experience when they're paying for it. I certainly wouldn't go back to work to give my kid a free ride.

One of the nice things about ER is that you have all that quality family time to devote toward improving your health. They're like little built-in aerobics machines.

I have a few nagging questions, like, can I do 70K worth of 72(t) "substantially equal" TSP withdrawal from 50 - 59.5 then stop (let rest of money sit in TSP) and avoid early w/d tax penalty? (and would it be a good idea - I would be doing it to pay off 70K remaining on residence).

I believe the first answer is "yes". I haven't actually done so but John Greany has a great tutorial on the subject.

The second answer is "maybe". You'll have to read the 2163 threads on this board over whether to pay off the mortgage or keep it, but if you're paying less than 6% you may be able to make more money in a small-cap value mutual fund. OTOH if this issue is only for 10 years, not 30, then you might do better getting rid of the debt and sleeping better at night without having to worry about a short-term hit.

Also, how much to ramp up life insurance to compensate for taking a lesser spousal benefit, and for how long?

Good question. I guess the answer is based on figuring how much your family would need to replace you and then finding a low-cost term insurance policy. But the guy who really knows the answer to that is Brewer. In the meantime you have to convince your family that you're worth more alive than dead. For that reason many ERs do not carry any insurance-- their pensions stop when they do.

Also, is it worth trying to shift some $ to Roth IRAs?

It can be. You have to believe that later your tax bracket will be lower than or the same as it is now, that RMDs would make your Social Security taxable, and that they're a better deal than a non-deductible IRA contribution. You can also play with IRA calculators at Fairmark.com and read a library copy of Ed Slott's book "The Retirement Savings Time Bomb".

My larger general question is just seeking some advice, comment, encouragement on the joy () of displacing -- I mean supplementing -- the "at home" spouse; parenting 3 youngish kids; and time/money to enjoy it all.

With three kids to share in the childcare, I don't think you'll have to worry about him feeling displaced... and while it may not all be enjoyable, it all beats working for a paycheck!

 

[Martha]

My bil and sil are both 50 and have 5 children, all still at home. Their youngest are twin boys who are 5 years old. Boy is their house wild! My bil who was a financial planner essentially retired when the twins were born. Mom is still working--a pediatrician. I can't imagine that whole family living on a boat for a year.

One of the things my bil did with his many sons was buy them all dirt bikes and make a track around their property. Now he and the sons that are a little older go riding a lot together. He enjoys taking the boys on adventures.

 

[REWahoo]

My bil and sil are both 50 and have 5 children, all still at home. Their youngest are twin boys who are 5 years old. Boy is their house wild!... I can't imagine that whole family living on a boat for a year.

When I read this my mind flashed to a beautiful sailboat underway in the Caribbean...with the kids lashed to the mast (for their own protection, of course :)

 

[cute fuzzy bunny]

Dont you need bumpers or something hanging off the sides of those boats, in case of a collision?

Welcome to the wacky world of being retired early with kids. In a year or less you'll utter the words "How in the heck did I fit a job into this schedule?!?"

While living on a boat might not thrill, consider that you can now live anywhere in the world that you'd like. Quite an experience for most kids, to spend a year or two living in italy or thailand.

 

[yakers]

I'm at the end of my civil service career and still have one son at home in high school. My wife is retiring in 1 1/2 months. I expect to retire in Nov 07 with 34 years in. One reason for working this long is wanting to get a clearer picture of younger son's college prospects. So, like you, I have some of the unknowns (pension, medical coverage) covered but have a couple open including sons college and mother & MIL that may need support in the next 5-10 years. For me and I think for a lot of people its these kinds of "unknowns" that actually or psychologically block ER and other life decisions like relocating.

But it can be said that once the numbers look good then its a psychological decision and the track record appears to be that if the numbers support it things tend to work themselves out at least as well as staying at work.

Living on a boat (I have a half dream/half plan to live on a canal boat in England for a year) with kids could be good for them. One thing to consider is the temperament of your kids in the process. My older boy could travel & sleep anywhere but younger son is a real homebody and doesn't take change and discomfort well. Now he is firmly grounded in a school schedule, band activities and a circle of friends that I would not pull him out of lightly.

 

[old woman]

When I read this my mind flashed to a beautiful sailboat underway in the Caribbean...with the kids lashed to the mast (for their own protection, of course  :)

They could ride in the mother in law boat. That is the small boat being towed by the big boat and the more she talks the more rope you let out.