Am I nuts? About to retire early without bulletproof money.

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IlliniDave
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Re: Am I nuts? About to retire early without bulletproof money.

Post by IlliniDave »

SnowBog wrote: Mon Feb 08, 2021 8:03 am
But the fear of switching from earning /saving money to spending money is very real - no matter how good the numbers look. Lots of people do OMY (one more year) not because they need the money, but because they aren't ready to step away yet.
It absolutely is. "Fear" might be a little strong but in many ways I'm getting ready to turn my life on its head, and it comes with some uncertainty. I've been wrestling that for the last year or two.
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IlliniDave
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Re: Am I nuts? About to retire early without bulletproof money.

Post by IlliniDave »

HoosierJim wrote: Mon Feb 08, 2021 8:05 am You should only keep working if working is the only thing that gets you out of bed in the morning.

Does your employer provide retiree health coverage? ...
Regarding healthcare my employer does offer a plan that I can buy into. I put together a detailed spending plan (aka budget) for post-retirement and in it I've included the cost of premiums plus hitting the full OOP max each year, which for a while will hopefully be conservative (no costly ongoing medical concerns yet). It's a little pricier than the sample plan you included, but it has much more robust out-of-network coverage than what ACA plans seem to have built in. For the first 18 months I can get essentially the same plan for half the cost via COBRA. And the retiree plan is HSA eligible so I can offset a little income. I mentioned elsewhere that I plan to take the annuity right away. I've looked into the mechanics of trying to do conversions up to the top of the 12% bracket, but in the end I get hung up on: "Should I really spend money I know I have now based on a promise from someone else to give me money later?" Probably short-sighted on my part but I gotta be me.

I get out of bed earlier on weekends than through the work week, and wake up a couple hours earlier than necessary for work to have some time with my hobbies while I'm still at my best for the day. Hard to say what the passage of a few years might do to my initiative but out of the gate I should be okay. I've downplayed it, but my little cabin is a big part of the plan while I'm still able to remain active. It's on a nondescript lake that is basically the edge of a large northwoods wilderness preserve with tons of fishing/hiking/camping/boating/canoeing opportunities and I plan to spend as much of the warm months there as I can get away with, and hopefully will be able to get my dad up there a fair bit in the short term. "Up north" fishing trips are something we've done together and enjoyed in the past. And along with the more rugged opportunities he's probably no longer up for, it's very easy to do easy and relaxing there as well.
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Valuethinker
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Re: Am I nuts? About to retire early without bulletproof money.

Post by Valuethinker »

IlliniDave wrote: Tue Feb 09, 2021 7:33 am
SnowBog wrote: Mon Feb 08, 2021 8:03 am
But the fear of switching from earning /saving money to spending money is very real - no matter how good the numbers look. Lots of people do OMY (one more year) not because they need the money, but because they aren't ready to step away yet.
It absolutely is. "Fear" might be a little strong but in many ways I'm getting ready to turn my life on its head, and it comes with some uncertainty. I've been wrestling that for the last year or two.
This is one of life's irrevocable decisions.

Imagine that you spent the next 2 years working, and your Dad died within that time. How would you feel? That's scenario 1.

Scenario 2 is that you retire, and spend that time with your father. How would you feel?

Scenario 3 is that you work the next 2 years, and still get time with your Dad.

There's various books about decision making which are worth a perusal.

My gut tells me that you've been thinking about this for a year or more. So you've already made that decision for a year. I think you know where you want to go, that last step is a tough one.

Be warned, there is never "enough". My bet is stock markets are going to take a dive - there's far too much crazy stuff going on (pink sheets, cryptocurrencies, Tesla, Game Start/ reddit/ Wall Street bets, IPOs of SPACs, small cap stocks moving, Robinhood). I haven't felt a mania (in stocks) like this since early 2000. The way people are talking about stocks - there was a builder outside my house with a stock trading app on his phone. Whether that's just the sort of -20% we saw in December 2018, or whether it's a lot more, I have no idea. Nor can I say whether it starts with the market as it is now, or from 25% higher.

So we have to be prepared for that eventuality - it will happen some day, because that's what stock markets do.
Last edited by Valuethinker on Tue Feb 09, 2021 8:12 am, edited 1 time in total.
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IlliniDave
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Re: Am I nuts? About to retire early without bulletproof money.

Post by IlliniDave »

dknightd wrote: Mon Feb 08, 2021 8:38 am
IlliniDave wrote: Mon Feb 08, 2021 7:28 am I've got my finger on the button to punch out at the end of March
Honestly, after reading and thinking some more, in your shoes, I might reset the button and punch out at the end of February. If that was acceptable to you and them.

I used to think you only lived once. But a wise friend told me you only die once. You live every day.
I'm atypical among a lot of early retirees in that my job is okay and I like my colleagues and have privately promised a few of them I would see the current project through to it's conclusion in early March.

The part of your post I italicized really resonated with me. It reminds me of a day I accidentally coined a phrase shooting the bull with some friends: It will be time to retire when I can no longer afford to spend my time earning money.
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IlliniDave
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Re: Am I nuts? About to retire early without bulletproof money.

Post by IlliniDave »

Valuethinker wrote: Tue Feb 09, 2021 8:01 am
This is one of life's irrevocable decisions.

Imagine that you spent the next 2 years working, and your Dad died within that time. How would you feel? That's scenario 1.

Scenario 2 is that you retire, and spend that time with your father. How would you feel?

There's various books about decision making which are worth a perusal.

My gut tells me that you've been thinking about this for a year or more. So you've already made that decision for a year. I think you know where you want to go, that last step is a tough one.
Scenario 1 has already happened with my mom. I was trying to get to minimum retirement age as my employer defines it while my mom was in a multiyear cancer battle. She'd been doing quite well then out of left field came a precipitous decline.

In scenario 2 maybe Id reach a point in 5 years or something where I wish I'd have worked a little longer. Oh well.

I see it as a Pascal's wager where the downside of scenario 1 is much worse for me than the downside of scenario 2. And if I have regrets this time, I want it to be regretting action rather than regretting inaction.

Thanks for boiling it down the way you did. Made me see it in clear pictures.
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aristotelian
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Re: Am I nuts? About to retire early without bulletproof money.

Post by aristotelian »

I don't know in what world $58K baseline plus $1.1M and SS is not bulletproof for a single individual. There is no question, you are completely set financially. Only question is whether there is some mental/emotional reason to keep working.

Do your expenses include housing?
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IlliniDave
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Re: Am I nuts? About to retire early without bulletproof money.

Post by IlliniDave »

HomeStretch wrote: Mon Feb 08, 2021 9:33 am In addition to the questions from other posters about the annuity (when does it start? and is it indexed for inflation?), the other question is about your annual expenses ($44k actual, $55k planned). Does the $55k include everything - living expenses, income taxes, post-retirement healthcare costs and lumpy expenses such as a new car)?
The budget accounts for everything I anticipate to be outgoing including a plus-up for what I think my income tax will be. I do have sinking funds that are based on 7 years historic data for things like auto repair/upkeep and run of the mill home maintenance/repairs. For those big things like new vehicles, new roof, etc., I'm fudging a little and do not have a monthly line item. My plan for those is:

-starting off with an old school emergency fund of ~$30K
-while my health remains good I'm overbudgeting for medical expenses by about $7K/yr, which will be rolled in with the $30K to the extent it goes unspent, as will any unused money from the budget set asides for ongoing maintenance/upkeep. If that gets depleted as time goes on, then I've got all the retirement and taxable brokerage assets serving as sort of a supersized emergency fund.

I've got to leave myself a little bit of a challenge. :)
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IlliniDave
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Re: Am I nuts? About to retire early without bulletproof money.

Post by IlliniDave »

Watty wrote: Mon Feb 08, 2021 9:23 am Many of the peoples budgets and incomes here can be a bit intimidating. Compared to a lot of posted here I am pretty middle class. It might make you feel better to read the post I did about five years ago when I was about your age and I was deciding if I could retire or not and I probably had less than half of what you have and it was for a couple. (spoiler alert: it is working out fine.)

viewtopic.php?f=1&t=167664

...
Set any mutual fund in the taxable account to not automatically reinvest the dividends or capital gains distributions. You can either use that money to cover any additional expenses or reinvest it manually in some other mutual fund. In a year this will make all your capital gains long term so that it will be easier to sell the mutual funds when you need to.

...

At many, but not all, companies your health insurance will paid through the end of the month when you terminate. If your company is like this then if your last day is on the 1st of the month then you will basically get an extra months healthcare. It might make sense to make your last day be on March 1st or April 1st.
Thanks for sharing your story and congrats on now almost 6 years!!

I've had my taxable accounts set not to auto reinvest for some years now. Helps rebalancing a little, and makes loss harvesting somewhat simpler too.

I'll look into the health insurance angle.
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IlliniDave
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Re: Am I nuts? About to retire early without bulletproof money.

Post by IlliniDave »

Duckinator wrote: Mon Feb 08, 2021 10:03 am SS: little over $30K/yr at 67 (data a couple years stale)

Is this off the SS website? If so I suspect it assumes you will continue to work until 67.
Sort of. The number is from early 2019. I was messing with one of the calculators on ssa.gov I said I was going to retire at 54 so it would fill in zeroes for 2019 (turned 54 that year) onward and it gave me an estimate for benefit at age 62 which I then modified for 67 and 70 based on the normal ratios between the three. So it was a pretty decent estimate at the time. Since then I maxed out 2 more years and will have enough this year to probably knock off one of my years during school having only a summer job. I just got reminder email to go check my statement, so that's on the list.
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IlliniDave
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Re: Am I nuts? About to retire early without bulletproof money.

Post by IlliniDave »

Wanderingwheelz wrote: Mon Feb 08, 2021 9:35 am I see my old man probably 6 days a week on average. He’ll be 80 this fall. I don’t care what your withdrawal rate is or how much money you have saved. I just give you massive respect for wanting to spend the time you do with your dad before he’s gone.
...
Thanks, in a lot of ways that means more than affirmation of the mathematics (which is quite helpful too).
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IlliniDave
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Re: Am I nuts? About to retire early without bulletproof money.

Post by IlliniDave »

Nestegg_User wrote: Mon Feb 08, 2021 12:24 pm

So two questions:
Does the corporate health care plan coverage area include the other location? (or any future location you might consider after your father passes)

Is the fathers location one you would consider for your long term retirement (even after his passing)? If not, you might be better off renting such that you would be able to change residence easily and at minimal cost and lower stress (especially right after his passing). (Also consider how much care, and the type of care, that might be needed and determine if the proposed location is appropriate.)
It's a UHC network plan and there seems to be at least a pretty good number of providers up in the county in N Illinois I intend to move to, and up in the far corner of MN near the cabin. There are different retiree plans that cover a few other areas where the company has a strong presence, particularly California and the Northeast. The one that covers me in the Southeast where I live now is also the default "nationwide" option. It also has reasonable out-of-network coverage when compared to something like ACA.

Yes, I would consider retiring in Illinois. It's my "hometown" where I'll be and aside from my daughters who won't hold still, all my other living relatives save one are there or nearby. Minnesota is also an option. Or somewhere closer to or equidistant between my daughters (and grandkids) at that juncture. For now I'm sort of working with rolling three year plans and trying not to lock down my future too much.
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IlliniDave
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Re: Am I nuts? About to retire early without bulletproof money.

Post by IlliniDave »

SgwayMontrose wrote: Mon Feb 08, 2021 10:30 am Good luck OP. I find this title/post combination unnecessarily alarmist and somewhat insulting. Perhaps you just needed to talk it out a little bit or are wanting to show off some, hope it helped, truly.
Apologies if you found it insulting. Not my intent--I'm not here to troll.
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Re: Am I nuts? About to retire early without bulletproof money.

Post by Meg77 »

Do it. You won't regret the extra time with your dad. But you may regret it if you don't take it when you know you could.

No plan is ever bulletproof, but you are certainly close enough. Besides, if you ever need or want to work again it won't be hard to materially increase your retirement income on a percentage basis even with just some fun part time work. Or you may end up starting a little business in 5-10 years. Who's to say? Most people never spend down their retirement money, and you have plenty sitting there to grow regardless of the inflation rate.
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IlliniDave
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Re: Am I nuts? About to retire early without bulletproof money.

Post by IlliniDave »

Valuethinker wrote: Mon Feb 08, 2021 12:55 pm
We long form it here as "sequence of return risk" and there Monte Carlo simulators and you should run a couple of them with conservative return projections.

That's a good reminder. Thanks. From my post account it's safe to infer I was a regular here in the 2013-16/7 time frame, so the term is familiar. I was so obsessed with things like firecalc and Tyler9000s visualizer that I wrote my own Monte Carlo simulation in Matlab so I could dial in pessimistic returns to my liking and add a random component to spending including random dispersed biggies like a new roof or vehicle, annual rebalancing, AA glide path, etc. Those were the days, haha. Millions and millions of trials. At the end my conclusions was that as long as the trend line of a conservative average return with no variation trended a little positive over time, I could withstand lots of vagaries from the universe. But in the spirit of due diligence I should go check again with my now more conservative AA and new spending forecasts, etc.
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Re: Am I nuts? About to retire early without bulletproof money.

Post by bltn »

IlliniDave wrote: Tue Feb 09, 2021 7:28 am
dboeger1 wrote: Mon Feb 08, 2021 8:15 am ...

You've planned for early retirement for years. You executed your plan. Your motivation is to spend time with your father in his old age. If I have no regrets taking more than a year of my young life off from work to play video games with a sick Internet stranger, I really don't see how you could look back after your father's gone and wish you had spent the time at work instead. It'd be one thing if you needed the money, but it doesn't seem like you do.
Thanks for sharing that.

During my mother's illness she finally reached the stage where the doctor's were talking another year, maybe two at the outside. This was about three years ago. Soon after she experienced a fall in which she hurt her back and was bedridden. I drove back home to help out until she was mobile again and could start therapy and along the Interstates decided I'd retire as soon as I got back. But she died nine days after I arrived. So I didn't retire right away when I got back. For a bunch of reasons that are OBE now that I'm over 55 I was in a much weaker position to check out.

So I know what it's like to feel as though a window was missed. My dad is in good health all things considered, and with luck that will persist for some years. But there's an increasing sense of urgency as time ticks away, not to mention the stark reminder the pandemic has provided. Im my case, unlike yours, the theoretical risk to my future is pretty small since having a super-duper professional career extending to and beyond my mid-sixties has been off the table since early 2012.

I guess the point I'm circling is that even though finances underpin much, much of life can't be figured out with a calculator.
I think you ve got a great plan. Congratulations on your financial recovery. Your father is a lucky man. As are you.

I have an acquaintance whose wife died shortly after his retirement in his late sixties. He started traveling with his son, an overnight trucker, on his work trips. They both have greatly enjoyed each others company on these trips.
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IlliniDave
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Re: Am I nuts? About to retire early without bulletproof money.

Post by IlliniDave »

JoeRetire wrote: Mon Feb 08, 2021 11:59 am
IlliniDave wrote: Mon Feb 08, 2021 11:35 am
I don't plan on moving in with my dad. I'm looking at buying a home from another older relative who is anxious to downsize into a senior-friendly development due to mounting health concerns. It's large enough I could move Dad in with me one day if it comes to that. I actually think he would like someone to move in with him, the almost 3 years now since my mom passed has been the only time in his life where he's lived alone. But I've been living alone now for 10+ years since my youngest daughter moved out (kids stayed w/me after divorce) and rather like it. When we talk on the phone he frequently asks when I'm going to retire, but I don't know for sure if it's because he's looking forward to me moving back, or dreading it. The house I'll be in is an easy 5 min drive to his house, maybe 7 min at rush hour.
Is this actually the root cause of your nervousness?
This has been mentioned a couple times which I've found perplexing. It will certainly come with its difficult moments and there are potentialities there no one really wants to tackle. But it's not like my desire is to work to FRA and it is being thwarted by family concerns. Since it got more than one mention I am contemplating it some more.

I think the root cause of nervous feelings come from a few places.

-I was raised at a time where many of us were prone to follow the track laid out before us: go to school, get a job, raise a family, try to better your lot in life up to traditional retirement age, then if you do well retire to Florida or Arizona or whatever. Lopping ten years off that timeline will be the first meaningful excursion I've made from the template. Heck, I'm still working for the company that hired me out of school 34 years ago.

-Aligned with that I'm a creature of habit. I'm most content when life has a predictable rhythm. Disrupting it will be uncomfortable. It's also likely to be good for me because rhythm->routine->rut.

-Like Valuethinker mentioned above (and I know "nobody knows nuttin'") I think it's more likely than not investors will experience some turbulent waters before too much time goes by. I'm entering the peak sequence of returns risk window. Part of the reason my portfolio looks so fat right now is that stocks have been on a tear against a backdrop where it seems like they shouldn't have. Who knows what's actually going to happen but the unknown is more menacing at some junctures than it is at others.

Anyway back to my dad. Someone asked about his financial situation. It's so-so. He has a modest IRT that he got from somehow overpaying into the state university retirement system. I don't know much about it but he's had it pretty much since he retired ~20 years ago. Balance is < $200K. Other than that he has basically no financial accumulation. He does get a really good pension though, about $90K/yr after tax with a cost-of-living adjustment. There have been some issues with one of my siblings' kids leaching off of him shamelessly. He's a classic absent-minded professor and Mom always handled the money so it took some time and intervention from my sister but it seems like a corner has been turned and things are straightening out. I anticipate one of us kids will have to take over his finances before all is said and done. I don't know how far $8K/mo would go towards a care facility, but it should at least take a big bite out of it.

I've never given what I might inherit from him one day much thought, aside from my great-grandfather's shotgun and tackle box. With four of us kids maybe it would come out to low/mid 5-figures best case. Not a life-changing windfall or anything or a big motivator for my actions one way or the other.
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IlliniDave
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Re: Am I nuts? About to retire early without bulletproof money.

Post by IlliniDave »

I would like to thank everyone who took the time to respond. I didn't respond or acknowledge everyone personally, but that's not from being unappreciative. The breadth of topics got me thinking about things that even if I'd thought through them in the past, its been a while and a revisit is in order (plus some new things). The consensus indicates that while future results are not guaranteed, the numbers work out and I didn't leave any gaping holes. I did get a wrinkle where someone asked me to stick around until the end of June so I'm entertaining that thought, but leery of it because of the infamous one-more-year syndrome.

Once again, thanks everyone.
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galawdawg
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Re: Am I nuts? About to retire early without bulletproof money.

Post by galawdawg »

It sounds like we have been in similar financial circumstances. In 2018 at age 53, I first became eligible to retire with a full pension that covers more than our monthly living expenses and a seven figure portfolio that would fund all discretionary spending, such as travel, home improvements, additional charitable giving, etc. I was also eligible for retiree health coverage which is the same as for current employees and even at the same rates.

Just a few years earlier, my salary had finally crossed into six figures and I had been doing catch-up contributions in an IRA and 401k. So there was a little trepidation. Not that I would not have "enough" but that I would be giving up future earnings of hundreds of thousands of dollars in income by retiring early instead of working to age sixty or later.

But having watched my Mom going from full-time employment into a memory care facility due to early onset Alzheimer's and my parents retirement plans of moving to the SC coast vanish, as well as having several friends and colleagues pass away before retiring, my wife and I decided we had "enough" and I retired at age 53.

While COVID put a crimp in our plans last year, our first retired year was fantastic. Flew to Philly for our first Boglehead's conference three (3) days after my last day in the office, enjoyed travel we had been postponing, went to some Georgia Bulldogs away games, and spent lots of time with our granddaughter during her breaks from school. I wouldn't change a thing! It was a great decision for us, my only regret is that I couldn't do it years earlier so that I could have spent more time with my Mom before she passed away.

For folks in our position where withdrawals from our portfolio is optional and strictly for discretionary spending, sequence of returns risk is much less a consideration. I'd recommend that you find an asset allocation you are comfortable with (I settled upon 75/25) and rebalance to that allocation.

Good luck! Enjoy your time with your Dad.
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IlliniDave
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Re: Am I nuts? About to retire early without bulletproof money.

Post by IlliniDave »

galawdawg wrote: Wed Feb 10, 2021 7:07 am ...

Just a few years earlier, my salary had finally crossed into six figures and I had been doing catch-up contributions in an IRA and 401k. So there was a little trepidation. Not that I would not have "enough" but that I would be giving up future earnings of hundreds of thousands of dollars in income by retiring early instead of working to age sixty or later.

But having watched my Mom going from full-time employment into a memory care facility due to early onset Alzheimer's and my parents retirement plans of moving to the SC coast vanish, as well as having several friends and colleagues pass away before retiring, my wife and I decided we had "enough" and I retired at age 53.
...
Thanks, hearing from my successful predecessors is very helpful.

The "money left on the table" consideration I wrestled with for a while. In my case it would be on the order of $1M in savings nominally. Part of me wondered if I had a duty to keep working and get the money on behalf of the family, or even to use to support charities or similar causes. On the other hand, I'm occupying a position without needing the income and in a sense preventing someone (presumably younger) from the opportunity. Wasn't easy to decide to walk away from the money.

Lots of similar observations regarding real life reminders that time is a finite thing for us, and at some point passing up present opportunities to have more money later becomes inadvisable. Enjoy the days ahead!
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Re: Am I nuts? About to retire early without bulletproof money.

Post by GrowthSeeker »

Isn't the amount of the annuity, by itself, even if taken immediately at is lowest dollar amount, greater than your annual spending? If so, then your withdrawal rate is zero. That's "kind of a big deal".

So add me to the list who thinks you're fine to retire. But I went through the same anxiety (not really fear) about such a big change when I retired about 6 years ago.

Quick thought (since paranoia is my middle name): you said someone asked you to stay on until June. Is there any way this could be a setup by Administration to somehow pretend there is something wrong with your performance in such a way that you forfeit your pension?
Just because you're paranoid doesn't mean they're NOT out to get you.
TCB
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Re: Am I nuts? About to retire early without bulletproof money.

Post by TCB »

Hey, what’s the big idear of showin off?
Why I oughta.....
😃
......

It’s your father.

You have enough-you know this, you’ve done all the math and then some. Consider how fortunate you are to be in a position to help your father when he needs (or may need) it.
Many would not even be close & have to consider other options.

If it was me, I’d retire now.
Like 5 minutes ago.

I wish you the best with your situation 👍
travelspot
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Re: Am I nuts? About to retire early without bulletproof money.

Post by travelspot »

You’re good to go. Nice work. No such thing as totally bulletproof anyway, but you’re going to be fine.

I hear you on leaving all that money on the table, I’m doing the same thing. But at some point free time in your healthy years is more important than collecting more money. Plus you have the Dad reason, which is a good one.

Congrats and good luck!
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jme123
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Re: Am I nuts? About to retire early without bulletproof money.

Post by jme123 »

Sick pension. Do you work for Illinois state government?
Patzer
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Re: Am I nuts? About to retire early without bulletproof money.

Post by Patzer »

You are more than fine.
I get that you are concerned about inflation, but if that is really your only breaking point, why not hedge against it with TIPS in your tax deferred accounts as a large part of your bond allocation?
Valuethinker
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Re: Am I nuts? About to retire early without bulletproof money.

Post by Valuethinker »

Patzer wrote: Wed Feb 10, 2021 10:16 pm You are more than fine.
I get that you are concerned about inflation, but if that is really your only breaking point, why not hedge against it with TIPS in your tax deferred accounts as a large part of your bond allocation?
The advice to hold lots of TIPS sounds like good advice.
nura
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Re: Am I nuts? About to retire early without bulletproof money.

Post by nura »

kd2008 wrote: Mon Feb 08, 2021 7:46 am
Wean off the obsessiveness, and get your focus on being with your father and enjoying time with him. That will bring you way more fulfillment than any assurance that you will be financially ok.
:thumbsup
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Re: Am I nuts? About to retire early without bulletproof money.

Post by markjk »

IlliniDave wrote: Mon Feb 08, 2021 7:28 am To anyone who's read this far, I suppose what I was hoping in throwing this out there is to get the thoughts of anyone willing to share. I'm in a situation where once I leave there's really no going back to my professional "career". I'm anticipating that others who have made or are at the cusp of punching out early with similar means will be able to help me feel confident I've given the decision due dilligence before signing the papers and turning them in.
It sounds to me like you are in a great spot and you are doing it for the right reasons. You can't get time back with your dad. You have a reasonable plan. There is always the option to find employment down the road to supplement. It may not be the "big money" job anymore but you could certainly find something to make a few extra $$ and take up some of your time.

The one thing I didn't see mentioned is health insurance and general health costs. I just want to be sure you are looking at that expense. At 56, you have 9 years before medicare. I'm sure you've considered this but I just want to say it since I didn't see it in your original write up.
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Re: Am I nuts? About to retire early without bulletproof money.

Post by IowaFarmBoy »

I just started reading this thread and wanted to say I sympathize with your hesitancy. I retired last summer with a pension, SS starting at some point in the future and investments. The total of these would provide 50% more than we needed to maintain our current lifestyle so we had a good cushion in the event something didn't go as planned.

It's just hard to pull the trigger and go from earning/saving to depleting. The best analogy is that I can come up with is that I am flying along in a perfectly good plane. The flight is pleasant and the plane has no issues. But at some point, I need to jump from that plane. I have a perfectly good parachute and we haven't lost any jumpers yet but it still isn't easy.

9 months in I haven't regretted the decision. I'm comfortably busy, happy and in better health. Sounds like your dad needs your help so I'd go for it.
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Re: Am I nuts? About to retire early without bulletproof money.

Post by chipperd »

I was nervous as well when my main position ended 2 years ago and I'm married and with three teens at home. My wife has a similar pension and we have similar financial situation you present. I never did need to replace that income and got valuable time with my wife and late teen/early adult kids.
My only regret, I didn't leave on my own terms sooner.
Given your situation, you only have to work if you want to. Your done! Nice job.
Life is short; go be with your dad, you won't regret that at all and it will mean the world to him.
Enjoy life! :sharebeer
Last edited by chipperd on Thu Feb 11, 2021 5:50 am, edited 1 time in total.
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Ed 2
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Re: Am I nuts? About to retire early without bulletproof money.

Post by Ed 2 »

IlliniDave wrote: Mon Feb 08, 2021 7:28 am Not sure if this is the appropriate place for this. I don't have specific investment questions (I'm about 90% boglehead orthodox in style). In the next two weeks I'll be deciding whether to take early retirement at the end of March and wanted to throw my plan out there to see what folks, especially those who are early-retired or approaching it, might help me avoid overlooking. For years I expected to be giddy at this point, but I find myself a little nervous. The situation is as follows:

Age 56, unmarried

Retirement annuity: little over $58K/yr
SS: little over $30K/yr at 67 (data a couple years stale)
Investment accounts: a little over 1,650K
-roughly $400K taxable
-roughly $100K Roth
-roughly $30K HSA
-roughly $1,100K 401(k)
AA roughly 50% stock, 50% bonds/cash (tolerance band for stocks is 60% +/- 10%)

Cash at bank ~30K
Real estate (house, cabin, small interest in farm rental) $375K

Debt $15K auto loan

Average spending 2011-2020 < $44K/yr

Planned retirement spending a little under $55K/yr

Anticipated average withdrawal rate:
-0.2% at current/recent inflation rates
-0.7% at 4% inflation

At first glance the numbers look pretty robust and you might ask, "What's this guy's problem? He just here to show off?" I'll admit I'm pretty pleased with getting my financial life turned around after a divorce that left me with a net worth of about $165K in 2008. Nevertheless, I've got my finger on the button to punch out at the end of March which means I'm leaving a lot of money on the table relative to plowing on until 65 or whatever.

Aside from the normal longing for freedom the main short-term pull towards retirement is to relocate to be closer to my dad whose 81 and on his own for the last 2 years, and for him navigating life without my mom there look after him is getting increasingly difficult. Since it looks like I'll have all I need and then some (albeit not bullet-proof means) its really tough to value scrabbling up maybe an extra few hundred K above having a chance to watch the sun set with my old man.

There are some things that give me pause financially though, some of which we can't talk about here. Like most everyone I suppose, inflation is a potential vulnerability. The estimates above for withdrawal rates come from a fairly detailed simulation, and with it I can increase inflation until it breaks me. I use something similar to Bogle's formula for estimating future returns (Gordon equation adjusted for PE returning to historic mean), so at the moment I'm forecasting with very tepid investment returns, and of course it could be significantly worse than that.

My portfolio strategy is to maintain "2X liability in bonds" liability matching. I'm considering going to 4X which would still have me at 85% equities. Why, then am I at 50/50 now? I'm a coward and want to get through the transition and first couple retirement years with muted volatility.

I spent about 4 years experimenting with how low I could drop sustained lifestyle spending before I got below an acceptably comfortable threshold. Luckily I have simple tastes and the number was around $30K. Doing the usual adjustments for working-to-not-working that would be about $40K, so I have some room to adjust downward without feeling deprived. I don't have a good number estimated for moderate-term bare-bones survival mode but I'm guessing $25K-$30K, less if I simplify my real estate footprint (downsize primary residence, sell cabin).

I've been very deliberately planning an early retirement for almost 10 years now. So I think I have a reasonably developed plan for use of my time. I have a long list of things to do and a few places to visit, mainly in N. America. I've selected a handful to cover the first three or so years, at which time I'll reevaluate, keep what's increasing contentedness, and go to the list to replace what's not. Actually, I won't really wait three years if something is not working out, but that's how I've been thinking about it when planning. So I'm not too worried about my mental/emotional/physical well-being during the "early" part of retirement. Although I admit that even though I live well below my means, I have some trepidation about turning off the big money spigot.

To anyone who's read this far, I suppose what I was hoping in throwing this out there is to get the thoughts of anyone willing to share. I'm in a situation where once I leave there's really no going back to my professional "career". I'm anticipating that others who have made or are at the cusp of punching out early with similar means will be able to help me feel confident I've given the decision due dilligence before signing the papers and turning them in.
You’ve been funny? You have annuity $58k a year , almost two million portfolio? Pushing 60 already and still worrying? Ok..... I am 50 , going to retire at 55. I will not have annuity but I will gave around 3 million portfolio by then. I never even think to ask myself if I may retire. Just enjoy. You will have plenty.
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
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Re: Am I nuts? About to retire early without bulletproof money.

Post by Carl53 »

We were in a similar position with similar numbers back in 2008 but there were two of us. Retirement funds took a biiig hit of 30-40% but were able to whether the storm due to decent pension and cash position. I did pick up some side pay as former employer asked me back for a couple of side projects over the next five years that totaled about one extra years final pay. You are near the top of the 12% bracket. Consider doing some Roth conversions at least filling up your 22% bracket which you likely will be in forever once SS starts until RMDs kick in and push you up another bracket. Doing some conversions now at 12 and 22% might keep you out of the next bracket once they kick in. RPM discussed elsewhere on this site may help you decide about them.
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Re: Am I nuts? About to retire early without bulletproof money.

Post by ZWorkLess »

Do it! Go enjoy your dad. Enjoy life. You've done the work, it's time to enjoy your rewards.

There's nothing in life I regret LESS than the (lots of) time I spent with my folks and nothing I miss MORE than their presence now.

Be well. ENJOY!!
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Re: Am I nuts? About to retire early without bulletproof money.

Post by galawdawg »

markjk wrote: Thu Feb 11, 2021 5:18 am The one thing I didn't see mentioned is health insurance and general health costs. I just want to be sure you are looking at that expense. At 56, you have 9 years before medicare. I'm sure you've considered this but I just want to say it since I didn't see it in your original write up.
It was in a subsequent post in this thread. :happy
IlliniDave wrote: Tue Feb 09, 2021 7:58 am Regarding healthcare my employer does offer a plan that I can buy into. I put together a detailed spending plan (aka budget) for post-retirement and in it I've included the cost of premiums plus hitting the full OOP max each year, which for a while will hopefully be conservative (no costly ongoing medical concerns yet). It's a little pricier than the sample plan you included, but it has much more robust out-of-network coverage than what ACA plans seem to have built in. For the first 18 months I can get essentially the same plan for half the cost via COBRA. And the retiree plan is HSA eligible so I can offset a little income.
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Re: Am I nuts? About to retire early without bulletproof money.

Post by jharkin »

GrowthSeeker wrote: Wed Feb 10, 2021 1:47 pm Isn't the amount of the annuity, by itself, even if taken immediately at is lowest dollar amount, greater than your annual spending? If so, then your withdrawal rate is zero. That's "kind of a big deal".

So add me to the list who thinks you're fine to retire.
+1000

Based on the numbers you provided you are set for life on the annuity alone. SS kicking in a few years down the line will easily cover inflation. Honestly, a level of inflation bad enough to even make you draw down a fraction of your portfolio probably would result in the complete collapse of the western world so I’m not sure what you are concerned about......

I’d bet money you never even touch your portfolio and will be back here in 20 years asking estate planning and gifting questions....
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Re: Am I nuts? About to retire early without bulletproof money.

Post by MP173 »

Congrats on digging yourself out of the financial issues of your 2008 divorce. That is quite a recovery you made.

It sure seems you are in fine financial position to do what you want. I am 10 years older than you and very capable of retiring, but choose to continue work as it is rewarding. My wife retired nearly 4 years ago and it was the right decision for her.

I would suggest that you decide what you want to do with your 168 hours per week. It is commendable that you want to spend time with your father...looking back I regret not spending more time with my parents prior to their death. That trip down I57 to Southern Illinois would have meant more to me than I realized at the time.

Engineering background should allow you to find something to do if boredom kicks in. Companies are looking for qualified personnel...you dont have to work full time. Perhaps you dont want to work, but what will you do?

Read the book The New Retirementality by Mitch Anthony which is a very analytical look at how one can spend their retirement, if they have funds (you do).

Good luck on your decision and enjoy the time with your father.

Ed
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Re: Am I nuts? About to retire early without bulletproof money.

Post by Candor »

If you're nuts I must be stark raving mad.
The fool, with all his other faults, has this also - he is always getting ready to live. - Seneca Epistles < c. 65AD
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Re: Am I nuts? About to retire early without bulletproof money.

Post by TheNightsToCome »

dboeger1 wrote: Mon Feb 08, 2021 8:15 am I agree you sound more than fine. However, even if you were borderline, this part stood out to me:
IlliniDave wrote: Mon Feb 08, 2021 7:28 am Aside from the normal longing for freedom the main short-term pull towards retirement is to relocate to be closer to my dad whose 81 and on his own for the last 2 years, and for him navigating life without my mom there look after him is getting increasingly difficult. Since it looks like I'll have all I need and then some (albeit not bullet-proof means) its really tough to value scrabbling up maybe an extra few hundred K above having a chance to watch the sun set with my old man.
I'm still early in my career and had a fairly unique experience in which I made decisions that seemed bad at the time, but I honestly have no regrets. I was laid off from my first adult job a few years back. The writing had been on the wall for a while, and everyone knew it was a matter of time before our product group would get shut down. I had also gotten married abroad the year before, and my wife was scheduled to immigrate to the states shortly after. At the time, I liked to play online video games with friends. I don't know how much you know about video games, but there was a cooperative game called The Division, and when searching for people to play with online, I came across a group of much older gamers who seemed like cool guys. I got to know several of them and we became good friends. One guy in particular had been suffering horribly from cancer for years. It was destroying so many of his organs, but he was adamant that he wanted to live long enough to meet his unborn grandchildren. Most of the guys I played with had been fans of another game called Destiny well before I started playing with them.

When my wife finally arrived, 2 things happened. 1st, she told me I should take a break from work so we could do some traveling together and focus on getting her a job first. 2nd, Destiny 2 was about to come out, and my older friends all expressed interest in starting that game. So I stopped applying for jobs and started playing that game with them, in part because I didn't want to get so busy with work again that I wouldn't get to spend the sick friend's last moments with him. That game turned into a complete addiction. I played it religiously every day for over a year. Even though I did apply for jobs in that time, I think I waited too long after my first job and the gap in my resume was causing me to not get past recruitment filters. Literally all of my applications were being completely ignored, but I didn't mind so much because I had saved aggressively and saw it as kind of a mini quarter-life gap year. I spent days playing that game with my friends, and the sick guy in particular, being retired and stuck at home in bad health, enjoyed having these long conversations about life, his career, his marriage, etc. His son also played, so I got to know more about his family as well.

One day, he just stopped logging in. A bunch of time passed with nothing but silence, and then I heard from another friend that he had spoken to the sick friend over the phone, and he said he was fine but just taking a rest. That was the last I heard of him for years. I eventually went back to work and got back into the daily grind. It wasn't until a few months ago that one of the other guys told me that sick friend had passed away.

That whole experience was horrible for my career. It was arguably even worse for my marriage, as my wife got really frustrated with me not being very successful with job applications, and I kind of resented her for that because it felt so out of my control. I'm not even sure I would recommend the same course of action to anyone else. But it was also one of the best years of my life, and that guy who passed became one of my best friends, despite the crazy age difference. It was one of those things that didn't need a purpose or a justification. I just spent the time with him because it felt good. I'd like to think he was happier for it. I certainly could have focused on getting back to work sooner, but I'm not sure that would've been better for my life in the grand scheme of things. My career and marriage both got back on track, and we're doing really well for ourselves, but that friendship wouldn't have been there for me had I saved it for later.

You've planned for early retirement for years. You executed your plan. Your motivation is to spend time with your father in his old age. If I have no regrets taking more than a year of my young life off from work to play video games with a sick Internet stranger, I really don't see how you could look back after your father's gone and wish you had spent the time at work instead. It'd be one thing if you needed the money, but it doesn't seem like you do.
I've never played a video game, but yes to all of this.

:sharebeer
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Re: Am I nuts? About to retire early without bulletproof money.

Post by TallBoy29er »

No point in re-hashing the finances, as others have done it. You are in amazing shape. Not only that, you have been observedly diligent in your preparation. I have a hard time as well thinking of "spending" my retirement v saving for it. But if I were in your shoes, I would want someone to push me over the edge and take the leap.

In the alternative, you work 5 more years, your dad's struggles become more difficult, and you miss some very precious years with him. That is the tradeoff, it seems, to becoming more ironclad than you are.
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Re: Am I nuts? About to retire early without bulletproof money.

Post by novemberrain »

:sharebeer
Last edited by novemberrain on Wed Dec 01, 2021 4:06 pm, edited 1 time in total.
huskerfan1414
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Re: Am I nuts? About to retire early without bulletproof money.

Post by huskerfan1414 »

This is a classic boglehead thread. My goodness.



Congrats on retirement. Please, go enjoy your life.
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IlliniDave
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Re: Am I nuts? About to retire early without bulletproof money.

Post by IlliniDave »

A number of responses came in after I last checked in on this thread. Thank you to everyone who took the time to chime in. I just wanted to provide an update (though I understand it, I'm often disappointed when "talking" with someone about significant decisions then never knowing what they decided and how it turned out).

I decided to pull the plug. At this moment the plan* is that I'll be a retiree on 8/1. Not much has changed except my retirement assets have increased by roughly $100K and it looks like I'll net about 80% more than expected from selling my house. :shock: I expected to have to kick in maybe $20K-$30K extra to make the sell here/buy there sequence work out the way I wanted; now it looks like I might pocket a nice sum while living in a modestly more comfortable home than I expected. Neither of those changes were the linchpins in the decision, but they help allay concerns. If inflation persists at the most recent reported levels it will deflate some of my legacy hopes but I'll fundamentally be okay.

*There's a small possibility I'll wind up dropping to part-time (24hr/wk max) on 8/1, working 100% remote from "back home" for 6 months to be a resource for my replacement, then retiring at the end of January next year. Since retirement for me was driven more by geography than actual retirement per se (but it was close), being able to move home base back closer to my dad as planned means part-time WFH off ramp could be tolerable (devil in the details of course).

Thanks again, everyone!
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Tubes
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Re: Am I nuts? About to retire early without bulletproof money.

Post by Tubes »

I just read this thread. Amazing! From one Illini to another, congrats on your decision IlliniDave! We're similar age and struggled with similar decisions.

It sounds like your job is old school and they won't take advantage of your part time work, should you decide to do that. If you do, guard against them making part time into full time. My final company took advantage of part timers sometimes, after all, people were working 60+ hours a week anyway, so working 40 would be considered part time.

To balance the view about my final company, I will say they were on the leading edge of working from home under certain conditions. I spent many, many weeks back in Illinois when my dad was ailing 10 years ago. I worked remote before it was a thing. They were very respectful of this and I am grateful.

However, it was never the same as having no job. I wish I didn't miss a few events with my dad. His ultimate final illness and death snuck up on me and I wish I was there more in those final months. The point being, you are making a good decision if you decide to cut the cord completely. The job will figure out the transition plan without you. They always do.
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Re: Am I nuts? About to retire early without bulletproof money.

Post by LukeOfTheDraw »

OP - Congrats on retirement, you’re in an enviable and impressive position. Glad your work and planning has paid off.

Somewhat unrelated but I wish there were more threads on this site dealing with the lower / middle class. I get a small chuckle sometimes out of the “not sure if I can retire on my $xxx million portfolio and 0.01% withdrawal rate”. My eventual retirement will certainly be cutting things a lot closer...and I count myself *quite* lucky that that’s even a possible option, I know for many people it’s a pipe dream. This site has a lot of good info but I wonder if there’s a portion of active or prospective participants who feel that they must be doing something wrong since everyone seems to be a millionaire (selection bias, I know I know).
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Re: Am I nuts? About to retire early without bulletproof money.

Post by stuper1 »

Yes, I too wish there were more threads on us lower/middle class working stiffs. Maybe we should start one called something like "Retirement Scenarios for Lower/Middle Class Folks" where we could share stories of what our retirement is going to look like or already looks like. Or is there already a thread like that available?
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Re: Am I nuts? About to retire early without bulletproof money.

Post by willthrill81 »

stuper1 wrote: Sat May 29, 2021 10:17 am Yes, I too wish there were more threads on us lower/middle class working stiffs. Maybe we should start one called something like "Retirement Scenarios for Lower/Middle Class Folks" where we could share stories of what our retirement is going to look like or already looks like. Or is there already a thread like that available?
Such a thread could be interesting, but in truth, retirement planning can be much simpler for those with below average incomes. A larger proportion of their career income will be replaced with SS benefits compared to those with higher incomes. For instance, a MFJ couple who averaged $40k of earnings for 35 years will have at least $1,850 of monthly SS benefits at age 66 ($1,233 for one spouse plus 50% for spousal benefit), over $22k annually; by comparison, if the couple had $100k of earnings, their SS benefits would be under $41k annually. Also, lower income folks are more likely to have none or little of their SS benefits taxed. So it's entirely plausible that if they are living in a home they own free and clear and don't have to fund the raising of children any more, a couple who has made $40k while working might 'only' need something like $200k in a portfolio (providing $8k of additional income, assuming 4% withdrawals) in order to live quite comfortably in comparison to their working years. And that $200k could be obtained by investing $185/month, all of which could be contributed to an IRA so no 401(k) plan access is necessary, for 35 years at a 5% real rate of return.
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IlliniDave
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Re: Am I nuts? About to retire early without bulletproof money.

Post by IlliniDave »

Tubes wrote: Sat May 29, 2021 9:28 am It sounds like your job is old school and they won't take advantage of your part time work ... I will say they were on the leading edge of working from home under certain conditions. I spent many, many weeks back in Illinois when my dad was ailing 10 years ago. I worked remote before it was a thing.
My employer is definitely old-school, but they've been trying to do better the last 10 years or so. But frankly, covid changed everything. They are still saying anyone that can work from home, must work from home. The proposed arrangement came from the project management side of my management chain, so I don't know how the HR-recognized side will react. I think there is little risk that they'll try to pull me back in too deeply, but if that happens I can just retire prior to January. I don't need to do it, but 60% salary (minimum is 24 hr/wk to get full benefits) is about 60% more than the retirement annuity and comes with much cheaper medical insurance. Gives a little extra buffer through the relocation and getting settled time. And I might pull the plug sooner even if they are 100% respectful of the arrangement, if it just ain't working for me. I-L-L ... :)
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IlliniDave
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Re: Am I nuts? About to retire early without bulletproof money.

Post by IlliniDave »

stuper1 wrote: Sat May 29, 2021 10:17 am Yes, I too wish there were more threads on us lower/middle class working stiffs. Maybe we should start one called something like "Retirement Scenarios for Lower/Middle Class Folks" where we could share stories of what our retirement is going to look like or already looks like. Or is there already a thread like that available?
LukeOfTheDraw wrote: Sat May 29, 2021 9:44 am OP - Congrats on retirement, you’re in an enviable and impressive position. Glad your work and planning has paid off.

Somewhat unrelated but I wish there were more threads on this site dealing with the lower / middle class. I get a small chuckle sometimes out of the “not sure if I can retire on my $xxx million portfolio and 0.01% withdrawal rate”...
LukeOfTheDraw, I hear you. Mine are definitely well up the list of first-world problems. I grew up in the lowest fringe of middle class where for most people retirement came when they either could no longer physically perform the job, or maybe got kicked to the curb during a bad economic time when starting over in their trade/profession was just too much of a long shot. That's actually part of my hangup. In the demographic I came up in people didn't voluntarily leave potential income on the table. Another thread I participated recently was a poster with net worth north of 5M but was struggling with retiring at 50 because leaving a much better salary than I ever made went against all the instincts formed during a childhood that was poorer than mine.

Stupor1, that's a good idea. I can't really create that thread but many people here could. That said, my thoughts in that direction...

Part of the reason I'm where I'm at is because I lived a middle class lifestyle spending-wise (sub-median for the heart of the big push accumulation years). A linchpin of my retirement is to maintain a ~median lifestyle. Retiring ~10 years prior to FRA drives a lot of the apparent overkill. Over the last half of my career I was fortunate to creep up into the lower upper middle class income range and kept spending sub-median. I also worked nearly the equivalent of 10 years full-time employment in overtime. What's really "unfair" is that I'm just old enough that I got grandfathered into a retirement plan that was jettisoned a couple years later and I stayed with that job through good and bad for 3+ decades. No merit at all in that, just luck and weak enough ambition that I never jumped ship for better opportunities.

People do ER after having never had more than median income. For them it seems to be a matter of how much they are willing to give up relative to their neighbors (i.e., other median income families).

What I learned in all the planning I did is there are two knobs that are equally effective (though not always easy to turn): income and spending. This calculation was sort of the aha moment for me. With a 3% withdrawal rate (sorta standard for not-too-early early retirees), every 100 dollars a month one can lower ongoing expenses means $30,0000 that doesn't need to be accumulated.
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Re: Am I nuts? About to retire early without bulletproof money.

Post by Tubes »

IlliniDave wrote: Sat May 29, 2021 12:49 pm LukeOfTheDraw, I hear you. Mine are definitely well up the list of first-world problems. I grew up in the lowest fringe of middle class where for most people retirement came when they either could no longer physically perform the job, or maybe got kicked to the curb during a bad economic time when starting over in their trade/profession was just too much of a long shot. That's actually part of my hangup.
IlliniDave, I may have grown up near you, in Chicago. So I know what you mean. My Dad worked hard labor as a Journeyman Plumber for a ridiculous 42 years. Many of his buddies bailed as soon as they could, which was about 30 years with a reduced pension. He stuck it out, mostly because he liked doing repair work and helping and interacting with people.

But it was a great cost. He had 4 joints replaced, a few back operations and multiple hernia surgeries.

I was just starting to get the ER itch when he got sick, so I never discussed the idea with him before he passed away. However, I can hear him say something like this: "Tubes, this is why I encouraged you to go to college. You did your part and got good grades and a good job. Enjoy it. You don't have to go down the same path."

So I bailed at 55. And since then I'm doing volunteer work, ironically some of it requiring construction. But I can do it for a while and stop before I damage myself too much. I think dad would be proud. We're in a new time, there's no need for us to work until we drop dead or our joints come out of our sockets. I know my dad and my grandfather went that path. They were proud, but never wished that on us.

I say you enjoy your success. You will be helping a family member. That's a very fine vocation in itself. You may also find something else to occupy your time in a worthwhile way as you explore retirement. Go for it.
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Re: Am I nuts? About to retire early without bulletproof money.

Post by Jazztonight »

Once you retire, the fun begins!

Do you have a plan for your own remaining years?

Retirement can be, in many ways, a "full-time job."

I hope you make the most of your new life! When you can, start researching what makes for a successful retirement. (Hint: It's not about money.)
"What does not destroy me, makes me stronger." Nietzsche
InMyDreams
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Joined: Tue Feb 28, 2017 10:35 am

Re: Am I nuts? About to retire early without bulletproof money.

Post by InMyDreams »

IlliniDave wrote: Sat May 29, 2021 12:14 pm I think there is little risk that they'll try to pull me back in too deeply, but if that happens I can just retire prior to January. I don't need to do it, but 60% salary (minimum is 24 hr/wk to get full benefits) is about 60% more than the retirement annuity and comes with much cheaper medical insurance.
Not sure if I understand the situation you're talking about, but - a little-known clause of the ACA says that your current-year eligibility for employer-based health insurance is based on the previous benefit year's worked hours. So, for instance, I worked 8-16 hours per two week pay period thru most of 2019 (which is below benefited hours) but paid for health insurance at the part time employee rate because I worked sufficient hours in 2018. One requirement was that the health insurance premium had to be paid from my paycheck.

In 2019, I felt like I had retired - I did more traveling than I had done in a long time, slept so well at night, had more play time. Which is good - I had memories to keep me going in 2020!
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