Author Topic: alternative to early retirement, thoughts?  (Read 10175 times)

des999

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alternative to early retirement, thoughts?
« on: July 20, 2015, 10:49:56 AM »
My initial plan was to save like mad (which I have been doing) for another 10-15 years and retire around 50.  The plan seems great, and on paper it works well.  The issue is, I don't want to work for 10-15 more years, at least not 40 hours/week in my current job.

My alternative, tell me if you think I'm crazy or where there are holes.

I have a child with a pre-existing condition, so for me this wasn't a real possibility until the ACA came out.  Also, the government subsidies actual make it better for this situation.

I plan to get my retirement accounts to $250k and then stop contributing, with the thought that they will grow, and I will not touch them for the next 15-20 years.  (I also have $120k in home equity as an extra cushion and 0 debt).

During this time, while my retirement balance is sitting in Index funds and hopefully growing at 7%, I plan to work part time doing a job that I enjoy.  Because I will be making ~40k, family of 3, with government subsidies, my silver plan (which matches what I have currently) will be only $214/month.

I currently make about 105k / year, so taking this huge pay cut seems crazy at first, but b/c most of it is going to retirement any way, I am only living on about 40k.  So, I can afford to work way less, which I don't want to stop working, I just want to cut back and be able to take more time off for family and travel.

Kind of a long post, but I'd love to know if anyone has done or thought about something similar. 

rubybeth

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Re: alternative to early retirement, thoughts?
« Reply #1 on: July 20, 2015, 10:59:55 AM »
I think it sounds good. Money is a tool. If you've already stashed a considerable amount that will continue growing without you needing to touch it, and part-time income would support your lifestyle, why not go for it? The bonus being the ACA subsidies. You'd always have the option to pick up a second part-time job or find another full time job, right? I'd see if you could negotiate part-time with your current employer, as a kind of "sabbatical."

I haven't actually done this, but I dream about cutting back at work once we're at full stash, and if my employer says no, I'll walk. It's a fantasy that keeps me sane. ;)

des999

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Re: alternative to early retirement, thoughts?
« Reply #2 on: July 20, 2015, 11:05:18 AM »
I love that thought rubybeth, that is actually my plan.  Before I am ready to actually pull the plug I plan to talk to HR about possible cutting my hours.  I think I remember MMM saying that his employer let him do 4 days or something like that for a while before he actually left.  That might be a good way to transition into part time work.  :)

My only fear is the ACA (healthcare), who knows if it will continue to exist in it's current state.  Or if they one day decide to look at assets as well as income for the subsidies.

Cookie78

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Re: alternative to early retirement, thoughts?
« Reply #3 on: July 20, 2015, 11:13:09 AM »
I think you should do it, if the numbers add up.

I dream about doing something similar. Right now the plan is to work 2 more years, then live on half the investment growth for the first few years minus any side job income I feel like doing. Lately I am considering if it's possible to do this after 1 year, or even now, but it would make spending much too tight for my liking and there wouldn't be as much investments to watch grow. I'd be more dependent on finding some part time source of income. It's a tough call. In addition it's a tougher call not knowing what the housing market will do in the next couple years. I need to sell both houses for my plan to work. If I wait and it drops too much I'll be stuck for a few extra years. If I wait and it goes up I'll be set.


Cookie78

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Re: alternative to early retirement, thoughts?
« Reply #4 on: July 20, 2015, 11:14:15 AM »
I love that thought rubybeth, that is actually my plan.  Before I am ready to actually pull the plug I plan to talk to HR about possible cutting my hours.  I think I remember MMM saying that his employer let him do 4 days or something like that for a while before he actually left.  That might be a good way to transition into part time work.  :)

My only fear is the ACA (healthcare), who knows if it will continue to exist in it's current state.  Or if they one day decide to look at assets as well as income for the subsidies.

If your fears end up happening then you could probably go back to full time work with your employer, right? Or a new employer?

index

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Re: alternative to early retirement, thoughts?
« Reply #5 on: July 20, 2015, 11:45:26 AM »
The ACA subsidies are there to help people who are less fortunate, not to subsidize people who don't want to work. If you are relying on everyone else to support you, then your not really financially independent. A+ for working the system though. 

 

mxt0133

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Re: alternative to early retirement, thoughts?
« Reply #6 on: July 20, 2015, 11:53:43 AM »
A+ for working the system though.   

One way to look at it is maximum optimization which is something most in this forum strive for, moral judgements aside.

des999

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Re: alternative to early retirement, thoughts?
« Reply #7 on: July 20, 2015, 12:01:08 PM »
The ACA subsidies are there to help people who are less fortunate, not to subsidize people who don't want to work. If you are relying on everyone else to support you, then your not really financially independent. A+ for working the system though. 

 

Trust me, I have thought about this, and it does give me hesitation. 

But, I also have been paying into SS my entire working career, and don't plan on getting much if anything back from that.  Also, it's not any different than folks that make a lot more money than I and pay less in taxes.  I think I'll be able to sleep at night, but we shall see.

des999

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Re: alternative to early retirement, thoughts?
« Reply #8 on: July 20, 2015, 12:03:06 PM »


If your fears end up happening then you could probably go back to full time work with your employer, right? Or a new employer?
[/quote]

Yes, that is an option in my case.  :)

EscapeVelocity2020

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Re: alternative to early retirement, thoughts?
« Reply #9 on: July 20, 2015, 12:05:28 PM »
Not sure about your details, but ACA costs are going up as much as 30% YoY here in Texas.  Keep in mind that you'll be living on a reduced income and depend on ACA subsidies (given the pre-existing condition) to make healthcare available and affordable in the decade(s) to come.  Unless your part time job come with good health insurance, this might make sticking it out in your current job worth more than you think if this compounding continues - plus you can stash much more than if you go part time.  Maybe ACA stabilizes more in a few years, which would help make this a clearer decision. 

Quote
Roughly 960,000 Texans, of an estimated 3 million who are eligible, have enrolled in and paid for insurance plans offered through the federal exchange that was mandated by the Affordable Care Act. The impact of rising premiums on participation rates for 2016 remains to be seen.
   • Texas’ 32 percent participation rate for 2015 is lower than the national rate of 36 percent.
   • Several large insurers, in Texas and nationally, have reported they are seeking to raise premiums by as much as 32 percent for 2016.
   Source: Kaiser Family Foundation, Centers for Medicare and Medicaid Services

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Re: alternative to early retirement, thoughts?
« Reply #10 on: July 20, 2015, 12:29:43 PM »
A+ for working the system though.   

One way to look at it is maximum optimization which is something most in this forum strive for, moral judgements aside.

I see no problem with working a job you don't love until you have saved enough money then going and doing something you enjoy. The risk only risk is your nest egg doesn't appreciate as you expect and you have to work your "fun job" longer or you go back to a higher paying job for a few years to make up the difference.

I would say if you are depending on the ACA subsidy to support your "fun job" then you can't afford it.

Maximization is a way to justify it to yourself. The MMM blog could be focused on cutting your expenses down to 24k then applying for disability. Instead, most on this forum strive to be truly financially independent so they are not forced to rely on others to support them financially weather that be an employer.... or a government subsidy. 

Eric

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Re: alternative to early retirement, thoughts?
« Reply #11 on: July 20, 2015, 01:04:29 PM »
A+ for working the system though.   

One way to look at it is maximum optimization which is something most in this forum strive for, moral judgements aside.

I see no problem with working a job you don't love until you have saved enough money then going and doing something you enjoy. The risk only risk is your nest egg doesn't appreciate as you expect and you have to work your "fun job" longer or you go back to a higher paying job for a few years to make up the difference.

I would say if you are depending on the ACA subsidy to support your "fun job" then you can't afford it.

Maximization is a way to justify it to yourself. The MMM blog could be focused on cutting your expenses down to 24k then applying for disability. Instead, most on this forum strive to be truly financially independent so they are not forced to rely on others to support them financially weather that be an employer.... or a government subsidy.

There is no morality in the tax code.  There's only the tax code.  In the case of the ACA, subsidies are linked to income.  If the government didn't want them linked to income, they would've written the law differently.  There are a whole host of other tax subsidies that are also linked to income, yet somehow no one ever questions the morality of those.  Also, you never hear anyone talking about the morality of the mortgage interest tax deduction or setting up a trust for your descendants in order to avoid estate taxes.  Somehow it's only immoral if low(er) income people do it.

There's certainly no moral failing at deciding to not work a full time job for the rest of your life.  If there was, none of us would be here.
« Last Edit: July 20, 2015, 01:10:40 PM by Eric »

Eric

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Re: alternative to early retirement, thoughts?
« Reply #12 on: July 20, 2015, 01:06:51 PM »
I have a child with a pre-existing condition, so for me this wasn't a real possibility until the ACA came out.  Also, the government subsidies actual make it better for this situation.

I plan to get my retirement accounts to $250k and then stop contributing, with the thought that they will grow, and I will not touch them for the next 15-20 years.  (I also have $120k in home equity as an extra cushion and 0 debt).

During this time, while my retirement balance is sitting in Index funds and hopefully growing at 7%, I plan to work part time doing a job that I enjoy.  Because I will be making ~40k, family of 3, with government subsidies, my silver plan (which matches what I have currently) will be only $214/month.

All posts so far have only mentioned premium amounts, but you should estimate actual out of pocket expenses on top of this.  The premiums are only one side of the coin.

Stache-O-Lantern

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Re: alternative to early retirement, thoughts?
« Reply #13 on: July 20, 2015, 01:11:19 PM »
My wife and I have been moving in a direction similar to what you describe.  Our first child was born 2 years ago, since then both of us have scaled back to 30/hrs week at our jobs.  I consider ourselves lucky to have jobs where this is possible.  Since 30/hrs week is legally full time, we both still have health insurance through our employers.  The next step for us would be to go to part-time or on-call work where we bought health insurance ourselves.  There are parts of my job I like, and I could focus on those more.

Even just scaling back to 30 hrs ( I work three 10 hr days/week) has been great, one of the best decisions we ever made.  Full FIRE for us is probably still 8 years away minimum.  But i would encourage you to make changes to your employment situation if you really don't like it and can do with less income.  Don't be afraid to make the unconventional choice, especially when you've thought about it and the numbers work out.  Even a 'stache too small for FIRE helps make better alternatives possible.

By the way, personally I see no problem with you getting a subsidy due to the ACA, especially since it sounds like your kid has a medical issue.  That's the kind of person and family ACA is supposed to help.  Even without that, I think you should do it.  The ACA subsidies could be thought of essentially as a targeted tax benefit for people with low incomes.  Is someone who deducts mortgage interest on their enormous mansion unethical?  They're just following the rules in place, which are littered with "loopholes" that lots of people here take advantage of.  I took family leave with benefits from the state when my son was born.  I could have done without them.  I feel fine.

KCM5

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Re: alternative to early retirement, thoughts?
« Reply #14 on: July 20, 2015, 01:23:02 PM »
I always thought a benefit of the ACA was that health insurance is no longer tied to jobs quite so tightly. So, personally, I see no issue in using the benefits to work less - that's how its designed.

Regarding your plan to save a bit, then let it ride, we have the same plan. One question: your numbers sound a little off - how much longer are you planning on working full time?

des999

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Re: alternative to early retirement, thoughts?
« Reply #15 on: July 20, 2015, 01:23:16 PM »
A+ for working the system though.   

One way to look at it is maximum optimization which is something most in this forum strive for, moral judgements aside.

I see no problem with working a job you don't love until you have saved enough money then going and doing something you enjoy. The risk only risk is your nest egg doesn't appreciate as you expect and you have to work your "fun job" longer or you go back to a higher paying job for a few years to make up the difference.

I would say if you are depending on the ACA subsidy to support your "fun job" then you can't afford it.

Maximization is a way to justify it to yourself. The MMM blog could be focused on cutting your expenses down to 24k then applying for disability. Instead, most on this forum strive to be truly financially independent so they are not forced to rely on others to support them financially weather that be an employer.... or a government subsidy.

I'm not depending on it, I'm just saying it is making this reality happen sooner.  The dependent part I am talking about is the fact that now an Ins company can't tell me to fly a kite b/c someone in my family has a pre-existing.  That was the case a few years back, so I would have to work at mega corp to keep myself insured.


des999

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Re: alternative to early retirement, thoughts?
« Reply #16 on: July 20, 2015, 01:37:29 PM »
I always thought a benefit of the ACA was that health insurance is no longer tied to jobs quite so tightly. So, personally, I see no issue in using the benefits to work less - that's how its designed.

Regarding your plan to save a bit, then let it ride, we have the same plan. One question: your numbers sound a little off - how much longer are you planning on working full time?


I didn't really put any real numbers behind my post, just generic stuff.  What numbers are you referring to? 

cliff notes version, I have about 200k in retirement accounts, I was going to work another couple years and try to get it closer to 250k before I cut back on work.

The thinking is that the 250k sits for 15-20 years and when I'm ready to start withdrawing it would be in the 700-900k range.

KCM5

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Re: alternative to early retirement, thoughts?
« Reply #17 on: July 20, 2015, 01:44:49 PM »
I always thought a benefit of the ACA was that health insurance is no longer tied to jobs quite so tightly. So, personally, I see no issue in using the benefits to work less - that's how its designed.

Regarding your plan to save a bit, then let it ride, we have the same plan. One question: your numbers sound a little off - how much longer are you planning on working full time?


I didn't really put any real numbers behind my post, just generic stuff.  What numbers are you referring to? 

cliff notes version, I have about 200k in retirement accounts, I was going to work another couple years and try to get it closer to 250k before I cut back on work.

The thinking is that the 250k sits for 15-20 years and when I'm ready to start withdrawing it would be in the 700-900k range.

By numbers, I meant that it looks like you make quite a bit now and I assume should be banking the difference between your current salary and your projected part time salary. So if you only need to save $50k more you should be saving at least $30k a year right now. And to get $250k to a point where it's equivalent to $40k/yr you need at least 20 years with normal growth (ballparking these numbers, but maybe you'll get what I mean now). But if you plan on reducing your spending in retirement it sounds like a plan.

Gumbo1978

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Re: alternative to early retirement, thoughts?
« Reply #18 on: July 20, 2015, 02:23:25 PM »
I'm in a similar boat.  Thought about FIRE'ing early, but instead plan on drawing back vs. rushing the finish line.  I've got 3 more years working for a large insurance company before my wife gets out with a speech pathology degree.  My wife will start working at that point (hopefully 30 hours as the above poster referenced) so we can get healthcare.  After I spend a couple of years at home with my kids (will have a 1st and 3rd grader at that point) and cleanse myself of the 14 years I've spent here, I plan on working part time.  We are going to let what we have put in retirement/529 ride and work strictly from a cashflow standpoint (only enough to pay the current bills).  If that puts us below 30 hours, we'll go to ACA to purchase a policy.  If we get subsidized (we surely will), all the better.


des999

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Re: alternative to early retirement, thoughts?
« Reply #19 on: July 21, 2015, 09:06:26 AM »
something else I just thought about, wondered if anyone is doing.  I believe if I make over the 40k limit I talked about, I could invest the excess into a solo 401k (or maybe I have other options), as this would keep my MAGI (which is what calculation they use for subsidies) at 40k.

this may allow me to make an additional 18k and invest that 18k to ensure my retirement account is growing at a better rate.




mandy_2002

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Re: alternative to early retirement, thoughts?
« Reply #20 on: July 21, 2015, 09:53:42 AM »
something else I just thought about, wondered if anyone is doing.  I believe if I make over the 40k limit I talked about, I could invest the excess into a solo 401k (or maybe I have other options), as this would keep my MAGI (which is what calculation they use for subsidies) at 40k.

this may allow me to make an additional 18k and invest that 18k to ensure my retirement account is growing at a better rate.

Under married filing jointly, you could also take advantage of the saver credit .

forummm

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Re: alternative to early retirement, thoughts?
« Reply #21 on: July 21, 2015, 11:16:52 AM »
Not sure about your details, but ACA costs are going up as much as 30% YoY here in Texas.  Keep in mind that you'll be living on a reduced income and depend on ACA subsidies (given the pre-existing condition) to make healthcare available and affordable in the decade(s) to come.  Unless your part time job come with good health insurance, this might make sticking it out in your current job worth more than you think if this compounding continues - plus you can stash much more than if you go part time.  Maybe ACA stabilizes more in a few years, which would help make this a clearer decision. 

Quote
Roughly 960,000 Texans, of an estimated 3 million who are eligible, have enrolled in and paid for insurance plans offered through the federal exchange that was mandated by the Affordable Care Act. The impact of rising premiums on participation rates for 2016 remains to be seen.
   • Texas’ 32 percent participation rate for 2015 is lower than the national rate of 36 percent.
   • Several large insurers, in Texas and nationally, have reported they are seeking to raise premiums by as much as 32 percent for 2016.
   Source: Kaiser Family Foundation, Centers for Medicare and Medicaid Services

Note that insurers are seeking to raise premiums by that amount. Unclear if they will be allowed to. And Texas is an outlier in part because they have such low participation rates (less than 1/3 of people eligible actually enrolled). This makes the people who did enroll on average much more likely to be having higher medical expenses and the people who didn't enroll much more likely to have lower medical expenses. So premiums are higher. Texas has the highest uninsured rate in the nation (tied with OK) at something like 22%.

EscapeVelocity2020

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Re: alternative to early retirement, thoughts?
« Reply #22 on: July 21, 2015, 12:38:03 PM »
Note that insurers are seeking to raise premiums by that amount. Unclear if they will be allowed to.
Well, if insurers are losing money in this market, I'm not sure how the government can force them to not raise premiums or cap them.  I think that it is more on the Federal government to raise the subsidy so that insurers can continue to make the limited profit they are 'allowed' to make.
Quote
And Texas is an outlier in part because they have such low participation rates (less than 1/3 of people eligible actually enrolled). This makes the people who did enroll on average much more likely to be having higher medical expenses and the people who didn't enroll much more likely to have lower medical expenses. So premiums are higher. Texas has the highest uninsured rate in the nation (tied with OK) at something like 22%.
As premiums increase, Texas participation rate will most likely go lower - that's the conundrum which makes me wonder how it will stabilize.  Texas looks to be the interesting test case.  Most 'national health insurance' schemes have a unified structure, the Affordable Care Act is more like a Euro-esque patchwork, where the weakest member keeps asking for more subsidy which could challenge the whole structure (i.e. will the Federal Government step in to stabilize premiums if people keep dropping out, and how will the rest of the country feel about that...)?  And might only get more confusing when a less supportive administration comes in...

Sorry to go off topic if the OP isn't immediately affected by this, but going in to the ACA knowing you will rely on it to provide essential health insurance in the future, it most likely will eventually become a topic of interest... 

cloudsail

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Re: alternative to early retirement, thoughts?
« Reply #23 on: July 21, 2015, 01:35:47 PM »
Have you looked into whether or not your child qualifies for Medicare?  My son is covered under Medicare until the age of 18.

forummm

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Re: alternative to early retirement, thoughts?
« Reply #24 on: July 21, 2015, 03:14:15 PM »
Note that insurers are seeking to raise premiums by that amount. Unclear if they will be allowed to.
Well, if insurers are losing money in this market, I'm not sure how the government can force them to not raise premiums or cap them.  I think that it is more on the Federal government to raise the subsidy so that insurers can continue to make the limited profit they are 'allowed' to make.
Quote
And Texas is an outlier in part because they have such low participation rates (less than 1/3 of people eligible actually enrolled). This makes the people who did enroll on average much more likely to be having higher medical expenses and the people who didn't enroll much more likely to have lower medical expenses. So premiums are higher. Texas has the highest uninsured rate in the nation (tied with OK) at something like 22%.
As premiums increase, Texas participation rate will most likely go lower - that's the conundrum which makes me wonder how it will stabilize.  Texas looks to be the interesting test case.  Most 'national health insurance' schemes have a unified structure, the Affordable Care Act is more like a Euro-esque patchwork, where the weakest member keeps asking for more subsidy which could challenge the whole structure (i.e. will the Federal Government step in to stabilize premiums if people keep dropping out, and how will the rest of the country feel about that...)?  And might only get more confusing when a less supportive administration comes in...

Sorry to go off topic if the OP isn't immediately affected by this, but going in to the ACA knowing you will rely on it to provide essential health insurance in the future, it most likely will eventually become a topic of interest... 

The insurers tend to set the negotiation high and then it gets pushed down. And a "death spiral" situation in Texas is unlikely because of the tax credits. They provide a hard ceiling on what low income people have to pay. Plus over time people will realize that it's just private insurance and nothing to be afraid of. And the tax for not having insurance goes up to the greater of 2.5% of income or $695/adult +1/2 that per kid. So people will be motivated to get covered.

Have you looked into whether or not your child qualifies for Medicare?  My son is covered under Medicare until the age of 18.

Or Medicaid or CHIP perhaps?

des999

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Re: alternative to early retirement, thoughts?
« Reply #25 on: July 21, 2015, 06:54:59 PM »
OP's post reminded me of Flannel Guy's great article on Pretire ment :

http://www.flannelguyroi.com/can-pretire/

Since my DW loves her job, and her income alone covers our costs, I think about doing this, but I want to get our investments a little higher first.

Thanks for that link

des999

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Re: alternative to early retirement, thoughts?
« Reply #26 on: July 21, 2015, 06:56:52 PM »
Have you looked into whether or not your child qualifies for Medicare?  My son is covered under Medicare until the age of 18.

I have not yet as our income is too high (I assume). But if I do the part time thing I will def. look into it. Thanks for the info

cloudsail

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Re: alternative to early retirement, thoughts?
« Reply #27 on: July 22, 2015, 01:31:10 AM »
Have you looked into whether or not your child qualifies for Medicare?  My son is covered under Medicare until the age of 18.

I have not yet as our income is too high (I assume). But if I do the part time thing I will def. look into it. Thanks for the info

Our coverage is not income based.  As long as the child is being serviced by the regional center, which he will be until the age of 18, he is covered.  Right now I'm using it as secondary coverage, as we also have coverage through our employers.

des999

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Re: alternative to early retirement, thoughts?
« Reply #28 on: July 22, 2015, 10:35:19 AM »
I'll look into it. Thanks for the info.

ash7962

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Re: alternative to early retirement, thoughts?
« Reply #29 on: July 22, 2015, 12:10:12 PM »
des999, your OP is very similar to the scenario I want to make happen for myself except some different numbers and I am currently a family of 1.  I've thought about it quite a bit, and I think the risk is pretty minimal depending on how easy it is to go back FT.  For me, I would like to quit when I've got something like 200-300k, move to a LCOL area, and grab a part time job doing whatever.  I kinda dream about working in a public library, but I'd take almost anything.  I think several things will come of this: I'll get a better idea of the budget I will need post FIRE in a LCOL area, I'll get a break from full time/high stress jobs, and I'll have time to explore my interests more in order to find which ones I'm really passionate about.  I'm honestly not too worried about it working out for a few reasons.  I think if the experiment is a failure I'll be able to tell within about a year (basically, does the part time job cover expenses? do I hate life?).  I think a 1 yr "sabbatical" is pretty easy to explain on a resume, so if things aren't working out then a full time job is an option.  I'm also pretty young and have an in demand skillset.  Its also possible one or more of my hobbies can turn into additional income if necessary.  And finally I think my expenses can be pretty flexible since I just have to worry about myself. 

I'm more worried that I'll quit and find that I worked too long/over saved.  I feel that if I work until I reach my full FIRE number then when I quit I will find that I saved too much and worked too long.  I don't want a huge pile of money, I want as much free time as possible.

des999

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Re: alternative to early retirement, thoughts?
« Reply #30 on: July 22, 2015, 07:49:07 PM »
Ash,
I agree being able to go back to full time at any point would be a nice luxury. I'm on IT so unless my part time job is in IT if I'm out of it too long it may be hard to get back in.

Another cool thing that you mentioned is that it seems like with more time you find more interests and a lot of times those end up in extra income.

Are you close to your 200-300 number? 

EscapeVelocity2020

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Re: alternative to early retirement, thoughts?
« Reply #31 on: July 23, 2015, 04:12:54 AM »

The insurers tend to set the negotiation high and then it gets pushed down. And a "death spiral" situation in Texas is unlikely because of the tax credits. They provide a hard ceiling on what low income people have to pay. Plus over time people will realize that it's just private insurance and nothing to be afraid of. And the tax for not having insurance goes up to the greater of 2.5% of income or $695/adult +1/2 that per kid. So people will be motivated to get covered.

Have you looked into whether or not your child qualifies for Medicare?  My son is covered under Medicare until the age of 18.

Or Medicaid or CHIP perhaps?

I don't think you have thought enough about this, but whatever.  RootOfGood had a 'hands on' post on this topic ( I covered it also, but I'm not an actual 'user' of these programs and in a totally different situation than the OP):  http://rootofgood.com/affordable-care-act-subsidy/

ash7962

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Re: alternative to early retirement, thoughts?
« Reply #32 on: July 23, 2015, 08:22:53 AM »
Ash,
I agree being able to go back to full time at any point would be a nice luxury. I'm on IT so unless my part time job is in IT if I'm out of it too long it may be hard to get back in.

Another cool thing that you mentioned is that it seems like with more time you find more interests and a lot of times those end up in extra income.

Are you close to your 200-300 number?

I hit 100k total NW a couple months ago though I'm only at ~70k invested.  I want to go part time once I have 200-300k in investments.  I expect to be there in less than 5 years if I never got a raise or a bonus.  The large chunk of uninvested cash is for a down payment within the next 1-2 years.

Yeah the going back to FT thing could be tough.  If you give yourself a time frame of 6mo then I'm betting you could find another full time job.  During the 6 months you just have to see how much your part time job actually covers expense wise, and if you are ok with the new rate of stashing or unstashing.  I really do think interests I pursue will be a source of income too.  Just by pursuing my interests I know something will come out of it.  Could be just experience gain or actual items I could sell.  For instance knitting is one of my hobbies.  What happens when I've knitted more items than I need?  I probably won't stop knitting, so I'll just put the extras up on etsy or give them as gifts.  I could also knit samples for magazines, or teach a class in town or even out of my home.  So many options for just one hobby!  Also since I hopefully won't be relying on this money (I plan on it being potential icing on the cake), it doesn't matter if it takes years and years for me to build up a small hobby business.  Also I'd be happy if it only made me 100-300$ a month or whatever, and it just covered my hobby spending.  Haha sorry if that's all boring, I love talking/thinking about my partial retirement potentials :).

des999

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Re: alternative to early retirement, thoughts?
« Reply #33 on: July 23, 2015, 10:16:34 AM »
Ash,
I agree being able to go back to full time at any point would be a nice luxury. I'm on IT so unless my part time job is in IT if I'm out of it too long it may be hard to get back in.

Another cool thing that you mentioned is that it seems like with more time you find more interests and a lot of times those end up in extra income.

Are you close to your 200-300 number?

I hit 100k total NW a couple months ago though I'm only at ~70k invested.  I want to go part time once I have 200-300k in investments.  I expect to be there in less than 5 years if I never got a raise or a bonus.  The large chunk of uninvested cash is for a down payment within the next 1-2 years.

Yeah the going back to FT thing could be tough.  If you give yourself a time frame of 6mo then I'm betting you could find another full time job.  During the 6 months you just have to see how much your part time job actually covers expense wise, and if you are ok with the new rate of stashing or unstashing.  I really do think interests I pursue will be a source of income too.  Just by pursuing my interests I know something will come out of it.  Could be just experience gain or actual items I could sell.  For instance knitting is one of my hobbies.  What happens when I've knitted more items than I need?  I probably won't stop knitting, so I'll just put the extras up on etsy or give them as gifts.  I could also knit samples for magazines, or teach a class in town or even out of my home.  So many options for just one hobby!  Also since I hopefully won't be relying on this money (I plan on it being potential icing on the cake), it doesn't matter if it takes years and years for me to build up a small hobby business.  Also I'd be happy if it only made me 100-300$ a month or whatever, and it just covered my hobby spending.  Haha sorry if that's all boring, I love talking/thinking about my partial retirement potentials :).

Haha not boring at all. I try talking to friends and family and they think I'm nuts so it is great to talk to other people that enjoy talking about this stuff ;)

Cookie78

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Re: alternative to early retirement, thoughts?
« Reply #34 on: July 23, 2015, 10:24:24 AM »
Ash,
I agree being able to go back to full time at any point would be a nice luxury. I'm on IT so unless my part time job is in IT if I'm out of it too long it may be hard to get back in.

Another cool thing that you mentioned is that it seems like with more time you find more interests and a lot of times those end up in extra income.

Are you close to your 200-300 number?

I hit 100k total NW a couple months ago though I'm only at ~70k invested.  I want to go part time once I have 200-300k in investments.  I expect to be there in less than 5 years if I never got a raise or a bonus.  The large chunk of uninvested cash is for a down payment within the next 1-2 years.

Yeah the going back to FT thing could be tough.  If you give yourself a time frame of 6mo then I'm betting you could find another full time job.  During the 6 months you just have to see how much your part time job actually covers expense wise, and if you are ok with the new rate of stashing or unstashing.  I really do think interests I pursue will be a source of income too.  Just by pursuing my interests I know something will come out of it.  Could be just experience gain or actual items I could sell.  For instance knitting is one of my hobbies.  What happens when I've knitted more items than I need?  I probably won't stop knitting, so I'll just put the extras up on etsy or give them as gifts.  I could also knit samples for magazines, or teach a class in town or even out of my home.  So many options for just one hobby!  Also since I hopefully won't be relying on this money (I plan on it being potential icing on the cake), it doesn't matter if it takes years and years for me to build up a small hobby business.  Also I'd be happy if it only made me 100-300$ a month or whatever, and it just covered my hobby spending.  Haha sorry if that's all boring, I love talking/thinking about my partial retirement potentials :).

Haha not boring at all. I try talking to friends and family and they think I'm nuts so it is great to talk to other people that enjoy talking about this stuff ;)

I agree. It's awesome to hear about other's alternative life plans.

ash7962

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Re: alternative to early retirement, thoughts?
« Reply #35 on: July 23, 2015, 12:05:58 PM »
Yeah told my parents about my plans and they think I'm crazy.  My parents recently went through a financial rough patch (which they're past now), so we've had a bunch of financial conversations.  During one of those I decided to tell them my plans, so I went on about how I plan on quitting once I have around 300k or so (plus a big explanation about part time jobs and how it'd all work).  My Dad thought about it for a few minutes then said seemed to have an "ah ha" moment, and said something along the lines of "Oh right well you'll be married by then and you'll have his salary".  I was a little offended that having a husband was the only way the scenario I described could work in his mind.  Its just he could not even comprehend my plans or reconcile them with what he thinks are the facts of life (basically needing to spend 40k/year).

Cassie

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Re: alternative to early retirement, thoughts?
« Reply #36 on: July 23, 2015, 01:32:14 PM »
I don't see anything wrong with using the ACA & working p.t.  If our income ever got low enough that we qualified I would use it.

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Re: alternative to early retirement, thoughts?
« Reply #37 on: July 26, 2015, 10:21:04 PM »
My wife and I are planning to hit the road in an RV once we hit the halfway to FI mark. We are on track to hit that mark in around 6 months.  I think we are very close to halfway right now but I'm not counting the money we will use to purchase the RV.  After taking some time to decompress we will find some part time work or be work campers for awhile. We can figure it out when we get there. While we aren't FI, we are willing to extend our working time in exchange for a better work/life balance and a little adventure. This discussion reminds me of an oldie but goodie.
 http://forum.mrmoneymustache.com/ask-a-mustachian/how-much-do-you-need-to-retire-early/msg27938/#msg27938

This article is very similar to what is being talked about here.   http://www.mrmoneymustache.com/2011/10/25/the-joy-of-part-time-work/




des999

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Re: alternative to early retirement, thoughts?
« Reply #38 on: July 27, 2015, 10:14:34 AM »
My wife and I are planning to hit the road in an RV once we hit the halfway to FI mark. We are on track to hit that mark in around 6 months.  I think we are very close to halfway right now but I'm not counting the money we will use to purchase the RV.  After taking some time to decompress we will find some part time work or be work campers for awhile. We can figure it out when we get there. While we aren't FI, we are willing to extend our working time in exchange for a better work/life balance and a little adventure. This discussion reminds me of an oldie but goodie.
 http://forum.mrmoneymustache.com/ask-a-mustachian/how-much-do-you-need-to-retire-early/msg27938/#msg27938

This article is very similar to what is being talked about here.   http://www.mrmoneymustache.com/2011/10/25/the-joy-of-part-time-work/

That sounds like a lot of fun, we've talked about doing a similar road trip/RV trip once our child is a little older. 

Nice link, it is nice to see people talking about leaving full time work for part time.

ash7962

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Re: alternative to early retirement, thoughts?
« Reply #39 on: July 27, 2015, 02:03:41 PM »
My wife and I are planning to hit the road in an RV once we hit the halfway to FI mark. We are on track to hit that mark in around 6 months.  I think we are very close to halfway right now but I'm not counting the money we will use to purchase the RV.  After taking some time to decompress we will find some part time work or be work campers for awhile. We can figure it out when we get there. While we aren't FI, we are willing to extend our working time in exchange for a better work/life balance and a little adventure. This discussion reminds me of an oldie but goodie.
 http://forum.mrmoneymustache.com/ask-a-mustachian/how-much-do-you-need-to-retire-early/msg27938/#msg27938

This article is very similar to what is being talked about here.   http://www.mrmoneymustache.com/2011/10/25/the-joy-of-part-time-work/

Your RV plan sounds great since I'm guessing your expenses will fall a bit while you RV plus you'll get a taste of the FIREd life.  Also, I had forgotten about the Joy of Part Time Work article, so thanks for linking it.  It made me curious about how many more years would everyone here have to work with a part time job vs the full time (to become FIRE I mean)?  I believe with my plans I would be trading about 4 years of full time for something like 10 years of part time (all estimates of course).

welliamwallace

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Re: alternative to early retirement, thoughts?
« Reply #40 on: July 27, 2015, 02:24:04 PM »
Hey OP, unfortunately this thread has been sidetracked by discussions about insurance policy. I want to focus on what might be a gap in your plan.

You state that you currently live on about $40k a year. If you expect to have approximately the same expenses in retirement (in 2015 dollars of course), You would need about a $1,000,000 stash to fund your retirement with the 4% rule ($1MM * 0.04 = $40k).

However, a $250k retirement account growing at 7% will take approximately 21 years to become $1MM, and that's assuming 7% annual returns. I would be much more conservative than that (probably... 5%?), because
1) at your age I would not be 100% in stocks
2) 6.9% is actually the long term annual growth of the S&P 500 with inflation and dividends factored in, but I would put money on having slightly lower annual returns than that over the next 10 years (given the run-up in the past 6 years)

des999

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Re: alternative to early retirement, thoughts?
« Reply #41 on: July 28, 2015, 07:05:37 AM »
Hey OP, unfortunately this thread has been sidetracked by discussions about insurance policy. I want to focus on what might be a gap in your plan.

You state that you currently live on about $40k a year. If you expect to have approximately the same expenses in retirement (in 2015 dollars of course), You would need about a $1,000,000 stash to fund your retirement with the 4% rule ($1MM * 0.04 = $40k).

However, a $250k retirement account growing at 7% will take approximately 21 years to become $1MM, and that's assuming 7% annual returns. I would be much more conservative than that (probably... 5%?), because
1) at your age I would not be 100% in stocks
2) 6.9% is actually the long term annual growth of the S&P 500 with inflation and dividends factored in, but I would put money on having slightly lower annual returns than that over the next 10 years (given the run-up in the past 6 years)

All valid points.  My thinking is this: 

I don't mind withdrawing some principal.  I also am thinking that my expenses will be lower in 20 years than they are now (could be risky to think this way). 

Also, recently I have been looking for what I am planning to do for part time work, if I stay in IT, I hope I can make more than 40k, and put all the extra income into a Solo 401k to keep my MAGI at around 40k for health care.  This way I can continue to grow my nest egg.  This will be the initial goal when I leave Mega Corp, find a way to make say 50k working 25 hours a week thus allowing me to still put some money into nest egg.

Lastly, the 7% is just mostly what I have read/seen others use.  I do agree that the next 20 years could just as easily be 4% as it could be 9%.  So, being more conservative might not be a bad idea.
« Last Edit: July 28, 2015, 08:27:38 AM by des999 »

des999

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Re: alternative to early retirement, thoughts?
« Reply #42 on: July 28, 2015, 10:35:33 AM »
one other thing, I'm 36, is anyone in that age range planning to have any money from Social Security when they are 62/67.

I would think there would be some money when I'm eligible, so that would be a nice added bonus. 

cloudsail

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Re: alternative to early retirement, thoughts?
« Reply #43 on: July 28, 2015, 01:00:21 PM »
one other thing, I'm 36, is anyone in that age range planning to have any money from Social Security when they are 62/67.

I would think there would be some money when I'm eligible, so that would be a nice added bonus.

I just hit 30.  I'm pretty sure that Social Security will still exist in some form in 40 years, but I never factor it into any of my calculations.  It is completely out of my control and totally unknown as to amount or when it would become available.

des999

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Re: alternative to early retirement, thoughts?
« Reply #44 on: July 28, 2015, 01:07:28 PM »
one other thing, I'm 36, is anyone in that age range planning to have any money from Social Security when they are 62/67.

I would think there would be some money when I'm eligible, so that would be a nice added bonus.

I just hit 30.  I'm pretty sure that Social Security will still exist in some form in 40 years, but I never factor it into any of my calculations.  It is completely out of my control and totally unknown as to amount or when it would become available.

I agree, the only thing that worries me is that they base it on need, meaning anyone with assets over a given amount would no longer qualify. 

There is no way it will just up and go away, too many people rely on it.  It may get taxed more, or they may raise the age, I just don't see how they can do away with it all together.