Author Topic: Who Needs a Nest Egg?  (Read 2958 times)

jamaicaspanish

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Who Needs a Nest Egg?
« on: December 07, 2013, 11:45:47 AM »

First World Problems
Or
Champagne Choices

Hi guys.  Long-time mostly-Mustachians (because of circumstances and choice).  First time callers.  Please forgive the length of the post.

We are an incredibly lucky couple whose good fortune, hard work, and planning are paying off.  Not only are we in a financially stable position, but we still like each other after raising three children and 25 years of marriage.

But we have a life choice to make and would like some Mustachian perspective.

Background:
We were public school educators who worked in a state that allowed us to “buy back” Social Security years of work.  Through 403 and 457 plans, we tax- sheltered and then ‘bought back’ 10.5 years of previous non-pension work for Worse Half.

Total cost was $225k (about 7 years of saving 33k annually).
(This is the best investment I can imagine.  You can literally buy years of life/freedom.  And virtually no one in the state takes advantage of it. Boggles the mind.)

Two years ago WH retired (@ 45) and we transitioned to teaching internationally.  Sold our house.  Sold/gave away almost all our possessions.  Left two Mustachian cars with our kids at university.

 WH’s  Defined Benefit Pension is 53k/year (+2% COLA).  We chose the reduced option to cover Surviving Spouse at 100% benefit in case of Retiree’s death.

Overseas these two years, we have  both drawn a full-time teaching salary and one Stateside pension (yea for double dipping!).
We have paid off our three kids’ college bills (they contributed, as well) and saved for modest wedding gifts for them.

At the end of this school year will have a total cash reserve of 25k. 

Better Half will receive her pension beginning in 16 years (24k/year). 

Because we were public sector employees, our Social Security will be virtually nil.  And we still have to cover our own health insurance until MediCare kicks in.

Here’s the question:  since we funneled all our available savings into buying back years for the Pension Fund, we are savings poor (25k in July 2014 ).

Should we 
1.    accept another international teaching post? (potential savings for a 2-year contract + Pension is $120k/year). 

2.   (Semi) Retire this summer and work on building a nest egg through part-time work (substitute teaching, tutoring, dog-walking, manual labor, or whatever) and frugal living?  This would probably be in the States, living close to family.

3.   Follow a wild hare that someone here suggests?

Thanks in advance for your thoughtful feedback.

TLDR:  Would you be happy with a very healthy, reliable Pension without a Nest Egg?  Or would you work a couple of extra years (and we still love the work) to build back-up investment?



Catbert

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Re: Who Needs a Nest Egg?
« Reply #1 on: December 07, 2013, 12:31:50 PM »
Personally, I would not be comfortable having all my retirement eggs in one pension basket.  On that basis I would probably continue to work oversea and bank a bunch of money for a few more years.

 However, the oversea teaching vs. stateside part-time workings seems more a question of life style preference than money.  Do you still enjoy being oversea or do you want to be closer to family.  No one buy you can answer that question.

juggleandhope

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Re: Who Needs a Nest Egg?
« Reply #2 on: December 07, 2013, 03:40:33 PM »
Fun question. 

It seems to me that you've reached a version of "financial independence".  Really there's two questions -
1.  Should you build a small pile of cash so that you have more of a back-up plan, more options, etc or just ignore money and do what you want to do?
2.  Assuming you choose to still pursue more money, should you do it now or later?

My tendency would be to think "yes" to the first question but I suspect that's indoctrination speaking.  Similarly I'd think "now" to the second question since you're still enjoying it and maybe would have somewhat easier access to another int'l school gig at this point than in a few years.  And 240K would be a plenty big nest egg, right, given the pensions?

But I think your real sense of changing your lives will happen after you stop teaching and maybe that would be the bigger growth experience.  Like you said, there's lots of options to make a little money while being back in the U.S. too. 

Do your kids have the idea that they will be your back up plan, since you helped pay for college and gave them cars?  Or are you still their back up plan for mortgages and emergencies?

Stultepro

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Re: Who Needs a Nest Egg?
« Reply #3 on: December 07, 2013, 04:09:56 PM »
First, Congrats on getting this far - in Matrimony, Matriculation, and General Maturation... =-)

Baby Mustache here - but to me it's all about loving the living you are making, and doing.

Let's look forward a few years if we may - you are roughly 47 years old, your kids are married
and Grandkids will soon be on the way I'm sure. 

Ah, Grand Children - the reason for the season-ing.

Option 1 - Two years invested now means that you can be there for your kids and Grandkids and be able to enjoy it that much more.  Without the affects of regular Grandparent involvement my life would have been... unpleasant.

It's sounds like your kids are at the pre-kids stage of marriage where they are still building themselves as a unit..? 
I don't know your situation - but two more years of you guys being less central in their lives might be good for their maturation as a couple, and as adults (again - none of my business and I don't know your family dynamics - I beg your pardon if I have offended)

Option 2 - if Grandkids are already entering the picture perhaps you go the odd-job route and babysit the occasional weekend so the kids can have a sanity break.  My BetterHalf-in-Law lives with us and is a daily boon and blessing.

I agree with Mary W - One basket nest eggery is an invite to omelette.
When it comes to Nest eggery "Don't screw the Poach." 

That being said - you have Nest Egg one put away - why not do something with a slightly higher risk and larger return with Nest Egg number 2?  LendingClub (or Daric, or Prosper) perhaps? 

Or do like my Great Aunt did - buy an apartment building / complex centrally located between where all the kids live - she didn't manage it herself but did live on-site watching her investment. (My Aunt started with one building and eventually bought the 4 closest buildings too.  Added a pool and community center mostly to have a place for Grandkid birthday parties)

See Mr Money Mustachio's update on his Peer-Peer Lending experience (if you haven't already)
http://www.mrmoneymustache.com/2013/08/26/the-lending-club-experiment-at-one-year-the-gravy-train-grows-crowded/
 
Daric.com is BRAND Spanking New Peer to peer lending, so the crowding shouldn't be too bad.
(I have no financial relationship with Daric - but plan to do some Peer-peer lending through them in Q1 next year)

Well - that is the two cents of a baby mustachian... maybe it'll garner some interest in your quantum pudding vault.
 
 - Fool for the Journey -

greenmimama

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Re: Who Needs a Nest Egg?
« Reply #4 on: December 08, 2013, 09:26:06 AM »
SInce you enjoy the work, I would do it for another couple of years, just to build up a nest egg, for nothing else except, then you have more fun money, for traveling, or whatever your hearts desire is.

Congrats, it sounds like you have a great life, all teachers should be so lucky, you work very very hard for those years!