Can My Wife FIRE?

[UponStars]

We are long time readers of the blog and forums, so we value the opinions on this board.  We generally try to live a mustachian style life and I would like to hear what the experts think about my wife quitting or drastically cutting back her income to unload some stress.  Here is our current situation:

Paid Off House:  230k
Cash:  118k
403b:  32k
Rollover IRA:  341k
Roth IRAs:  74k
Vanguard Brokerage:  33k
HSA's:  20k

My Income (teacher): 4021/month
Expenses:  3577/month

House Tax/Ins           285
HOA                           15
Car Replacement   200
Home Repairs           400
Electric                   90
Natural Gas           90
City Utilities(water/trash)   40
Sewer                   50
Groceries                   650
Phone                   50
Internet                   55
Unleaded Gas           50
Restaurants           100
Car Maintenance   100
Car Insurance/Plates   94
Clothing                   100
Life Insurance           33
Personal Care           50
Professional Fees   25
Dog                     60
Christmas                   75
Blow Money           50
Dates                   100
Vacation                   500
Gifts                           50
Adult Activities           100
Kid Activities           150
Umbrella                   15

I know the cash on hand is absurd.  We have recently begun putting chunks of that into the brokerage account with plans to get it down to about half of what it currently is.

My wife currently works full time, but we think she could cut back to part-time or work as an independent contractor for the same company.  That option may be a good compromise for now, but that's not something I really want to bank on for this conversation.  As mentioned, I'm a teacher and I currently do not do any paid extracurricular positions.  Until recently she worked several evenings each week and occasional weekends and we have two elementary boys so I needed to be home after school and could not coach.  If she isn't working it would be pretty easy for me to pick up another 3-5k coaching and possibly an additional 3k if I taught summer school. 

Our cars are paid off and our boys have 529's with over 135k in each at the moment, so their college is paid for.  We will need to replace our roof, probably some windows, paint, and the deck, but we have a healthy home repair number in the budget along with the extra funds currently sitting in savings.

My income is an estimation because I currently max my 403b and our tax bracket is higher with both of us working.  I'm not exactly sure what it would be with no elective deductions and a lower bracket. 

I think she could completely quit and we could live on my salary until I'm able to retire from teaching 20 years from now.  I believe our investments would continue to grow although we would have very little extra to invest on my salary alone.  In 20 years, with a modest return our investments should be close to 1.5mil.  We should have my 2k/month pension plus both SS payments in retirement that will cover our current budget and we would only need to draw a little from our stache for the years between my retirement at 57 and when we start collecting SS.  I think we are more than safe at this point. 

What do you think, can she be free to do whatever she wants including nothing if that's her wish?
 

[Tuskalusa]

I think that if your wife wanted to stay home with the kids with you working, you’d be fine. It sounds like you are ok working until traditional retirement, and I totally get how it’s easier to have one parent at home with kids. (We did the same thing, and it really reduced family stress.). A few thoughts:

- Form the post, it sounds like your wife would like to quit working?  It’s a big change in lifestyle, so worth confirming that’s what everyone wants.
- Do you currently carry your whole family on your benefits?  If not, your costs will go up.
- Do you have life insurance?  With the entire family relying on your income, you will need some income protection.

Let’s us know what you decide!

[CowboyAndIndian]

I think she can stop completely, but it might be easier to do the 10-15 hours per week to ease her into it.

(I'm assuming you have no loans since your other numbers are good)

In 20 years, your money undergo almost 3 doublings (10% return using the rule of 72 gives almost 3 doublings). THat means the $600k that you have will be almost $4.5 million. Even two doublings(with a return of 7%) will result in $2.4 million, which is far more than the $1.5 million that you assume.

[RelaxedGal]

I think that if your wife wanted to stay home with the kids with you working, you’d be fine. It sounds like you are ok working until traditional retirement, and I totally get how it’s easier to have one parent at home with kids. (We did the same thing, and it really reduced family stress.). A few thoughts:

- Form the post, it sounds like your wife would like to quit working?  It’s a big change in lifestyle, so worth confirming that’s what everyone wants.
- Do you currently carry your whole family on your benefits?  If not, your costs will go up.
- Do you have life insurance?  With the entire family relying on your income, you will need some income protection.

Let’s us know what you decide!

Amen to everything Tuskalusa said, but especially the bit in bold.  Your post hits home because I'm debating whether I want to go part time or drop out of the workforce, and part of it is exactly that: do I really want to stop working?  In my office there is quite an "out of sight, out of mind" culture, and I won't be put on the big projects.  Can I take the hit to my self esteem if I'm not that important?  How much of my self worth is tied to being "needed" at work?  Hopefully your wife has a healthier relationship to work ;-) 

The numbers say Go For It, but since she needs that big of a cash cushion I doubt she'll take the word of internet strangers.  With 4021/month income and 3577/month in expenses that's only $500/month to build back up the emergency fund after an emergency and I could see that making her nervous.  As CowboyAndIndian said it might be easier for her to move to part time to ease into it, and give a bigger delta between income and outflows for that rainy day scenario.

[UponStars]

I think that if your wife wanted to stay home with the kids with you working, you’d be fine. It sounds like you are ok working until traditional retirement, and I totally get how it’s easier to have one parent at home with kids. (We did the same thing, and it really reduced family stress.). A few thoughts:

- Form the post, it sounds like your wife would like to quit working?  It’s a big change in lifestyle, so worth confirming that’s what everyone wants.
- Do you currently carry your whole family on your benefits?  If not, your costs will go up.
- Do you have life insurance?  With the entire family relying on your income, you will need some income protection.

Let’s us know what you decide!

She certainly talks like she'd like to quit, but she also admits that she'd probably be a bit bored.  I think cutting back would be a great compromise for her sanity by providing a little more cushion and giving her an outlet for her abilities/skills. 

I have family coverage currently, but we have a spousal carve out for working spouses, so she has to purchase her own insurance as well.  It will actually save us money if she quit! 

Yes, I have a term policy for another 11 years and then both boys will be out of the house and it she would be fine at that point.

It was mentioned that she may not trust internet strangers and I think that starts getting to the biggest issue for us.  A major point holding her back from enjoying the freedom she has earned is her fear of the unknown.  No one that we know lives this lifestyle and it is such a crazy concept to not make as much money as possible and buy as much stuff as possible.  She currently makes 130k and there is the thought that all of our friends/family would think that she is crazy and selfish to give up potential earnings to do "nothing".  Of course she wouldn't be doing "nothing" but that's what she feels others would think of her.  She's always earned more than me and possibly has a hard time of letting go of the security of being the bigger money earner as well.  I would love for her to just walk away and take the dog for walks or ride her bike all day long.  She's worked hard under pressure for long enough. 

[RWD]

Why are your expenses so high when your house is paid off?

[UponStars]

Why are your expenses so high when your house is paid off?

I modified the original post with a budget.  Vacation is super high, we don't spend that much at all, but my wife likes a cushion in her planning and when we take our camping trips over the summer she feels better about it and can relax and enjoy herself knowing that she is staying well within our vacation budget even if we go out to eat and buy some ice-cream occassionally. 

Do you see other areas that need to be trimmed?  We don't go on a date every month, more like 2 or 3 times a year, but again it's budgeted that way so when we get the chance she'll actually enjoy the evening.  Most items are overestimated and on the high side of reality to help with the whole goal of showing her that we can afford to live on my salary alone without a negative effect on our lifestyle. 

The only sacrifice would be the ability to significantly to our investments.  We currently max out 401k/403b, both Roth IRA, HSA and put a couple thousand into our brokerage account each month.  That is a lot of financial security for her to give up.   

[RWD]

Do you see other areas that need to be trimmed?

Restaurants           100
Life Insurance           33
Personal Care           50
Professional Fees   25
Christmas                   75
Blow Money           50
Dates                   100
Vacation                   500
Gifts                           50
Adult Activities           100
Kid Activities           150

I understand this is a budget, and not your actual expenses, right? In any case, I'll give my thoughts.

Do you really need life insurance when your net worth is ~$1.1 million? What are professional fees?

The remaining items I included in the quote above are all more or less fine by themselves but cumulatively make up a huge sum on optional expenses. You have a budget of $675/month on what can be essentially boiled down to a single recreation/gifts category plus the additional $500/month on travel/vacation. If you actually plan to spend that much then it would require $353k of your investments to sustain in retirement. I think instead of having so many little budget categories you should make one to three bigger pools that add up to a smaller total number.

[UponStars]

Do you see other areas that need to be trimmed?

Restaurants           100
Life Insurance           33
Personal Care           50
Professional Fees   25
Christmas                   75
Blow Money           50
Dates                   100
Vacation                   500
Gifts                           50
Adult Activities           100
Kid Activities           150

I understand this is a budget, and not your actual expenses, right? In any case, I'll give my thoughts.

Do you really need life insurance when your net worth is ~$1.1 million? What are professional fees?

The remaining items I included in the quote above are all more or less fine by themselves but cumulatively make up a huge sum on optional expenses. You have a budget of $675/month on what can be essentially boiled down to a single recreation/gifts category plus the additional $500/month on travel/vacation. If you actually plan to spend that much then it would require $353k of your investments to sustain in retirement. I think instead of having so many little budget categories you should make one to three bigger pools that add up to a smaller total number.

Thanks for your thoughts.  Yes, it is just a budget and you're right that they are essentially optional expenses.  We are both licensed professionals, so we have continuing ed costs as well as license renewal fees.   We needed the life insurance when we started this process 9 years ago and much like the other options, my policy provides peace of mind for my wife.  I wouldn't want her to feel that she needs to sell the house in case of my death and she will not touch the boys 529s, so the net worth is a misleading number for her to maintain her current lifestyle. 

The whole point of this exercise was not to see where we could really cut back as we both know there are a lot of optional or high items in our current budget/expenses, but I wanted to show her that others thought like I do.  It would not bring financial ruin to us, and would basically have no effect on our current lifestyle (other than a huge positive, her time) if she would retire now. 

I think the responses I have received generally send the message that I'm not crazy to think it's doable, especially so if we were willing to cut back on those optional expenses that you highlighted.  Thanks again for your thoughts.

[Nick_Miller]

Just a crazy thought, but if she worked just a couple more years, couldn't you BOTH retire or drastically cut back on work?

You seem like a great guy and supportive spouse, but I wonder if some resentment would build over time if your wife really did spend her days "riding her bike", etc., and you're doing the school grind into your 40s and 50s.

And honestly, you might fire back with "Of course not, Nick, that's ridiculous, " but I think it would be hard to anticipate how feelings might change over the next decade or two.

Speaking personally, even if I was okay with it for a year or two, I think I'd resent a situation where my wife left a hugely high-paying job, at a relatively early age, thereby locking me into working full-time for another 20 years.

Have you pondered any of this?

[UponStars]

I have not pondered on the possibility of retirement, although I'm not necessarily excited about working for another 20 years.  Like mentioned it is hard to anticipate exactly how I would feel, but I would certainly be excited for her in the near future.  She's worked in a very stressful environment for many years, and has earned the opportunity to step away.

I have a hard time wrapping my mind around both of us retiring in a couple of years.  Excluding the 529's, our net worth should be close to 1.1 million in a couple of years, if my wife keeps working, and a 4% withdrawal would cover our current expenses.  The huge uncertainty there is healthcare.  We have operated on the assumption that I will keep working mainly to cover increasing health insurance/healthcare costs.  We have no prescription or chronic illness costs at the moment, but that could change and access to the exchanges along with Obamacare may not exist.  Then what would we do?   In addition, early retirement from teaching will cost me more than $800/year from annual pension payments.  Retiring after 3 more years, instead of 20, would take my pension down from 21500/year to 6500.  If the 4% rule holds true we wouldn't miss the pension, but it's just another uncertainty that makes the decision more difficult.

I'll have to ponder on your thoughts a bit more.  Early retirement for me just seems like a mirage, and resentment hasn't crossed my mind, but I'm not 100% selfless and I admit it could be a possibility.

[ericrugiero]

I have not pondered on the possibility of retirement, although I'm not necessarily excited about working for another 20 years.  Like mentioned it is hard to anticipate exactly how I would feel, but I would certainly be excited for her in the near future.  She's worked in a very stressful environment for many years, and has earned the opportunity to step away.

I have a hard time wrapping my mind around both of us retiring in a couple of years.  Excluding the 529's, our net worth should be close to 1.1 million in a couple of years, if my wife keeps working, and a 4% withdrawal would cover our current expenses.  The huge uncertainty there is healthcare.  We have operated on the assumption that I will keep working mainly to cover increasing health insurance/healthcare costs.  We have no prescription or chronic illness costs at the moment, but that could change and access to the exchanges along with Obamacare may not exist.  Then what would we do?   In addition, early retirement from teaching will cost me more than $800/year from annual pension payments.  Retiring after 3 more years, instead of 20, would take my pension down from 21500/year to 6500.  If the 4% rule holds true we wouldn't miss the pension, but it's just another uncertainty that makes the decision more difficult.

I'll have to ponder on your thoughts a bit more.  Early retirement for me just seems like a mirage, and resentment hasn't crossed my mind, but I'm not 100% selfless and I admit it could be a possibility.

I'm not a teacher but it seems to me that would be a good thing for FIRE because you can pick up part time as a substitute when you want or need to. 

If your wife has the option of part time that seems like a good compromise.  Cut her stress level back while saving all her salary and living off your salary.  Then in a few years maybe you can retire or cut back as well. 

[Freedomin5]

Your situation sounds very similar to ours. DH is a teacher. If I were working full time I’d be making around three times what he makes. We are both licensed professionals. Last year, I cut down to part time (around 30 hours per week) so I could spend more time with the kid. We used several compound interest calculators and figured that as long as we had a current nest egg of around 250k and left it untouched, it would grow to over a million by traditional retirement age. We live on less than half of DH’s salary, so we continue to put (a smaller) amount into investments.

However, for someone used to being a high earner it’s very hard to quit completely. You get bored quickly. You also worry about being out of the field for too long and not being able to get back in should you need to. For me, cutting down to part time was a good solution. If I was too burnt out, I’d cut more hours, but if I was bored I could ramp up the hours. It gives flexibility and a safety net, and prevents burnout.

Basically, as long as you are living within one income (yours), your wife has the freedom to do what she wants. It just becomes a matter of saving more versus saving less.

[trollwithamustache]

100% on board with the math working out ok for you to retire at 57 without your wife working. This is an overlooked strategy on this board.

Seriously look at the part time / IC option. its a way to ease into not working, it keeps her professional skills current and you may find the business write offs make her marginal income quite useful in padding your stash. If she gets bored, its super easy to go back to full time (or find new full time employment). If something happens on the kiddo front, its much easier to drop hours to deal with the home front.

You may find in a few years of her as an IC, your final ER date gets pulled in quite a bit.