Author Topic: Golden Handcuffs factoring into RE timeline  (Read 6810 times)

LateToTheParty

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Golden Handcuffs factoring into RE timeline
« on: October 20, 2016, 07:17:24 AM »
Situation:  DH and I are on target to be FI in 5 years. This is with a mortgage-free non-mustachian home (pre-MMM - will downsize after RE) and ~1.5M in investments plus future pensions for both of us.

DH will likely pull the lever and RE at that time.

Despite the numbers, I struggle with golden handcuff syndrome. I reach full retirement benefits with my employer in 11 years from now. I will be 55 y/o. There are many, many benefits in me staying the course until I reach that milestone.

Access to employer contributions to a Health Reimbursement Account, which will be ~ $50,000 value
Offset of future Medicare secondary ins costs for me and spouse
Padding the pension
Employer automatic contributions to 403b while employed
Continuing my Cadillac employer sponsored health plan for longer **(I have a very expensive chronic health condition which will require spending max OOP costs for the rest of my life - I am currently covered under a health plan with $10 copay for everything, basically.  It is amazing, and the main reason I will delay RE)

With this chronic health condition and uncertainty of ACA future state, I am constantly revising projections of what might be feasible.  I honestly would feel better with 2M, which timeline will be closer to my employer full retirement eligibility. At which point, if it means only 2-3 years to get there, I will do it.   Work will be more enjoyable when I have FU$$ that = FI.

Who else has golden handcuffs factoring into their RE plans?

Am I overestimating the value of these benefits?

I am so glad to have found this site. Have been obsessively reading for past 8 months, and have converted DH to mustachianism.

Silrossi46

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Re: Golden Handcuffs factoring into RE timeline
« Reply #1 on: October 20, 2016, 07:56:54 AM »
I am literally on the same exact boat.   

23 years into a pension system.  = 46YO.   Paid off house and 1.4 M NW

If i stay till 55 i get medical for life and rough figures show my pension would be 6500-7000 / M
If i go at 50 i would still get the medical but a reduced pension cut by 15% plus less monthly due to less time in and a lower salary.
Roughly 4000/M   

I am FI now but still working.  Ponder this almost daily.   Worse is i just got promoted to a director title......   I like the position but id rather be out doing other things to be honest...............................

azu612

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Re: Golden Handcuffs factoring into RE timeline
« Reply #2 on: October 20, 2016, 08:12:26 AM »
I'm not as far into my career, but I also have a job with a pension that would allow me to retire at 57.  I've been working long enough not to really want to switch unless something amazing came up.  In my mind I just plan on being financially responsible enough to become FI before retirement and retire on time comfortably.

DebtFreeinPhilly

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Re: Golden Handcuffs factoring into RE timeline
« Reply #3 on: October 20, 2016, 08:42:33 AM »
MMM wrote a good article on retiring early and factoring in the actual costs of health care, expenses, etc. that has really helped me shape my timeline for FIRE. I am 35, 12 years into a gov't job, can retire with pension at 48 and health care coverage for life (I pay 1/3 of premiums and co-pays), and expect to have $1 Mil in 401k at that time. And this is without even changing to a full on mustachian lifestyle. 48 years old is super early by normal standards but a little late by Mustachians and my standards. My plan is FIRE in under ten years (43 yo) which gets me a 34% pension ($45k/yr), about $550k in 401k, and health benefits. Again this is not adjusting for a mustachian lifestyle yet. Now add in MMM principles: cut expenses, fast track the mortgage to paid off in 10 years, invest spouse's salary and live off mine alone, and you get a pretty kick ass life at 43. Why am I explaining all this?

I thought I had to work until 57 (mandatory retirement age for my position) and then get another job just to enjoy "so called retirement". After I ran the numbers through the Mustaschian Super Computer again, I realized that I can have a much happier life much earlier. Take a look at health insurance and see if you can coverage for your condition. Factor those new expenses into your FIRE calculations. Is your job worth that extra expense? And remember this is 11 years we are talking about. It seems its more of a mindset issue for you than an actual numbers issue...you're playing the "what if" game against yourself. 

PhrugalPhan

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Re: Golden Handcuffs factoring into RE timeline
« Reply #4 on: October 20, 2016, 11:41:33 AM »
Though not an Early Retire person (I started here at 41) I am in a similar situation.  I'm vested, but won't get money until I am 65 if I leave now (and only 25% of my current pay - I'm currently 54), or stick it out for 6 more years and get a 40% pension starting on day 1 (plus a small health supplement).  Including my house my net worth is around $1Mil, and my yearly expenses are in the $30k range.  But if I retire now there is no more health benefit so my expenses will jump a lot should I retire now, and I will spend at least a little more given all my free time - so there's more expenses.  So here I stay for now - but I think about it probably too much.

My girlfriend will retire in 26 months and she has $800k (and will get a $30k pension plus health benefits).  When she retires.... its going to be very tempting to pull the plug. 

Slee_stack

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Re: Golden Handcuffs factoring into RE timeline
« Reply #5 on: October 20, 2016, 01:01:06 PM »
9yr til my DW can leave.

Similar benefits as described by everyone else.  (ie clown money)

We may not make it to that date, but are not ready to throw it away just yet.  Full-on OMY here....possibly 'NMY'.

Will RE together, so no E-RE for me :P


socalteacher

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Re: Golden Handcuffs factoring into RE timeline
« Reply #6 on: October 20, 2016, 02:19:24 PM »
Can you work part time and still accrue years of service and have access to health care?

LateToTheParty

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Re: Golden Handcuffs factoring into RE timeline
« Reply #7 on: October 20, 2016, 10:03:23 PM »
Can you work part time and still accrue years of service and have access to health care?

^^^This.  Will definitely be my strategy if I end up doing 11 more years. Just need 1000 hours per year to get credit for service years. Plan to work full time for next 5 until house is paid off, and then consider downshift to part time. Right now I am in management, so no part time; but I would have the opportunity to move back into a clinical role with my current employer (healthcare).

Options are good.

Monkey Uncle

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Re: Golden Handcuffs factoring into RE timeline
« Reply #8 on: October 21, 2016, 03:19:02 AM »
Do you need the extra money and benefits to support the lifestyle you want, or to build the legacy/inheritance that you want to leave behind?  If not, there is no rational reason to stay.

I'm roughly FI now, and I'm about to embark on OMY to make sure I have a reasonable buffer ($5k/yr) to cover unexpected/irregular expenses, vacations, etc.  Once that buffer is achieved, I will gladly wave goodbye to my employer, even though if I stayed another eight years my pension would double, I would have employer-subsidized health insurance for life, my stash would probably double, and my SS benefit would be substantially larger.  But I don't need any of that.  I can live the life I want with what I've got, so why would I endure eight more years at a job that I don't like any more to get money and benefits that I don't need?

LateToTheParty

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Re: Golden Handcuffs factoring into RE timeline
« Reply #9 on: October 21, 2016, 05:49:05 AM »
Thank you all for your replies. I know I will be spending time this weekend playing with FIRE calculations.
No need to factor in inheritance/legacy - we are DINKS. And while we don't want to have to optimize every expenditure in retirement, we are generally content with a simple lifestyle.

The future healthcare expenditure risk is something that I really need to explore in depth. It appears I am making it more of a barrier than it really is.

aperture

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Re: Golden Handcuffs factoring into RE timeline
« Reply #10 on: October 21, 2016, 06:15:06 AM »
OP - I have watched my own employer whittle away retirement benefits over the last decade or so.  Almost all of the whittling has been in the domain of healthcare.  Until you mentioned a chronic disease that is costly, I would have voted for retire when you are FI - without regard to promised health care benefits at retirement age.  But on the flip side, individual health insurance purchasers are going to be in for some big shocks in 2017.  In my state, Colorado, individual plans are going to jump 20% in cost in 2017.
http://www.denverpost.com/2016/09/20/colorado-health-insurance-rates-2017-individual-buyers/.  There are chronic diseases that can cost multiples of $10K per year to treat and this is not likely to change as many of these conditions are treated with biologic drugs that do not have the promise of generics in the future.  If you have such a condition, I thing the safest route will be to stick with a large employer health plan as long as needed until you can afford to pay for treatment out of pocket (though I would also look into living abroad and paying out of pocket in a country that has better pricing on health care.  (From the US, you can find such a country by throwing a dart at a spinning globe. 

Best wishes, Ap.

Rubyvroom

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Re: Golden Handcuffs factoring into RE timeline
« Reply #11 on: October 21, 2016, 07:22:40 AM »
Not to get overly philosophical here but, whenever I'm asked why I wouldn't just keep working longer, especially now that my career is starting to "take off," I think of Norma.

http://www.bbc.com/news/world-us-canada-37544913

Norma was diagnosed with terminal cancer shortly after her husband passed away. When faced with the decision to undergo surgery and treatment, she basically said screw it and went on an epic road trip with her family instead.

I have had grandparents die in their 80s that expressed regrets at never truly doing what they wanted in life. I have had friends die in their early 30s that regretted the same. I don't want to be morbid, but we're all here for a finite amount of time, and golden handcuffs be damned, someday I'm going to be Norma.

With that said, the health care situation does definitely need to be analyzed to ensure your Norma years aren't filled with anxiety. At the end of the day, it comes down to whatever you're comfortable with.

Slee_stack

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Re: Golden Handcuffs factoring into RE timeline
« Reply #12 on: October 21, 2016, 08:18:00 AM »
Do you need the extra money and benefits to support the lifestyle you want, or to build the legacy/inheritance that you want to leave behind?  If not, there is no rational reason to stay.

I'm roughly FI now, and I'm about to embark on OMY to make sure I have a reasonable buffer ($5k/yr) to cover unexpected/irregular expenses, vacations, etc.  Once that buffer is achieved, I will gladly wave goodbye to my employer, even though if I stayed another eight years my pension would double, I would have employer-subsidized health insurance for life, my stash would probably double, and my SS benefit would be substantially larger.  But I don't need any of that.  I can live the life I want with what I've got, so why would I endure eight more years at a job that I don't like any more to get money and benefits that I don't need?
Why endure even OMY then?  When is there 'enough buffer'?  If 4% SWR isn't enough today, will X% be good enough tomorrow?

I'm just poking fun because I completely understand where you're coming from. 

DoubleDown

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Re: Golden Handcuffs factoring into RE timeline
« Reply #13 on: October 21, 2016, 10:10:45 AM »
I wrestled with the same decision a few years ago and ultimately decided I would be happier with freedom than a larger  pension, lifetime premium healthcare, more money, and all the other benefits you mentioned. Best. Decision. Ever. I value my time so much more than those other things.

Only you can decide what makes sense for you, and I did not have a chronic health condition to factor into the decision. Nevertheless, I hope you won't overestimate the benefit of those extra monetary things, nor underestimate our own uncertainty in how much time we have on this Earth.

If it helps, since I FIRE'd a couple of years ago, my net worth has only gone up despite the relatively flat markets since then, which is a pretty common occurrence when you've factored in so many safety margins and buffers before pulling the plug. You'll likely experience the same thing in the long run. Even though I'm doing lots of travel and not carefully watching costs, there's more money than ever. Remember that the 4%SWR simulations in cfiresim/firecalc frequently end up with portfolios that are larger than when retirement starts. There really is a point where "enough" is enough, and anything beyond that is unnecessary and lost time/opportunity.

Monkey Uncle

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Re: Golden Handcuffs factoring into RE timeline
« Reply #14 on: October 22, 2016, 04:23:20 AM »
Do you need the extra money and benefits to support the lifestyle you want, or to build the legacy/inheritance that you want to leave behind?  If not, there is no rational reason to stay.

I'm roughly FI now, and I'm about to embark on OMY to make sure I have a reasonable buffer ($5k/yr) to cover unexpected/irregular expenses, vacations, etc.  Once that buffer is achieved, I will gladly wave goodbye to my employer, even though if I stayed another eight years my pension would double, I would have employer-subsidized health insurance for life, my stash would probably double, and my SS benefit would be substantially larger.  But I don't need any of that.  I can live the life I want with what I've got, so why would I endure eight more years at a job that I don't like any more to get money and benefits that I don't need?
Why endure even OMY then?  When is there 'enough buffer'?  If 4% SWR isn't enough today, will X% be good enough tomorrow?

I'm just poking fun because I completely understand where you're coming from.

Ha!  Here's a window into my personal OMY agony: http://forum.mrmoneymustache.com/welcome-to-the-forum/man-i-really-don't-want-to-go-back-to-work/

LateToTheParty

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Re: Golden Handcuffs factoring into RE timeline
« Reply #15 on: October 22, 2016, 06:04:11 AM »
 Monkey Uncle - I recall seeing that thread, it was absolutely relatable for me. Last summer I took three weeks off in a row, and ended up working equivalent of one of those three weeks (remotely) in order to avoid the punishment of the return.  I avoid taking time off because of this. It's unhealthy.  I have nearly 500 hours accrued in my PTO bank so I am really working to keep some regular time off scheduled or I stop accruing.

So will you stay OMY/OMHY, or will you go?

ender

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Re: Golden Handcuffs factoring into RE timeline
« Reply #16 on: October 22, 2016, 10:15:54 AM »
Not to get overly philosophical here but, whenever I'm asked why I wouldn't just keep working longer, especially now that my career is starting to "take off," I think of Norma.

http://www.bbc.com/news/world-us-canada-37544913

Norma was diagnosed with terminal cancer shortly after her husband passed away. When faced with the decision to undergo surgery and treatment, she basically said screw it and went on an epic road trip with her family instead.

I have had grandparents die in their 80s that expressed regrets at never truly doing what they wanted in life. I have had friends die in their early 30s that regretted the same. I don't want to be morbid, but we're all here for a finite amount of time, and golden handcuffs be damned, someday I'm going to be Norma.

With that said, the health care situation does definitely need to be analyzed to ensure your Norma years aren't filled with anxiety. At the end of the day, it comes down to whatever you're comfortable with.

This is so inspiring!

markbike528CBX

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Re: Golden Handcuffs factoring into RE timeline
« Reply #17 on: October 22, 2016, 10:31:36 AM »
My take on this is "firehose of cash" , a phrase from another thread.
Golden Handcuffs really doesn't describe me, as my SS and pension are more dependent on when I take it, rather than when I leave Semi-BigCorp.

My plan was at 2019 (55). 
So my strong desire to stay though a 10% bonus next year doesn't count as OMY/Golden Handcuffs, does it?

Turning off the firehose or at least stepping away seems pretty scary right now.
Given that our NW is ~25x post FIRE expenses(less than current, taxes), we have mustachian giggle-worthy worries.

Monkey Uncle

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Re: Golden Handcuffs factoring into RE timeline
« Reply #18 on: October 22, 2016, 06:10:32 PM »
Monkey Uncle - I recall seeing that thread, it was absolutely relatable for me. Last summer I took three weeks off in a row, and ended up working equivalent of one of those three weeks (remotely) in order to avoid the punishment of the return.  I avoid taking time off because of this. It's unhealthy.  I have nearly 500 hours accrued in my PTO bank so I am really working to keep some regular time off scheduled or I stop accruing.

So will you stay OMY/OMHY, or will you go?

As of now, I'm committed to OMY.  We'll see how I feel in a few months.

DebtFreeinPhilly

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Re: Golden Handcuffs factoring into RE timeline
« Reply #19 on: October 23, 2016, 07:00:45 AM »
What does OMY stand for?

Thanks everyone for all the great links in this thread! It has allowed me a peak into other people's world of FIRE or events leading up to FIRE.

ender

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Re: Golden Handcuffs factoring into RE timeline
« Reply #20 on: October 23, 2016, 07:04:10 AM »
What does OMY stand for?

Thanks everyone for all the great links in this thread! It has allowed me a peak into other people's world of FIRE or events leading up to FIRE.

OMY = one more year.

The idea that you are working an extra year, even if the numbers suggest you don't have to.

DebtFreeinPhilly

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Re: Golden Handcuffs factoring into RE timeline
« Reply #21 on: October 23, 2016, 07:10:44 AM »

OMY = one more year.

The idea that you are working an extra year, even if the numbers suggest you don't have to.

Thanks buddy! So many acronyms, so little time....

TomTX

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Re: Golden Handcuffs factoring into RE timeline
« Reply #22 on: October 23, 2016, 08:28:15 AM »
Monkey Uncle - I recall seeing that thread, it was absolutely relatable for me. Last summer I took three weeks off in a row, and ended up working equivalent of one of those three weeks (remotely) in order to avoid the punishment of the return.  I avoid taking time off because of this. It's unhealthy.  I have nearly 500 hours accrued in my PTO bank so I am really working to keep some regular time off scheduled or I stop accruing.

Hmmmnn. I resemble that remark. Slightly over 500 hours of various PTO in the bank.

We're going to go to Hawaii for a month next year, mostly paying for it with Chase CC signup bonuses funneled through my CSR.

DoubleDown

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Re: Golden Handcuffs factoring into RE timeline
« Reply #23 on: October 23, 2016, 08:56:34 AM »

OMY = one more year.

The idea that you are working an extra year, even if the numbers suggest you don't have to.

Thanks buddy! So many acronyms, so little time....

The other important thing to know when we say OMY is the idea that it never ends. The extra year comes and goes, then there's always just "one more year" for a little extra padding, Then I'll REALLY be ready to retire. Except then there's one more year to cover unknown health care costs in the future and...
« Last Edit: October 23, 2016, 08:58:14 AM by DoubleDown »

LateToTheParty

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Re: Golden Handcuffs factoring into RE timeline
« Reply #24 on: October 23, 2016, 09:10:45 AM »
My plan was at 2019 (55). 
So my strong desire to stay though a 10% bonus next year doesn't count as OMY/Golden Handcuffs, does it?

You get a pass for the first planning year.  That's just optimizing your FIRE plan IMHO.  But if it continues on beyond that, yup, you have OMY/Golden Handcuffs issues.

I think you are also seriously underestimating how long it will take you to get to 2mill+.  With 1.5 mill in investments currently, you would pass 2 million in just 5 years at a 6% return -- and that is if you aren't adding anything to the stash.

Start taking time off, and try to give less of a shit at work -- the stress reduction that will come along with it will be good for you.  Even if you lost your jobs today, with your asset base you and your DH would be fine.  Don't let your Inner Bag Lady run the show.  Send her over to hang out with mine -- maybe if they keep each other busy we can all enjoy our lives a bit more!

I think my original post was confusing. We are on target (current contributions+  growth) to be 1.5M invested in 5 years (not currently), plus paid off house around that same time. 
I am definitely working on giving less of a shit at work, and taking more time off. I have had ISSUES around that (over committed to my employer at the expense of myself).

This site has been transformative for me.

EnjoyIt

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Re: Golden Handcuffs factoring into RE timeline
« Reply #25 on: October 23, 2016, 12:56:50 PM »
Health care is a very big issue for me regarding retiring early.  I plan on continuing to work 6-8 days a month after hitting my number because work is fun especially when you don't need the money, and I want to save up enough cash to cover all healthcare costs.

As it currently stands health care costs will continue to rise. ACA seams to be falling apart as premiums rise and insurance companies are leaving markets. Since I am extremely skeptical I don't mind to save up some extra cash to help cover those ever rising costs and premiums. If I am wrong I will enjoy fancier vacations.