Can I retire yet? Age 59

[coppertop]

I will be 60 this coming fall.  My husband will be 56.  Our house has been paid off since 2013.  Husband has $20,000 in his 403(b).  I have $120,000 in 401(k) and $95,000 in IRA.  He saves 30% of his salary in his 403(b) and I max mine out ($24,000 this year). I drive 45 minutes to work to earn $75,000 a year.  I cannot realistically make this amount of money anyplace closer to home.  We live a frugal life and I figure we need $2,200 a month to live.  The biggest chunk is real estate tax, and I plan to appeal my assessment this year.  Our house is tiny - about 1200 square feet.  My husband works closer to home and makes $52,000 a year.  I can start taking a small pension whenever I want to - and I mean really small, $265 a month.  I am sick of working for people who do not appreciate me and my job is very stressful.  In two years, of course, I can apply for Social Security - which won't be large, probably about $1,100 a month.  No debts, no car payments, nada.  Kids are grown and out of the house.  We are vegetarians and grow whatever we can in our garden.  Of course, we cannot grow such things as rice and tofu, so we do need to go shopping.  Have I missed anything?  I know this is not a lot of money - I forgot to mention that we have $60,000 in cash assets that are not retirement funds, in addition to the $5,000+ that is in the account I use to pay property taxes and the $5,000 give or take that we have in checking accounts.  But at my age, I don't think I need the $600,000+ that MMM states a person in their 30s would need to retire.  I don't want to impoverish us, but at the same time, how much is enough for people who are close to retirement and don't plan any expensive habits such as fancy vacations?

[epipenguin]

Is your husband planning to continue to work? I'm not clear on that from your post.

I am not sure that you have enough by standard calculations, but maybe that is just me. Remember you still need a 30 year timeline for retirement, as you may easily live to 90. So the safe thing to do is to look at what withdrawing 4% of your portfolio a year would give you. By my calculation, even if I add everything together, it still only gives less than $1000 a month ($120k + $95k +$20k + $60k * 0.04 /12). With your social security and pension, it juuuuust about gets you to your $2,200 needed per month (but doesn't include your husband's social security). Does the $2,200 include health insurance premiums, by the way? If you drop your jobs, you'll have to pay for insurance up to age 65. Also, you wouldn't even get the reduced SS amount for a couple of years, so you'd have to draw more than that in the early years. If you did this plan, I'd try to tough it out to at least 62 at the current job.

Another alternative is to look up what your Social Security benefit would be if you waited to age 70. If that + the pension is enough to live on alone, one plan could be to use your portfolio to fund all of your retirement living from age 60 to age 70, and then to switch entirely to SS. But, it's risky. Make sure the age 70 calculation you use is based on stopping work now - the standard SS benefits estimate you get will assume you keep working up to the date you claim, and so may be higher than you'd actually get if you stopped work now.

A third option if you really hate your job would be to switch to a lower paid, lower stress job closer to home. So you save a bit less for retirement, but if you don't touch your stash or your SS for a longer period of time, and could, say, retire at full retirement age instead of 60, that might make things more bearable.

[dunhamjr]

I will be 60 this coming fall.  My husband will be 56.  Our house has been paid off since 2013.  Husband has $20,000 in his 403(b).  I have $120,000 in 401(k) and $95,000 in IRA.  He saves 30% of his salary in his 403(b) and I max mine out ($24,000 this year). I drive 45 minutes to work to earn $75,000 a year.  I cannot realistically make this amount of money anyplace closer to home.  We live a frugal life and I figure we need $2,200 a month to live.  The biggest chunk is real estate tax, and I plan to appeal my assessment this year.  Our house is tiny - about 1200 square feet.  My husband works closer to home and makes $52,000 a year.  I can start taking a small pension whenever I want to - and I mean really small, $265 a month.  I am sick of working for people who do not appreciate me and my job is very stressful.  In two years, of course, I can apply for Social Security - which won't be large, probably about $1,100 a month.  No debts, no car payments, nada.  Kids are grown and out of the house.  We are vegetarians and grow whatever we can in our garden.  Of course, we cannot grow such things as rice and tofu, so we do need to go shopping.  Have I missed anything?  I know this is not a lot of money - I forgot to mention that we have $60,000 in cash assets that are not retirement funds, in addition to the $5,000+ that is in the account I use to pay property taxes and the $5,000 give or take that we have in checking accounts.  But at my age, I don't think I need the $600,000+ that MMM states a person in their 30s would need to retire.  I don't want to impoverish us, but at the same time, how much is enough for people who are close to retirement and don't plan any expensive habits such as fancy vacations?

For my own eyes, I needed to break things out of the paragraph to lay out the numbers in a easier to consume fashion.

current incomes: $127k
$75k/yr
$52k/yr

current yearly savings rate: $39.6k
$24k/yr
30% of $52k = $15.6k/yr

expenses: $26.4k
$2,200/mo estimated

where did/does the rest of your money go now?
even just roughing the taxes at 30% and pulling your savings/expenses out, there is $23k/yr missing from what you have told us.

assets: $285k
401k - $120k
IRA - $95k
cash - $60k
cash for prop tax - $5k
checking - $5k

future incomes:
pension - $265/mo
SS - $1100/mo
-----------

To start off... you say you need $2200/mo.
But does this include your property tax payment?

Minus your pension makes it $1935
Minus your SS makes it $835.
You didn't mention when (or how much) your husband would SS would be.

So $835/mo is what your assets need to provide you.

With assets RIGHT NOW of $285k using a SWR of 4% would provide $950/mo.

According to the numbers I have seen, and I could be wrong or have missed something, you should have enough income to cover your expenses if you retired now.

For me there is not a lot of safety margin in these numbers though.

If you wait another couple years will the pension payment increase?  What about your SS amount?  And also, I would assume there will be a SS income for your husband available in a couple years as well.

[geek101]

If you are really spending just ~2,200/mo, you can quit today and live of your husband's income.  Or is that what you think you can live on? Considering you gross 127k, spend 26,400, and save ~40k in retirement accounts, you've got a lot of money missing there. Where does it go? If you're spending significantly more, don't assume you can live on the ~$2,200/mo, try it for a few months.

The key for you is to find the trade-offs. You could quit today and live off your husband's income, but will you be able to save enough for him to retire soon too, or would he need to keep working until 66 or longer? When would you need to take SS? When would he need to take it? What do you want retirement to look like? Would you like to spend more so you can travel? etc.

Read up on SS maximization. The longer you can wait to take it, the more you get, and there are a few strategies for maximizing the spousal benefit. Your 'full retirement age' benefit probably looks significantly better than the 1,100/mo you could get at 62.

Then I would use CFireSim to examine the trade-offs. If you work 1 additional year, you add around ~40k into your retirement accounts between the two of you. If you wait 1 additional year to take SS, you get x more per month. What does your pension offer at 62? 66?  My recommendation would be to minimize the 'total work years until retirement' accounting for you and your husband's work years. You might be able to quit today, but if he has to work an additional 10 years, you both might be better off with you working 1 more year, so he only has to work 6 more years, for example. 

[Eric]

We live a frugal life and I figure we need $2,200 a month to live. 

Does this include healthcare & health insurance?  Replacement car fund?  Home repairs?

See here for ideas on developing a retirement budget:

http://rootofgood.com/developing-a-retirement-budget/

[mozar]

Definitely wait until at least 65 to draw SS.

[coppertop]

Thank you for the thoughtful responses.  Whatever we do not spend each month goes into savings.  I am trying to talk my husband into putting our savings into mutual funds, but he isn't fully comfortable with that.  His SS will be about the same as mine if he retires at 62. 

I have thought about taking a lower-paying job closer to home, and that might be the answer, because the stress is really hard to deal with and is what is making me anxious to retire.  I had a promotion three years ago, and since then have gained 40 pounds and am tired all the time.  No amount of money is worth the toll it is taking on my health. 

[SunshineGirl]

Can you both live off your husband's income? If you aren't already, start banking 100% of your paychecks and see what it feels like. Getting a lower-stress job closer to home might be the best solution, because it would allow you to keep saving and working while vastly improving your quality of life.

You didn't mention if you intend to stay in your home forever, but if so, plan out all likely expenses over the course of 30 years -- new appliances, a new roof, aging-in-place expenses, etc.

Do you track your expenses with YNAB or the like? It could provide you with good data as you make your decision. 

[countdown]

You could also request a voluntary demotion at work if it's the additional stress that makes you want to retire. Just another option.