Author Topic: Case Study - How soon do you think?  (Read 3141 times)

db_cooper

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Case Study - How soon do you think?
« on: March 02, 2014, 10:25:26 AM »
Interested in hearing opinions on how soon we can/should retire.   

Just found this site a few weeks ago, and been devouring all the articles.  Wife and I aren't  super frugal, but have always lived below our means.  Wife has 10 years to go for a full Federal retirement, but we're thinking of bailing out soon.  We don't think we'll need that much 10 years from now.  Ages are 46  and 49 (me).

Income: combined $175K, DINKS,   cheap medical through my state job.  could have federal medical benefits til 65, if wife waits until 56.5 yrs old to retire.  ACA  and this website, is what has gotten us to thinking FIRE.

Current expenses: No mortgage, own a waterfront home on Puget Sound and a mountain cabin near skiing.  no car payments,  no water or sewer (we're on well and septic),  only electricity, which is super cheap at the mountain cabin (max $200 a month both places)  Stuck with Verizon ($120) for coverage at both houses,  no cable, but Netflix, and $50 a month comcast internet.  We eat out very little, and use Costco for as much groceries as possible.  Most other discretionary spending is related to biking, skiing, and hiking gear.  I only buy good stuff for those hobbies.  That said, we're pretty well stocked and don't need much for the next few years, til something wears out.

Expected ER expenses: (optional, if relevant):  Nothing to report here, unless the Feds take my screen name seriously, then I'll have room and board covered.

Assets: besides the houses (primary $400k and cabin $250k) and 2 cars,  we have about $450K tied up in 401k and Roth, and don't plan to touch until 59.5.  We would both have a defined pension, but reduced due to working years if we bail early,  wouldn't want to touch until 62/65, about the same time we'd take Soc Security .   We only have about $50K in cash and stock index funds right now.

Liabilities: none,  annual property taxes are high , almost $6K a year for the primary, and $1500 a year for the mountain cabin.

Specific Question(s):   I think if we sold our primary house right now we could invest and live off the dividends at the cabin, as the expenses there are almost nothing.  Or we could work a few more years and keep both residences.   I would like to keep both, and spend summers on the water, and winters in the mountains.  We would spend a lot of time hiking and skiing, so we would still need at least one car, and gas would be one of our bigger expenses.  we could also maintain a large garden at the waterfront house, right now we use that time to hike and ski.  We both like our jobs ok,  they just interfere with getting out when the weather is good, which in the PNW is always an issue. A definite First World Problem.   So I think we've got age 59 - 62 covered with the Roth, and defined pensions and Soc sec to supplement after that.  It's the next 10 years to get through.  Do you think we could get there in 3 years with both residences?  Or would you sell one and dive in?

Thanks for reading.

process

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Re: Case Study - How soon do you think?
« Reply #1 on: March 02, 2014, 10:31:34 AM »
Why wouldn't you want to start taking your pension benefits earlier?  Why not take them and invest them? 


db_cooper

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Re: Case Study - How soon do you think?
« Reply #2 on: March 02, 2014, 10:39:09 AM »
I haven't read all the articles on moving pension funds, but it looked like in most cases you would have to pay the 10% penalty to withdraw.  I hate to lose that kind of money,  since we could probably live a couple years on that 10%.  I'm assuming you're not talking about the defined plans, but the 401k/403b plans?

Weedy Acres

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Re: Case Study - How soon do you think?
« Reply #3 on: March 02, 2014, 10:46:50 AM »
So you've got a dilemma about whether your ER plans include summer and winter houses or just the mountain cabin.  I guess it depends on whether that dual-house lifestyle brings you more happiness than retiring 3 years earlier.  Only you can be the judge of that.

Whether 3 more years of working/saving is enough to live off for the 7 years after that depends on your annual savings for the next 3 years and your expected retirement spending.  You are a bit fuzzy on the details of both in your OP, so more details on that would help. 

Warden95

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Re: Case Study - How soon do you think?
« Reply #4 on: March 02, 2014, 10:57:57 AM »
DB,
When I left state employment (Florida) a few years ago, I switched my pension to a state investment plan then rolled it out into a plan of my choosing.  Don't know if you have that option or not.

ShortInSeattle

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Re: Case Study - How soon do you think?
« Reply #5 on: March 02, 2014, 11:20:12 AM »
I think you need a lot more specificity to your plan and your numbers before you do anything.

Here is some homework:
http://www.early-retirement.org/forums/f47/some-important-questions-to-answer-before-asking-can-i-retire-69999.html


db_cooper

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Re: Case Study - How soon do you think?
« Reply #6 on: March 02, 2014, 11:43:18 AM »
Thanks SIS, 

yes we're not going to do anything drastic,   just trying to come up with a plan that might get executed in the next year or two.   To be honest, we were planning on working til 56, until it dawned on us that we really don't spend or need  that much.  Our hobbies are relatively inexpensive, and good for you too.  I work with Medicaid and the ACA, so that spurred my thinking, and then finding MMM.

We had expenses related to fixing up the cabin this year, but my estimates of our normal annual spending is $25 - $30k per year not including medical.  That's including property tax, so moving to the cabin would certainly reduce this amount.  I think we could save 75% of our income the next 3 years without feeling deprived at all.  The wife is an engineer (big surprise eh?),  and might continue to find some source of income, but don't want to count on work earnings to make the plunge.

just writing this down has gotten me to think more seriously about selling the primary,  it's a lot of maintenance, and when we're not here the geese and gulls move in and take over.   most of our friends we do things with are in the area, so I guess we could just stay with them when necessary.