Case Study - I would love your advice

[Accidental Fire]

(sorry about the double post - my browser locked up on me!)

So I'm relatively new to MMM, but after reading every single blog post and portions of the forum I realize I've been practicing the majority of his advice on my own for the past 20+ years.  I'd love the advice of the wonderful mustachian community here to see how close I am to "retirement" - whatever that is :)

Life Situation: Single, 45 yrs old, no dependents, live in Northern Virginia outside DC (the expensive part of Virginia)



Pre-tax deductions: I'm a federal government employee, so I have the TSP (similar to an IRA), I contribute the max which is now $18,000 per year. The government matches 5%

Other Ordinary Income: none

Qualified Dividends & Long Term Capital Gains: I have quite a lot invested in Vanguard Index funds (and a few others) and made 8,000 in dividends for 2015

Rental Income, Actual Expenses, and Depreciation: none

Adjusted Gross Income: Last year it was

Taxes:

Current expenses: Provide breakdown and relevant details.  First off I have no debt except for my mortgage.    I pay my credit card off every month and spend way less than I make.  Monthly utilities ~ $170 (gas, electric, internet, water) I have lots of outdoor hobbies and am a competitive athlete (cycling and climbing), so I do spend money on competitions and travel (monthly ~$100)  In all, my average annual spending is probably around $27,000... but I definitely have years where it's more like 30K when I take a big foreign trip (I'm working on climbing the seven summits)

Assets: My total investments are dollars. Approximately  in non-retirement investments (mostly Vanguard Index funds)   



Liabilities: Mortgage -

[pbkmaine]

In addition to the TSP, is there a pension? And are you eligible for Social Security?

[Axecleaver]

The biggest problem you have to solve is your internal struggle with your commitment to your family. I feel you, because I struggle with this, too.The best advice I've gotten from the MMM community is something I've taken to heart. "Never help someone more than they're willing to help themselves." You decide how you want to implement that advice.

[nereo]

Welcome esskay1000

Here is some good news.  There is at least one way of accessing some of your TSP money before age 59.5, through what's called the 72(t) or substantially equal periodic payments (SEPPs).  Once set up it gives you a flow of cash from your TSP based on your age and it's value when you start the withdraws.  It's also possible to convert your TSP into an IRA, then use a ROTH conversion ladder to make payments without the steep penalty.  I won't go into great detail here, but just to say that it is possible.  Combined with your $562k in regular accounts you shuod have no problem making it to age 59.5, when you will have unfettered access to all of your accounts

Now - your expenses seem very low, but I couldn't tell exactly from your post what you think they will be in retirement.  It sounds like they will be quite a bit lower than the $44k your investments could generate using a 4% WR. 

The big unknown of course is your anticipated dependants (mother and brother).  You sound like an amazing person who is thinking of his/her family here. My advice here is to make a few estimates on how much caring for one or both of them might cost on an annual basis, and how many years you might have to provide that support.  Don't forget that medicaid may be particularly helpful for the medical costs from your brother's type-1 diabetes as well as your mother.  It might be that you may need to set aside another $100-200k to ensure that you can take care of them for a decade if you really want to never work again.

There is a third option here though - if your job is what's getting you down, you have more than enough assets to take care of both your brother and mother for a very long time.  Perhaps you could work part time just to earn enough to cover your own expenses (which would be what, $20-25k/year?)  This could give you more time to be outside more while being ready to support your family.  Perhaps you could find a job that let you work outside? A professional trainer or coaching job could bring in $20k.

g'luck.

[Accidental Fire]

Thx for the question pbkmaine.  I would get a pension. I have 20 years Federal government service and am what's called a "FERS" employee (https://www.opm.gov/retirement-services/fers-information/).  However, if I leave early - full FERS retirement is 30yrs working AND 57.5 age - I can't say what my pension would be. It would be significantly reduced from the full.  It's a percentage of my "average/highest three" yearly salaries, but leaving early would complicate the calculations and no one's been able to give me an answer to that.

And yes I'm eligible for Social Security but with al the same rules as everyone else. I think the earliest I can take money from it would be 62 if I'm not mistaken, and they'll likely raise that age as demographics work against the system.

[Accidental Fire]

Welcome esskay1000

Here is some good news.  There is at least one way of accessing some of your TSP money before age 59.5, through what's called the 72(t) or substantially equal periodic payments (SEPPs).  Once set up it gives you a flow of cash from your TSP based on your age and it's value when you start the withdraws.  It's also possible to convert your TSP into an IRA, then use a ROTH conversion ladder to make payments without the steep penalty.  I won't go into great detail here, but just to say that it is possible.  Combined with your $562k in regular accounts you shuod have no problem making it to age 59.5, when you will have unfettered access to all of your accounts

Now - your expenses seem very low, but I couldn't tell exactly from your post what you think they will be in retirement.  It sounds like they will be quite a bit lower than the $44k your investments could generate using a 4% WR. 

The big unknown of course is your anticipated dependants (mother and brother).  You sound like an amazing person who is thinking of his/her family here. My advice here is to make a few estimates on how much caring for one or both of them might cost on an annual basis, and how many years you might have to provide that support.  Don't forget that medicaid may be particularly helpful for the medical costs from your brother's type-1 diabetes as well as your mother.  It might be that you may need to set aside another $100-200k to ensure that you can take care of them for a decade if you really want to never work again.

There is a third option here though - if your job is what's getting you down, you have more than enough assets to take care of both your brother and mother for a very long time.  Perhaps you could work part time just to earn enough to cover your own expenses (which would be what, $20-25k/year?)  This could give you more time to be outside more while being ready to support your family.  Perhaps you could find a job that let you work outside? A professional trainer or coaching job could bring in $20k.

g'luck.

First off Nereo THANKS for the kind words and advice. I actually did read about the 72T thing but forgot to be honest! It seemed a bit complicated but I'll have to look into it again. And I didn't know that I could convert my TSP to a Roth, I guess I need to use my Google machine more often :)  I will definitely look into these options!

As for the other advice, you're totally on to me.... I've been scouting 'outside' jobs for a while now.  I've also been looking into being a Park Ranger for the National Park Service. The cliche that they don't make much is true - but I shouldn't need much!  And I'd be outside all day, in nature.  Additionally, I'd continue my Federal Service to boot, which would add to my pension.  I've also considered getting a degree in nutrition and becoming a personal trainer. I'm a health nut, it would actually be fun for me and I could help others who have trouble controlling their weight. I feel I have a lot to give in this arena from experience as I was actually quite heavy in my 20's.

Thanks again, I have some things to look into!

[Accidental Fire]

The biggest problem you have to solve is your internal struggle with your commitment to your family. I feel you, because I struggle with this, too.The best advice I've gotten from the MMM community is something I've taken to heart. "Never help someone more than they're willing to help themselves." You decide how you want to implement that advice.

Thanks Axecleaver, it is a dilemma.  My Mom taught me how to be frugal, so I feel that she's the reason I've been able to work hard and save over a million duckets.  That fact weighs heavily on my calculations.

[nereo]

As for the other advice, you're totally on to me.... I've been scouting 'outside' jobs for a while now.  I've also been looking into being a Park Ranger for the National Park Service. The cliche that they don't make much is true - but I shouldn't need much!  And I'd be outside all day, in nature.  Additionally, I'd continue my Federal Service to boot, which would add to my pension.  I've also considered getting a degree in nutrition and becoming a personal trainer. I'm a health nut, it would actually be fun for me and I could help others who have trouble controlling their weight. I feel I have a lot to give in this arena from experience as I was actually quite heavy in my 20's.

Thanks again, I have some things to look into!

Sounds like being a Park Ranger for the NPS could be an ideal situation since all you need to do is cover your expenses (if that).  The fact that it would continue your Federal Service is golden.

A few things you might want to check into while you research:
https://www.ssa.gov/planners/retire/AnypiaApplet.html
you might be surprised at how much you will get in benefits evne with ER.  The drop-off curve is realyl steep for SS

[mxt0133]

You say your mother has no money, so how does she support herself now?  One of your main concerns is you might have to financially support your mother or brother but you don't know how much you need to save up because you don't know what it would cost.

The way I would try to figure that out is find out how much they need to live on right now and start from there.  See if they qualify for any government benefits or subsidies.  There are many ways to support relatives other than purely financial assistance.  You can do some research, go to appointments with them, basically use your time to help them instead of your money.

Also sometimes a lot of things we think we have to do is really just all in our heads.  What if your relatives don't want or need your support.  Have you talked to them about it?  I would have a long conversation with them about what their expectations are or how they plan on supporting themselves in the future.

[MDM]

Gross Salary/Wages: 160,000
Pre-tax deductions: I'm a federal government employee, so I have the TSP (similar to an IRA), I contribute the max which is now $18,000 per year. The government matches 5%
Adjusted Gross Income: Last year it was ~$115,000]

$160K - $18K = $142K.  That's a bit more than $115K...?

Current expenses: Provide breakdown and relevant details.[/b]  First off I have no debt except for my mortgage.  Mortgage is 160,000 at 3.25%, 30-yr fixed.  I pay my credit card off every month and spend way less than I make.  Monthly utilities ~ $170 (gas, electric, internet, water) I have lots of outdoor hobbies and am a competitive athlete (cycling and climbing), so I do spend money on competitions and travel (monthly ~$100)  “Miscellaneous” probably 3.0%.

Presumably you buy food and have other expenses...? :)

Assets: My total investments are 1.1 million dollars. Approximately $562k in non-retirement investments (mostly Vanguard Index funds)   $541 in Retirement Assets (mostly government TSP)

Definitely have been doing more than a few things right!

Specific Question(s):  ...So I've done the MMM "have 25 times your yearly spending" calculations and realize that I 'probably' could retire.  Two things though - of my 1.1 million invested, as you can see only half is in non-retirement assets. So, if I try to retire next year (my desire), I cannot access the ~541k in retirement money - for now.  The rules for TSP say that you cannot start withdrawing before the age of 59.5 without a significant penalty.  So if I try to retire next year (age 46), I have to make it 13 years on the ~562k of non-retirement investments and the passive income that it would provide (or not, in this market).

See http://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/.  You need only make that $562K last 5 years while you get your Roth conversion pipeline flowing.

Second worry (ie. bigger worry), I grew up in a lower-middle class family. My Mother is 86 (Dad is deceased) and in rapidly declining health. I have only one other family member - an older brother (47) who has type-1 diabetes and is also in declining health. He got diabetes at the age of 3, and unless major medical breakthroughs are made, will be lucky to make it to age 60. I am the only person in my family to ever go to, much less graduate college. My salary is obviously quite nice, and I've worked my butt off to earn it and be successful.  My Mom basically has no money except for a 100k house (paid for), and my brother makes only about $26,000 per year, because he didn't go to college (long story).  So to cut to the chase, I'm the only person who will be able to take care of them, and am worried sick about retiring early and facing two dependents (for someone who has no kids). But these dependents will be expensive, and they'll have no one else to help them.  They're my only family, I can't turn my back.

I'm an athlete, I'd love nothing more than to ditch the indoor job (even though I still like what I do) and be outside all day, climbing mountains and racing my bikes. But I'm worried that I don't have enough in non-retirement investments and, more importantly, that my Mother and Brother will be dependent on me, and that I won't have enough to take care of them.

You're right, this is the more difficult issue. 

Any SS or pension (her own or inherited) for your mom?

Can your brother move in with your mom?  $26K/yr can go a long way if there is no (or minimal) housing expense.

Can you claim you mom as a dependent?  If you can file HoH instead of single and with 2 exemptions instead of 1, that could cut your taxes by ~$3800.


Pretty good suggestions from all other posters - can't improve on those.

[Accidental Fire]

You say your mother has no money, so how does she support herself now?  One of your main concerns is you might have to financially support your mother or brother but you don't know how much you need to save up because you don't know what it would cost.

The way I would try to figure that out is find out how much they need to live on right now and start from there.  See if they qualify for any government benefits or subsidies.  There are many ways to support relatives other than purely financial assistance.  You can do some research, go to appointments with them, basically use your time to help them instead of your money.

Also sometimes a lot of things we think we have to do is really just all in our heads.  What if your relatives don't want or need your support.  Have you talked to them about it?  I would have a long conversation with them about what their expectations are or how they plan on supporting themselves in the future.

Forgot to mention that my Mom lives on her Social Security and the remnants of a very small pension from my Father, which total approximately $900 per month.  It covers her needs, but gives her very little left over.  Basically she has a savings account with about $3,000 and the house.

I do help them a lot, especially her with her doctor appointments. Another commenter brought up the fact that Medicaid might indeed help in the future, which would be a huge bonus.  I know my Mom wants my support, but talking about things like the inevitability of death and what I would do if she were incapacitated are always difficult and she never responds when I try. It's a tough subject to approach obviously.  As for my brother's needs (by cost), we do know his monthly insulin/needle costs and some other things, but besides that it gets tough to predict. He still can work though, just wish he was able to get a higher paying job. My guess is that he would not want my help if it came down to it, but again, I don't know if I could turn my back.

Thanks for your comments

[Accidental Fire]

Gross Salary/Wages: 160,000
Pre-tax deductions: I'm a federal government employee, so I have the TSP (similar to an IRA), I contribute the max which is now $18,000 per year. The government matches 5%
Adjusted Gross Income: Last year it was ~$115,000]

$160K - $18K = $142K.  That's a bit more than $115K...?

Current expenses: Provide breakdown and relevant details.[/b]  First off I have no debt except for my mortgage.  Mortgage is 160,000 at 3.25%, 30-yr fixed.  I pay my credit card off every month and spend way less than I make.  Monthly utilities ~ $170 (gas, electric, internet, water) I have lots of outdoor hobbies and am a competitive athlete (cycling and climbing), so I do spend money on competitions and travel (monthly ~$100)  “Miscellaneous” probably 3.0%.

Presumably you buy food and have other expenses...? :)

Assets: My total investments are 1.1 million dollars. Approximately $562k in non-retirement investments (mostly Vanguard Index funds)   $541 in Retirement Assets (mostly government TSP)

Definitely have been doing more than a few things right!

Specific Question(s):  ...So I've done the MMM "have 25 times your yearly spending" calculations and realize that I 'probably' could retire.  Two things though - of my 1.1 million invested, as you can see only half is in non-retirement assets. So, if I try to retire next year (my desire), I cannot access the ~541k in retirement money - for now.  The rules for TSP say that you cannot start withdrawing before the age of 59.5 without a significant penalty.  So if I try to retire next year (age 46), I have to make it 13 years on the ~562k of non-retirement investments and the passive income that it would provide (or not, in this market).

See http://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/.  You need only make that $562K last 5 years while you get your Roth conversion pipeline flowing.

Second worry (ie. bigger worry), I grew up in a lower-middle class family. My Mother is 86 (Dad is deceased) and in rapidly declining health. I have only one other family member - an older brother (47) who has type-1 diabetes and is also in declining health. He got diabetes at the age of 3, and unless major medical breakthroughs are made, will be lucky to make it to age 60. I am the only person in my family to ever go to, much less graduate college. My salary is obviously quite nice, and I've worked my butt off to earn it and be successful.  My Mom basically has no money except for a 100k house (paid for), and my brother makes only about $26,000 per year, because he didn't go to college (long story).  So to cut to the chase, I'm the only person who will be able to take care of them, and am worried sick about retiring early and facing two dependents (for someone who has no kids). But these dependents will be expensive, and they'll have no one else to help them.  They're my only family, I can't turn my back.

I'm an athlete, I'd love nothing more than to ditch the indoor job (even though I still like what I do) and be outside all day, climbing mountains and racing my bikes. But I'm worried that I don't have enough in non-retirement investments and, more importantly, that my Mother and Brother will be dependent on me, and that I won't have enough to take care of them.

You're right, this is the more difficult issue. 

Any SS or pension (her own or inherited) for your mom?

Can your brother move in with your mom?  $26K/yr can go a long way if there is no (or minimal) housing expense.

Can you claim you mom as a dependent?  If you can file HoH instead of single and with 2 exemptions instead of 1, that could cut your taxes by ~$3800.


Pretty good suggestions from all other posters - can't improve on those.

[nereo]

Yes, sorry I do eat and have some other expenses.  I rarely go out to eat as I'm a health nut and like to control my food quality. Probably $200 - $250 a month

The single number here that will help us give you some estimates is your total annual spending.  If you are willing to provide a guestimate it will certainly help.  Budget-tracking software like the Mint (free!) can certainly help you there
Also, any estimate of SS benefits?

As I said, I think you are in a great position here - together we can figure out a few various scenarios for you and your family.

[MDM]

Not sure if I can legally claim my Mom as a dependent since I live 60 miles away. 

The living 60 miles away is not a problem, but her making more than $4K/yr from the pension is.

See https://www.irs.gov/publications/p501/ar02.html#en_US_2015_publink1000220939, "Gross Income Test".

[Accidental Fire]

Yes, sorry I do eat and have some other expenses.  I rarely go out to eat as I'm a health nut and like to control my food quality. Probably $200 - $250 a month

The single number here that will help us give you some estimates is your total annual spending.  If you are willing to provide a guestimate it will certainly help.  Budget-tracking software like the Mint (free!) can certainly help you there
Also, any estimate of SS benefits?

As I said, I think you are in a great position here - together we can figure out a few various scenarios for you and your family.

Thanks Nereo, I just ran numbers and my best estimate is $27,000 annual spending.  That includes my mortgage and everything. Some years that would fluctuate a bit, for instance last year I did a big cycling race in Colorado that cost me a lot of money for travel etc.  This year I have some bigger house maintenance to do (new driveway needed, probably new roof).

I haven't had time to plug all of my income numbers into the SS calculator yet, I'll have to dig up my annual SS forms that we all get that list my income over the years.  Thanks again for the help!

[Accidental Fire]

Not sure if I can legally claim my Mom as a dependent since I live 60 miles away. 

The living 60 miles away is not a problem, but her making more than $4K/yr from the pension is.

See https://www.irs.gov/publications/p501/ar02.html#en_US_2015_publink1000220939, "Gross Income Test".

Thanks for the link, yeah she makes too much.  I'm currently looking into any long-term disability benefits that I might have from my Fed Gov benefits. Apparently some apply to family members, but it's complicated.

[MDM]

I'll have to dig up my annual SS forms that we all get that list my income over the years.

Go to https://socialsecurity.gov/, set up an account for yourself, and your earnings history is available electronically.

[Nickels Dimes Quarters]

I don't have anything additional to add, but just wanted to say I am impressed by your commitment to save, live sanely and think about the well-being of your mom and brother. Congrats on your stash!

NDQ

[Accidental Fire]

I'll have to dig up my annual SS forms that we all get that list my income over the years.

Go to https://socialsecurity.gov/, set up an account for yourself, and your earnings history is available electronically.

Didn't know I could do that, will do later today after work - thanks!

[Accidental Fire]

I don't have anything additional to add, but just wanted to say I am impressed by your commitment to save, live sanely and think about the well-being of your mom and brother. Congrats on your stash!

NDQ

Thanks NDQ, I will check out your blog for more advice, I'm always learning

[aFrugalFather]

Any option to take more time off from work like a sabatical?  Seems like if you like your work, some sort of part-time or reduced work load would be a best of both worlds situation. 

[Accidental Fire]

Any option to take more time off from work like a sabatical?  Seems like if you like your work, some sort of part-time or reduced work load would be a best of both worlds situation.

We don't have sabbaticals at my agency, we do have LWOP (leave without pay) but it's really only approved for medical or family situations. If I told them I'm tired of spending my prime physical years in a chair in front of a computer I don't think they'll approve.  Going part-time is another issue, we have some PT employees and I already made some inquiries into that. I'm a senior government officer (GS15), so there are some sensitivities around that as related to my role and the resources I have under me.  It's probably more feasible to go part-time if I took a voluntary demotion in rank/responsibility, which is also on the table for consideration.

Life would be easy if it weren't for all these hard choices :)

[Ricksun]

And I didn't know that I could convert my TSP to a Roth, I guess I need to use my Google machine more often :)  I will definitely look into these options!

Just a heads up from another Federal Employee.  TSP has a lot of restrictions on it for withdrawals, which is one of the reasons its administrative costs are so low.  You are limited to only 1 partial withdrawal (not to be confused with the monthly dispersements once you reach age 59.5).  Any subsequent withdrawal will need to liquidate the entire TSP balance.  What I plan on doing is using that 1 Partial withdrawal to roll a significant portion of the funds that I will need to an IRA (vanguard, whomever you have) for a Roth IRA pipeline. 

Since you already have a reserve outside of TSP, you may not need this.  Let your TSP grow while you live off the other half of your income.

Ricksun

[Sibley]

So, regarding your mom and brother, here's one way it could play out.

They move in with you. Sell your mom's house, etc. Your mom has medical through Medicare, and your brother - work, the marketplace, Medicaid, or possibly even Medicare. Medical for both of them is likely going to be a lot. Your mom's income can be used primarily for medical care for her. If she needs care, maybe your brother can provide it.

Honestly, it wouldn't be a ton more money to add two people to your house. Utilities go up a bit, food goes up some. They're responsible for medical and clothes, maybe pitch in a bit on the rest. If your brother keeps working he'd have some spending cash. But it'd be doable.

[Accidental Fire]

And I didn't know that I could convert my TSP to a Roth, I guess I need to use my Google machine more often :)  I will definitely look into these options!

Just a heads up from another Federal Employee.  TSP has a lot of restrictions on it for withdrawals, which is one of the reasons its administrative costs are so low.  You are limited to only 1 partial withdrawal (not to be confused with the monthly dispersements once you reach age 59.5).  Any subsequent withdrawal will need to liquidate the entire TSP balance.  What I plan on doing is using that 1 Partial withdrawal to roll a significant portion of the funds that I will need to an IRA (vanguard, whomever you have) for a Roth IRA pipeline. 

Since you already have a reserve outside of TSP, you may not need this.  Let your TSP grow while you live off the other half of your income.

Ricksun

Thanks Ricksun, that's my goal, to use the non-retirement stash until I'm 59, when I can dive into the TSP.  Of course Congress could always raise the age as they can with Social Security, but I can't worry about what I can't control.

[Accidental Fire]

So, regarding your mom and brother, here's one way it could play out.

They move in with you. Sell your mom's house, etc. Your mom has medical through Medicare, and your brother - work, the marketplace, Medicaid, or possibly even Medicare. Medical for both of them is likely going to be a lot. Your mom's income can be used primarily for medical care for her. If she needs care, maybe your brother can provide it.

Honestly, it wouldn't be a ton more money to add two people to your house. Utilities go up a bit, food goes up some. They're responsible for medical and clothes, maybe pitch in a bit on the rest. If your brother keeps working he'd have some spending cash. But it'd be doable.

I've considered many times the possible inevitability of having to move my Mom into my house. Her friends are up in Baltimore, I'm in NoVA, and longtime friendships are important for mental health and to keep stress at bay. Another option is that I could find another Federal Job closer to Baltimore and move up there with her. Baltimore has a significantly lower COL than NoVA.

My brother on the other hand, wouldn't do it.  He'd be too proud.  Another commenter said "Never help someone more than they're willing to help themselves", and that is advice I will be continually fighting with in regards to my brother. Sometimes it just seems like he doesn't care about his own health, but I've never lived a day with type-1 diabetes so it's easy to throw stones from my glass house.

[Accidental Fire]

Ok so I have new info to add to my case and will also add it in the original post - THANKS again to all who have commented... this is a great community of generous people (who are also savers)

[MDM]

What say you mustachians with this new info on my future benefits?

That you should take this new info, combine it with what you already know, and run it through 2 or 3 of the retirement calculators mentioned in https://www.bogleheads.org/forum/viewtopic.php?t=115839#p1686175 and links therein.  Have fun!

[Accidental Fire]

What say you mustachians with this new info on my future benefits?

That you should take this new info, combine it with what you already know, and run it through 2 or 3 of the retirement calculators mentioned in https://www.bogleheads.org/forum/viewtopic.php?t=115839#p1686175 and links therein.  Have fun!

Thanks for the link MDM, doing that now

[Axecleaver]

Are you sure it's .21 and not 21/30=70%? That would make a lot more sense.

[Accidental Fire]

Are you sure it's .21 and not 21/30=70%? That would make a lot more sense.

That's what I thought would make more sense as well, but no it's 1% of the top three for each year of service.

https://www.opm.gov/retirement-services/fers-information/computation/

It's a much better pension than I thought to be honest. Not sure if it can be changed at whim by Congress but can't fret about that

[robartsd]

I think you have enough money to retire if you want to. You don't even need to worry about a Roth pipeline if you don't want to - your taxable accounts should be sufficient to get you all the way to 59.5 without any more money (without even considering future earnings in those accounts). You should still plan on a Roth conversion pipeline however, as distributing those earnings over more years means paying less income tax on them - at the very least be sure that you convert enough to Roth that you don't leave any tax free money on the table.

How do you feel about staying where you are at? What about moving closer to where your mom lives?

If maximizing your Federal pension is tempting to you, a Park Ranger job could provide you with a much more outdoor job that continues to earn credit towards your Federal pension to get your full 30 years without several more years more at a desk. You could start looking into what that could mean for your lifestyle and lifetime happiness.

[former player]

Any chance you could work part-time at your current job?  I went down to 4 and a half days a week (worked in 4 8 hour days each week) aged 42, and it enabled me to take up hobbies and establish the life to which I eventually retired aged 50.  4 days on and 3 off is a markedly different balance to 5 on and 2 off.  And I was working longish days anyway, so putting a little extra time on each day just meant that I was being paid for hours I would have worked anyway.

[Accidental Fire]

Any chance you could work part-time at your current job?  I went down to 4 and a half days a week (worked in 4 8 hour days each week) aged 42, and it enabled me to take up hobbies and establish the life to which I eventually retired aged 50.  4 days on and 3 off is a markedly different balance to 5 on and 2 off.  And I was working longish days anyway, so putting a little extra time on each day just meant that I was being paid for hours I would have worked anyway.

Thx for the comment, I've been looking into it and mentioned it in a prior comment. I'm a senior government official and have lots of responsibility and many people working for me. I would likely have to take a voluntary demotion/reduction in rank and a completely different job.  That would also send the "he's not serious about his career" ripples to others. I've been here 20 years and am well-connected, it would definitely change the dynamic of all of my professional relationships.

It might be easier to just get a part-time job at a completely different government agency to avoid the politics of it all and start anew.

[Accidental Fire]

I think you have enough money to retire if you want to. You don't even need to worry about a Roth pipeline if you don't want to - your taxable accounts should be sufficient to get you all the way to 59.5 without any more money (without even considering future earnings in those accounts). You should still plan on a Roth conversion pipeline however, as distributing those earnings over more years means paying less income tax on them - at the very least be sure that you convert enough to Roth that you don't leave any tax free money on the table.

How do you feel about staying where you are at? What about moving closer to where your mom lives?

If maximizing your Federal pension is tempting to you, a Park Ranger job could provide you with a much more outdoor job that continues to earn credit towards your Federal pension to get your full 30 years without several more years more at a desk. You could start looking into what that could mean for your lifestyle and lifetime happiness.

Thx for the comment and the Roth advice. I have thought of moving closer to Baltimore and trying to stay with the government.  The Park Service doesn't seem to have many jobs around here as it's a huge metro area, the few they have are interpreter and tour-lead type jobs for the local historical sites, and there are lots of old retired folks who apply for those.  I have more energy than those folks being only 45, maybe I can compete :)

[fallstoclimb]

Fellow fed here who also loves biking & hiking.

I'm about 15 years behind you, and my early retirement plan actually gets us to right around where you are at right about your age.

We are not planning on outright retiring, but we will stop all saving, which means we only need to make enough money to cover our day-to-day needs.  The stash will continue to grow on its own, and we will enter a new phase in our careers -- perhaps part time work, perhaps just low-paying jobs, perhaps a year off and a year on.  I am hoping we will both be able to go very part-time at our current jobs but I'm willing to take some risks once we have a solid stash.

If I were you, I would rent your house, live off your taxable investments, and pick up work here and there as needed.  If you are a high level fed, it's likely there are consulting opportunities you could pick up, no?

I admire your dedication to your family, and I cannot give you much advice there.  I do think that you can move to a more flexible working situation that allows you to continue helping them but also have more time and freedom away from a desk.  I'd suggest setting boundaries on the amount per month you are willing to give them.  If your mom gets to the point where she has to live in a facility, I strongly suggest letting her go on Medicaid for this.  Otherwise this could eat just way too much of your assets.

You are 45 and you love being outdoors and who knows how many years of health you have left.  Go live your life!

Also it's time to stop worrying about the "he's not serious about his career ripple" -- they're right, you're not. You don't have to be - you've put yourself in a fantastic position.  You also might be surprised with what they agree to when they understand that you are 100% financially capable of walking away.   

PM me if you want to chat about being a fed in Baltimore :)

[Accidental Fire]

Fellow fed here who also loves biking & hiking.

I'm about 15 years behind you, and my early retirement plan actually gets us to right around where you are at right about your age.

We are not planning on outright retiring, but we will stop all saving, which means we only need to make enough money to cover our day-to-day needs.  The stash will continue to grow on its own, and we will enter a new phase in our careers -- perhaps part time work, perhaps just low-paying jobs, perhaps a year off and a year on.  I am hoping we will both be able to go very part-time at our current jobs but I'm willing to take some risks once we have a solid stash.

If I were you, I would rent your house, live off your taxable investments, and pick up work here and there as needed.  If you are a high level fed, it's likely there are consulting opportunities you could pick up, no?

I admire your dedication to your family, and I cannot give you much advice there.  I do think that you can move to a more flexible working situation that allows you to continue helping them but also have more time and freedom away from a desk.  I'd suggest setting boundaries on the amount per month you are willing to give them.  If your mom gets to the point where she has to live in a facility, I strongly suggest letting her go on Medicaid for this.  Otherwise this could eat just way too much of your assets.

You are 45 and you love being outdoors and who knows how many years of health you have left.  Go live your life!

Also it's time to stop worrying about the "he's not serious about his career ripple" -- they're right, you're not. You don't have to be - you've put yourself in a fantastic position.  You also might be surprised with what they agree to when they understand that you are 100% financially capable of walking away.   

PM me if you want to chat about being a fed in Baltimore :)

THANKS very much for your perspective.... Swamped now (at work of course), I'll try to hit you up!

[Catbert]

Are you sure it's .21 and not 21/30=70%? That would make a lot more sense.

That's what I thought would make more sense as well, but no it's 1% of the top three for each year of service.

https://www.opm.gov/retirement-services/fers-information/computation/

It's a much better pension than I thought to be honest. Not sure if it can be changed at whim by Congress but can't fret about that

I wouldn't worry too much about Congress changing FERS.  The last time there was a major change to the retierment system (~1983) they grandfathered everyone who was already in the old retirement system.

Also look into the ACA for potential health insurance if you retired soon w/o FEHB.  If your income is low enough your cost may be lower than you think.  (Admittedly FEHB is hard to pass up, but not worth working 12 more years

[robartsd]

The Park Service doesn't seem to have many jobs around here as it's a huge metro area, the few they have are interpreter and tour-lead type jobs for the local historical sites, and there are lots of old retired folks who apply for those.  I have more energy than those folks being only 45, maybe I can compete :)

If an outdoorsy Park Service job is not an option near your mom('s friends) you can always put that idea in your back pocket for a later phase of your life (assuming you still care about maximizing your unneeded pension). I agree that you shouldn't have to worry about changes to your pension plan - it'd be practically impossible to muster enough political power to change your plan in a way that would negatively impact you.

[notactiveanymore]

You could maybe consider long-term care insurance for the mom and/or brother. If your mom has some friends in independent living situations, she may be more inclined to move into one of those arrangements before her health starts declining. In my experience, making that transition before it's necessary is much easier than waiting. If the cost of her rent and later care was covered by that and supplemented by the sale of the home, she would probably still have a decent chunk of money left at the end of her life. You could broach the subject with her of leaving any remaining money to your brother alone. Then you're not helping your brother, he would be receiving an inheritance.

I'm not as into the RE part of FIREing, so to me that covered health insurance for life with 12 more years of service would be very hard to pass on. But if I'm reading it right, you'd still be able to get that benefit even if you did those 12 years with Parks, correct?

[nereo]

Ok so I have new info to add to my case and will also add it in the original post - THANKS again to all who have commented... this is a great community of generous people (who are also savers)

I spent time with my HR folks today to learn what my pension would be if I left before full retirement.  Turns out it's actually simpler than I thought, especially since I'm not former military. It's basically the average of my top three highest salaries (currently that number is $158,200) times the number of years of service as a percentage (if I leave next year that will be 21 years). So 158200 * .21 = $33,222 annually, or $2769 monthly.  However, I can't start collecting this until I'm 62, this is called "deferred retirement".  The not-so-good part is that I lose my health and life insurance benefits.  If I complete 30 years with the government and retire at age 57, I get a bigger pension and health/life insurance for the rest of my life.  That's a HUGE benefit obviously but I'm not sure I'm willing to suffer 12 more years in a chair in front of a computer for 10 hours a day to get health/life insurance for the rest of my life.

I also did the Social Security calculations on their website as recommended. According to them, if I retire and stop earning money next year my monthly payment will be $1507. That's assuming I totally stop work, which I probably won't like MMM.  I can see me doing jobs outside or in the outdoor industry that I'm more connected to and that keep me feeling healthy.  Or becoming a Park Ranger.

So, based on this (mostly good) news, after age 62 I can start collecting a pension and social security which will be approximately $4276 monthly (before taxes and in today's money).  That's $51,000+ per year.  I'm starting to feel more optimistic...

What say you mustachians with this new info on my future benefits?  Thanks again in advance!

(re)joining the conversation esskay1000.  Based on what you've written, I have the following synopsis for you:
Age: 45, single
Annual expenses (current): up to $30,000 with travel factored in.  Does not include supporting brother and mother (below)
Liquid Assets: $1.1MM
Pension (age 62): $33,222/yr
SS benefits (age 65): $1507/mo

Liabilities:
Mortgage $160k at 3.x%
Brother (age 47) with health problems (type I diab.), currently lives off of $26k/year.
Mother (age 86) who lives off SS, owns home valued at $100k

The breakdown:
You are in an excellent position financially, with only the 'unknowns' of two family members complicating things.  Your pension and SS benefits will more than cover your personal expenses later in life (starting in 17 years), and you have a great deal of savings to 'bridge-the-gap'.  Let's see what we can say about supporting your family members.
To be perfectly frank, the life expectancy of an otherwise healthy 86 year old is just under 7 years. We can optimistically and conservatively plan for her to be around for another 13 years (a probability of ~5%) - long before you have pension income*.  She will continue to receive SS benefits and has her home which could be used to provide for some end-of-life care (either by selling or via a reverse mortgage).
Your brother currently lives off about $26k/year but has chronic medical costs.  His day-to-day needs aren't great, but he will need healthcare coverage and medical expenses for the rest of his life, which you may be called upon to provide from time to time.
You will get an additional 'tail-wind' in ~20 years when your mortgage disappears.

Here's how you could provide for yourself and your family members.
There is no question that you have enough assets to retire today if you were only providing for yourself. 
Given your mother's age, its sensible to only plan for her expenses over the next 13 years.
With $1.1MM in investments and a 4% WR you could have $44,000/year indexed to inflation with very little chance it will run out.  Even better, because you have both a pension and SS which will cover all your expenses later in life, you only need that money to last 17 years ("bridging the gap" between now and your pension).  This means you could use a much higher WR.  Looking at fireCALC, a WR of 5.45% over 17 years gives you a 95% success rate and would provide you with $60k/year.  Clearly this is enough to fully support yourself plus provide a lot of financial support to both your brother and mother.

Looking at this another way, your investments could provide you with $30k/year in income, plus an additional 5 years where you had $80k/year to provide $50k in support for your family members and you would still have an almost bulletproof retirement (historical success rate of 100%).  That's a quarter-million$ in support for your mom and brother without impacting your retirement at all.

If you are able to find a job (e.g. National Park Service) to cover your expenses then your entire investment portfolio could be used to support family members in need.  That could be up to $60k/year for up to 17 consecutive years.

Finally, given your assets I would not base any future job on your pension.  Sure, in an ideal world you could work for the NPS and continue reaping pension benefits, but you have already won the game here.  You have the assets to cover your heath-care costs, and your pension and SS will already provide you with more than enough income starting at age 62.  A job (any job) seems optional here.

Additional information you might want to research:
Cost for your bother's medical insurance.  What does it cost to insure your brother? Check out healthcare.gov to get some basic insurance quotes, and also consider any assistance from medicaid (which might be considerable given his low income). He can already live on a relatively-low $26k/year (his current salary), so you could offer him support almost in perpetuity.

End-of-life care for your mother. There's no way of knowing this for certain, but there are estimates available.  Don't forget that the value of her home can provide for some of her end-of-life care, even if it's after the fact (by selling the home).


*I never enjoy talking about age-expectancies for loved ones, but there's no room for emotion when looking at finances.  Being "free" from your current job may very well allow you to spend more time with your mother and brother.

[DebtFreeBy25]

There is no question that you have enough assets to retire today if you were only providing for yourself. 
Given your mother's age, its sensible to only plan for her expenses over the next 13 years.
With $1.1MM in investments and a 4% WR you could have $44,000/year indexed to inflation with very little chance it will run out.  Even better, because you have both a pension and SS which will cover all your expenses later in life, you only need that money to last 17 years ("bridging the gap" between now and your pension).  This means you could use a much higher WR.  Looking at fireCALC, a WR of 5.45% over 17 years gives you a 95% success rate and would provide you with $60k/year.  Clearly this is enough to fully support yourself plus provide a lot of financial support to both your brother and mother.

Looking at this another way, your investments could provide you with $30k/year in income, plus an additional 5 years where you had $80k/year to provide $50k in support for your family members and you would still have an almost bulletproof retirement (historical success rate of 100%).  That's a quarter-million$ in support for your mom and brother without impacting your retirement at all.

If you are able to find a job (e.g. National Park Service) to cover your expenses then your entire investment portfolio could be used to support family members in need.  That could be up to $60k/year for up to 17 consecutive years.

Finally, given your assets I would not base any future job on your pension.  Sure, in an ideal world you could work for the NPS and continue reaping pension benefits, but you have already won the game here.  You have the assets to cover your heath-care costs, and your pension and SS will already provide you with more than enough income starting at age 62.  A job (any job) seems optional here.

Seconding this excellent summary. Esskay100, you are absolutely FI and can retire now with confidence if you chose.

You only have to fund 15 years of early retirement before your sizable pension kicks in, you're eligible for penalty-free disbursements and you'll be eligible for Social Security and Medicare. (Horrah, happy 62nd birthday!)  This is certainly doable with 562k in non-retirement accounts. You're also obviously a smart and industrious person and can probably work an enjoyable post-career gig for some extra income.

As for your mother, do not put any assets in her name (ie. transfer funds directly into her checking account). Doing so could impact her ability to qualify for Medicaid. Your mom may also want to consider signing her house over to your brother (assuming she trusts him and wants him to inherit it). In Maryland, there's a 5 year "look back" period for Medicaid eligibility meaning that the feds will look at her financial history, specifically looking for gifts, for the 60 months preceding the application. If she's interested in keeping her home in the family, it would be wise to get it out of her name as soon as possible. (Obviously there are no guarantees with someone's health, but if she wants to do this, the time is now.) Also, I strongly advise against being too proud to let a family member go on Medicaid. Eldercare can become prohibitively expensive quickly even for those with significant financial resources.

Edited: It appears that Maryland doesn't require seniors with home equity under 552k to sell their homes before being eligible for Medicaid. (Seniors almost always have to forfeit their homes in my state.)

"Your home is exempt, whatever its value, if your spouse, minor children or certain dependent or disabled relatives live in the home.

Your home will be exempt no matter who lives in it if you say on your Medical Assistance application that you intend to return to it — even if it is unlikely that you will be able to return (as long as the equity value is less than $552,000). Homes with an equity value greater than $552,000 are not exempt under the intent to return home rule. See Question 7, about when the State will place a lien on a house.

Usually, Medical Assistance will not allow you to use any of your income except rental income from the home to pay taxes, insurance and maintenance costs for the home. However, you may be able to have up to $350 per month of your income set aside for up to six months to maintain your home while you are in a nursing home. A physician must certify that you probably can return home.

If you intend to return home, the proceeds from the sale of an exempt home are also exempt to the extent they are used to purchase a new home within 3 months of the sale."

- See more at: http://www.peoples-law.org/frequently-asked-questions-about-medical-assistance-nursing-home-care#sthash.OCnJDK3F.dpuf

As for your brother, it's his life to live, and it doesn't sound like he's willing to accept help. The good news is that your mother and brother are accustomed to getting by on very little, so the assistance you could offer them, even if that's only a few thousand dollars a year, would go a long way. Kudos to you for looking out for your family and being wiling to provide for them if necessary. The numbers have been crunched and the scenarios have been analyzed; you can live the dream starting now. Now go out there and do it!