Time to Quit?

[Debbie M]

Should I quit?  Here's my story:

I used to have a job where, among other things, I was a liaison between the programmers and users of a computer system.  I worked in a central office with the programmers and did training and trouble-shooting for people in 14 different offices (aka "my chickadees").  When my workload doubled, that was rough, but when I got a new boss who tried hard but actually increased my workload and frustration levels more while simultaneously pushing all my buttons, I stuck it out until I had acquired one more year of service toward my pension and then I quit.  I would have been eligible for a pension in three years, but quitting meant it could take up to six (depending how much state employment I got in the next three years).

I wanted a break, but one of my chickadees asked me fairly shortly thereafter to work part-time for them temporarily.  Other chickadees have since jumped on the band wagon, and I ended up with full-time work for most of the next year, earning another year toward my pension.  My plan is to continue working with my chickadees so long as they want me (or for the next two years, whichever comes first).  I've got one half-time job ending mid April, one more at the end of May, and another chickadee who's asked me to contact him when I am next available (no guarantee, of course).

I only have to deal with my old boss once a week, but the program is in transition (they're re-building a new version from the bottom up and pressuring people to switch to it before they're even done).  The programmers are good, but the new liaisons are ignorant (as expected for new people) and quite possibly don't have the brain power to ever be able to properly understand either the big picture or the details.  So even my new little jobs are often quite frustrating.  (Instead of just speaking plain English, we have to use special phrases to get any respect such as "data integrity issue" and a new one I just learned, "I don't feel comfortable going live without that feature.")  On the other hand, I love that I am able to stick around and help push to make the new system better from the outside, which will help all my chickadees not to mention the thousands of end users.  My longer-term goal is to never have to work for money again.

As a person in a (previously) stable job (the latest recession brought layoffs) with a pension that would cover my post-retirement expenses, I've been not too worried about having funds to cover unemployment or early retirement.  (Yes, punch-worthy.)  But I did buy a small house and pay it off.  (Not quite as exciting as it sounds--I live in a state with high property taxes.)  I've been maxing out a Roth IRA ever since they were invented.  (That money is in index funds).   A couple of years ago, I also started buying growth dividend stocks.  And a few months before I quit, I finally started saving toward an early retirement fund to cover the years before I can collect my pension.

So now I have 5.5 months of expenses saved.  I'll have a couple more months worth saved at the end of May, not nearly enough to cover the remaining 3.5 pre-pension years.  My dividends are up to an average of $18.78/month; that's not helping much.  And 4% of my IRA is $350.  Better, but, well, my expenses are $1663/month, though I'm cutting out the ballroom dance classes ($70 every five weeks) and dance club membership ($100/year), so that should help slightly, depending on what I do instead.

Here's the interesting part.  With a Roth IRA, you're allowed to withdraw the amount you deposited (not the extra value that has been gained) at any time, even if you're not yet old.  That 57K amounts to 34 months of expenses.  I could be done working forever.  (Assuming nothing crazy happens like my country gets so berserk that if I'm lucky, I escape with my life and start over with nothing.)

So, option A is to quit when the chickadees stop offering me jobs and never work again.  This idea makes me very happy.

Option B is to look for just over 1.5 more years of work for the state, which would mean I could keep adding to my IRA instead of draining it, increase the pay of my pension (by at least $190/month forever), and, if the work is full-time, keep making the big contributions to charity I like to make and maybe increase my renovation fund a bit more (I'd really like a dishwasher and covered parking and a separate laundry room so I can move the washer out of my kitchen and the drying rack out of my bedroom).

The other work would probably be some kind of clerical thing.  And I would take classes to be able to do bookkeeping which is in pretty high demand at my current employer (because the pay is so low).

So is it stupider to drag out my unhappiness just for piles of money, or is it stupider to risk my future financial security by cutting things so close?  As is, my pension should pay $2088 gross (plus free health insurance).  My guess is that would leave $1896 after taxes.  And an article I read implies that, because pensions don't keep up well with inflation, this is the equivalent of getting $1340 in today's dollars indefinitely. Subtracting my current $199/mo insurance brings my expenses to $1463.  Subtracting dividends = $1443, subtracting 4% of my remaining IRA ($171) would be $1272.  So that's less than $1340.  But health expenses cost more when you get old, plus at age 65 I have to start buying some Medicare thing and my pension insurance becomes just supplemental, so that's more even if I don't have health problems.  And pension rules can change.

I'm extremely risk averse (love having a nice cushion) and really, seriously think I might never work for pay again.  sure, it's possible that the math book I'm planning to write will be publishable.  And it's possible that the math tutoring I want to do at the local middle school will lead to creating some kind of saleable materials, but I really can't imagine anything else coming up.  So it's quite possible that the inflation hedges MMM talks about won't apply.

I'm pretty sure I want to just quit.  Draining my IRA sounds bad, but that's what it's for, right?  (Another weird thing is that being ready to quit improves my negotiating skills.  Because I really do want to walk away in some cases, no matter how loveable the chickadee.)

[sherr]

It sounds to me that you have done the math and know that you are currently Financially Independent. The question then becomes if you want to keep working (either because you love your job, which it sounds like you do not, or because you want a larger safety margin, which it sounds like you do). I don't really think there's much that can be said to help you with that decision as it's entirely dependent on how much you hate work and how much you want an extra cushion. If it were me I would probably just take it one week at a time, knowing that you can quit anytime you feel like it, and then just see what happens.

You also didn't mention any Social Security or Medicaid payouts when you're old. I assume you'll be getting some? That should help reduce the risk of inflation significantly.

[twinge]

It strikes me that your plan is VERY reliant on the viability of your pension.  How confident are you that your pension plus health insurance will last your lifetime?  Many pensions are not--you get something, but not what you expected if the company declares bankruptcy or something else.  What are you expected to receive in social security benefits? I would calculate out various scenarios--such as, what would happen if your social security benefits were 75% of what you expect and your pension 25% of what you expect and see if you could still squeak by.  What would happen if health insurance premiums continued to rise at their current rate? etc.  Not that you have to be able to protect yourself against every bad thing you imagine, but more as an exercise to see what your risk tolerance is around these issues. 

I personally would want to preserve enough cash/investment buffer so that a dramatically lessened pension and social security would still provide me food/clothing/shelter/healthcare.

[Debbie M]

Ooh!  Advice!  Thanks!

sherr, I do qualify for Social Security (currently estimated to be $1165 at full retirement age, $815 at age 62 but, of course, highly subject to change).

One week at a time is a good plan.

twinge, you ask the scary questions.  SS at 25% of expectations and pension plummeting to 75% of expectations would probably work, but the reverse that you mentioned would not.  My pension is actually (currently) in good shape, and I work for the state, so it's guaranteed by the poor taxpayers. But it's still risky.

That's two mustachians telling me that continuing to work after FI isn't necessarily stupid, even if I don't love my job.  Interesting.

Another strategy is to strive to work only half-time.  (By which I mean only one half-time job.)  If possible, that's probably a good compromise where I get lots of extra glorious free time, but don't drain my finances much, if at all.

[Zaga]

Seeing my mother struggle to live on very little post retirement and take on odd jobs for very little pay makes me want to advise you to have a little bit more of a cushion before you pull the trigger.  I like your idea of working half time for a few years to give you a bit of that cushion while also relieving the stress of working full time faster.

[travelbug]

We are convservative and for another 1-2 years "investment" working to have peace of mind for the rest of your life would keep my nose to the grindstone.
How old are you? That would also make a difference to my decision. But to have to give up pleasurable activities that are not that expensive, your dance lessons etc, would be the clincher to me.
Retirement would not be much fun if you were unable to afford the things you love. (within reason of course, a DB9 is not in my list of must haves, although it would be nice!)
Good luck.

[Debbie M]

Thanks, Zaga.  My best wishes for your mother!

travelbug, I'm 50 - not young, not old.  I don't "have" to give up dance lessons, I just happen to be doing so.  (I've been taking lessons for decades, always bringing the latest boyfriend.  The current boyfriend has learned all he wants to.  Plus the club just switched to an even smaller dance hall for Saturday dances, and switched to every other Saturday instead of every Saturday, so it's just a good time to quit.)  Still, point taken.

[travelbug]

Oh, sorry. I didn't mean to be rude, I just mis-read the context perhaps.
If you are 50, perhaps just go for it. Life is short and worth living on your own terms.
How exciting for you though, all the best with your decision.

[Debbie M]

No worries, travelbug.  It's wasn't at all clear in my post why I was cutting the dance expenses.  And fifty is old for a working mustachian, but I could easily have 30 or more years ahead of me, so it makes sense to have a cushion.

I'm going to aim for half-time and a cushion, but not freak out if I can't find acceptable work.