What would you do? (Transitioning to partial retirement.)

[brksguy]

What would you do?

Wife is working 44 hour per week job in health care that drains her physically and emotionally. She spends approximately 10 hours commuting per week.

There are limited opportunities to find work closer to home and additional earning potential is limited to 2-3% annual  raises over the course of the career.

She could resign current position as a manager and continue working part time PRN for approximately 20 hours per week making at least 35k, probably more depending on PRN rate.

We have other viable business ideas that we have been unable to put into action due to lack of time. With the additional time off, wife could work on business ideas that would be more meaningful and fulfilling than current work and could eventually transition to that full time.

We are close to full retirement and could certainly continue to save at a lesser rate even on husbands salary alone. However, with the market being high and additional expenses with kids in the future, we are not sure if now is a good time to scale back. Should we put in a few more years of "super-savings" before making this transition?

Details are below but please ask if you need additional information.

Total net worth: 595,000

That is broken down as follows:
-160 k in tax advantaged retirement accounts
-185 k in cash (recently acquired in lump sum that we have been hesitant to put in the market as it is very high at the moment. Also searching for potential rental income properties)
-250 k in house with paid off mortgage

Annual income
Husband: 80 k
Wife: 73 k

Annual expenses
-Currently: 30 k/year (includes luxury expenses such as vacations abroad)
-Bare bones expenses: 22 k/year

Potential new expenses:
Anticipate having kids in near future

Ages:
Husband: 29
Wife: 28

[dreams_and_discoveries]

The easiest and most socially acceptable way is to start trying for the baby now, make that your number one focus and try and reduce work stress, then if it all works out your wife can take mat leave, then plan to stay at home for a few years / go part time / never go back.

Also, if she is not loving the job, she can just leave....she doesn't need the money, and something else is likely to come up, or she could take bank shifts etc and take it easy.

Although both these options do put some pressure on you to be the main breadwinner for a few years, is that something you are truly comfortable with?

[zinnie]

I'm not sure I understand how you are close to retirement--are you counting the home equity? You only listed 345k of liquid that you can draw from, and that doesn't come close to supporting a 30k per year need. If your 30k per year expenses are 30k with a paid off house, then that 250k is getting you a return of whatever you would be paying rent. So you can't also count it for withdrawal rates. And to have a 4% withdrawal rate apply, the money has to be invested. You only have 160k currently invested, right? I'd work on getting the windfall into the market. Set up an automatic monthly investment and get it in slowly over six months, if that makes you feel more comfortable. But don't just sit on it.

On face value, however, if your expenses are only 30k, and you make 80k and your wife could still make 35k at an easier job, that's still more than enough for the two of you and a healthy savings rate. Since you mentioned having kids, have you looked into how that would increase your expenses? And if she is only working part-time, will your company's insurance cover her at a good rate? And does it have good maternity and family care? That's the stuff I'd be looking into if I was planning to have kids. Clearly many people take on new jobs just to get good insurance during this [potentially very expensive] time.

In my opinion, happiness and life fulfillment greatly outweighs financial concerns. Money should be a tool to help you achieve what you want, not an end in and of itself. What would she do if it wouldn't make a financial difference either way? You have enough buffer to experiment a little bit. 28/29 is way too young to feel like you are tied to a job you don't like. That said, has she fully explored other, less stressful, full-time options? Including applying for new jobs and going on interviews? If she's a manager, is that just the part that isn't right for her? And has she worked on ways to make the job she currently has less stressful before considering leaving? (Though the commute alone seems like a good reason to look for other work--or move!) Just wanted to say that it makes sense to a) do everything in her power to improve her current situation and b) understand what other options are realistic, before leaving this position. But if she has done that, you have my blessing to experiment a little bit :)

[Hargrove]

28 year old wife is working a 44-hour draining job and you have over a half a million in assets, a paid house, and 153k in income...

You don't give many details on those businesses, but you seem to answer your own question. "We have viable business ideas (that only require time). We could get more time to run these much more interesting, fulfilling, less draining businesses." With only that to go on, I can only ask - what are you waiting for? If instead your question is "how risky is this?" then, well, we have no idea, because we don't know what you're considering or how many skills you bring to the businesses.

On money: every day you time the market you accept guaranteed losses at the current rate of inflation. If the market goes up 10% until a crash of 20% in April 2018, you would be "down" but up any dividends collected by that point and then recovered pretty quickly thereafter. If the market instead dips in 2019, there's a very high chance you would be flat or up from today anyway. Understand that by not investing your cash, you are making a bet that a market that tends to go up will go down, and very soon, and the less soon it goes down, the more money you lose. People who are paid millions of dollars to make that bet properly screw it up every single day. Invest the money.

You claim "luxury vacations" with spending of 30k/yr but your income is 153k. You are doing so awesome I'm confused about your concern. People who make 40k/yr combined have kids. You have most of your money available and a paid off house. If you save at your current rate (and invest it), you could be FIRE in 2-4 years. If your wife downsized immediately, it would impact FIRE by a couple years if the business didn't make much of anything. Whether or not to quit working and become an entrepreneur is just the answer to the question "is it worth working at my own business and retiring two years later instead of continuing this job?"

[nereo]

What would you do?

I suspect that a great deal of what is 'draining' on your wife would feel less of a burden if she wasn't spending 2 hours each day commuting.
Personally, I'd prioritize moving to be closer to your wife's work, OR find a job that is much closer to home.  44 hours/week is managable.  54 hours (including the commute) can be brutal. 

You're also likely spending > $10k/year on wife's commute - not a trival expense.

[MaaS]

No matter what decision you make, remember this: You're crushing it.  The cards are pretty stacked to provide you with a long lifetime of freedom.

Assuming you get that cash working for you, compounding will set you free reasonably quickly, even if you scale back.

My recommendation is to take the path you find most interesting. You've earned that luxury.

[Turtles All the Way Down]

No matter what decision you make, remember this: You're crushing it.

This is what I was thinking!  Taking a pay cut to start a business is scary.  Retiring early can be scary.  Having kids is SCARY.  But you have a lot going for you, and if you truly believe your business will make money, stop delaying because you're unsure.

(And I truly believe your life will be better with kids, so don't put that off if you're ready!)

[brksguy]

Wow, what awesome responses!

Thanks so much for all the thoughtful comments. My wife and I read through all your comments at lunch time today and we are planning to have a proper chat about it all tonight.

We are still obviously about 5 years away from full retirement but it is helpful to have a group of people who have a unique perspective to bounce these decisions off of.

Cheers!