Author Topic: 51 years old-can I retire next year…or now?  (Read 7779 times)

MinouMinou

  • Stubble
  • **
  • Posts: 102
51 years old-can I retire next year…or now?
« on: November 19, 2022, 04:04:20 PM »
Life Situation:
Me: 51 year old female, married filing jointly, work in healthcare (government RN). Partner:  60, solo self-employed. We live in the PNW region of the US and have 2 adult kids, one still living at home & on my health insurance.

I am burned out! Tired, and so tired of routines. Tired of office politics, grumpy coworkers, sitting in a cubicle, inflexible rules, workplace stress.

But: ongoing work positives are kind colleagues, being well compensated with good health insurance for self & family, meaningful work, and patient interactions.

Gross Salary/Wages:
Self: 100k; Partner: 60 k

Individual amounts of each Pre-tax deductions
Self: 457b 26k (30k in 2023), HSA 6k;
Partner: Traditional IRA, 6k
Total: 38k
AGI: 122k

Rental Income, Actual Expenses, and Depreciation:

2022 will be our first full year of owning a rental property
Income: 4k/mo; 48k/yr
Expenses: 3,600/mo, 43,200/yr
(Mortgage, taxes, repairs funds, property management, landscaping, water/garbage bills)
Rental Income: 400/mo; 4,800/yr

Current expenses:
Semi-fixed Expenses:
Home Mortgage 850/mo; 10,200/yr
Current health spending: 650/mo; 7800/yr
Property taxes on home: 400/mo; 4800/yr
Gas for car: 125/mo; 1,500/yr
Car maintenance: 100/mo; 1,200/yr
Groceries & Household items: 500/mo; 6,000/yr
Life Insurance: 150/mo; 1,800/yr
Home & Auto Insurance: 100/mo; 1,200/yr
Home Repair: 100/mo; 1,200/yr
Misc: 50/mo; 600/yr
Utilities:
Water & Electric: 125/mo; 1,500/yr
Garbage: 25/mo; 300/yr
Phone: 80/mo; 1000/yr
Internet: 75/mo; 900/yr
Total “Needs” Expenses: 3,330/mo; 39,960/yr

Non-fixed Expenses:
Clothing: 25/mo; 300/yr
Streaming/online news services: 100/mo;1,200/yr
Entertainment/eating out: 25/mo; 300/yr
Gifts: 100/mo; 1,200 yr
Charitable Giving: 100/mo; 1,200 yr
Travel: 500/mo; 6,000/yr
Yarn/art/craft supplies: 25/mo; 300/yr
Home/garden beautification: 25/mo; 300/yr
Total “Wants” Expenses: 900/mo; 10,800/yr
Total “Needs” + “Wants” Expenses: 4,230/mo; 50,760/yr

Expected ER expenses:
About the same, except healthcare, the big scary unknown
Assets:
Self: Asset allocation in low cost index funds: 85 % stocks;15% bonds   

Taxable: 125k
457b:300k
403b: 22k
Roth IRA: 155k
Trad IRA: 52k
HSA: 27k
State retirement fund:88k
Cash/emergency fund: 8k
Self total assets: 777k

Partner:
   Traditional IRA: 68k
   Roth IRA:11k
   SEP IRA: 16k
   Cash/emergency fund: 34k   
Partner total assets: 129k

Self+ partner total assets: 906k

Possible Future Additional Income:
Self:       State pension 2k/mo; 24k/yr beginning at age 65 if I stopped working now
      SS: 1,500/mo; 18k/yr beginning at age 70 if I stopped working now
Partner:   SS: 1,500/mo;18 k/yr beginning at 67 if he stops working now

Liabilities/Debt:

Mortgage on Home: 186k (30 yr fixed, 3%) (valued at 450k)
Mortgage on rental duplex: 364k (30 yr fixed, 3.625%) (valued at 550k)
Total Mortgage Debt: 550k
 
Specific Question(s):
Please, bristly and bearded Mustachians, if you have made it this far in my case study, share your honest thoughts, advice, and opinions.
I want to quit by 12/31/23.
1)   Is it realistic to walk away?
2)   Would you recommend a bigger cushion?
3)   What about the unknown health insurance conundrum?
4)   Should I be planning to cover all expenses (not just half) in case something happens to my partner or our relationship?

Thank you…




« Last Edit: November 19, 2022, 07:30:03 PM by MamaMinou »

zolotiyeruki

  • Walrus Stache
  • *******
  • Posts: 5603
  • Location: State: Denial
Re: 51 years old-can I retire next year…or now?
« Reply #1 on: November 19, 2022, 07:52:53 PM »
Well, the 4% rule would say that you need $1.25 million in order to cover your desired $50k/year spend, but that $50k doesn't include healthcare.

Is your $900k enough?  Without modeling it out, it's hard to say.  It sounds like you need to build yourself a spreadsheet, listing amounts and sources of income for each year, as well as expenses and expected returns for each year moving forward.  That way you can forecast that you'll need to budget $X for health insurance until you're old enough for Medicare, and that your SS and/or pension will start providing income of $Y/year in year Z.  How good are your Excel skills?

I suspect that because you won't be relying solely on your own funds in perpetuity, it's fine to be less conservative than a 4% withdrawal rate.

MinouMinou

  • Stubble
  • **
  • Posts: 102
Re: 51 years old-can I retire next year…or now?
« Reply #2 on: November 19, 2022, 10:41:53 PM »
Zolotikeryuki, thank you for your reply! My Excel skills are basic at best, but my partner offered to help build that out. One thing I didn’t include in net worth, since I wasn’t sure how to account for it, is mortgage equity. We currently have 186k in the rental duplex. I won’t count home equity since we have to live somewhere. Our current budget includes 650/mo for health spending, since I use the HSA for investment. I am guessing that without job insurance we might spend another $500/month or more. But then I wonder about ACA subsidies if our income dropped.

I think my partner wants to work a few more years.

I was secretly hoping someone would say Go for it! You’re in a good place! But I also want to be prudent.

Ladychips

  • Handlebar Stache
  • *****
  • Posts: 1449
Re: 51 years old-can I retire next year…or now?
« Reply #3 on: November 19, 2022, 10:44:27 PM »
I have no answers but I do have some questions:

Are you SURE about your spending? Have you tracked (over a significant amount of time)  what you actually spend? When I see round numbers, I think general calculations, not actual spend...

You list 88k in state retirement funds and $2,000 in future pension. Is that the same pot of money or different pots? I'd want you to be sure you aren't double dipping when you count it.

What would your spending be without your partner? If your relationship would end, what would your assets and liabilities be then?

Have you looked at ACA plan costs? What will your adult child do for insurance ? Does your child know they will need to provide their own insurance next year?

Have you made a plan how to withdraw your money (how much from which pots at which age)?

Is your partner going to continue working? If so how long (and at what contribution to the stash)? If not, is your partner prepared to live on the stash? Is your partner supportive of you FIREing?

I don't need to know the answers to these questions, but you do.

I don't know if you have enough to FIRE, but I do know you are in excellent shape and you at the very least have FU money and therefore lots and lots of choices.  Well done!

former player

  • Walrus Stache
  • *******
  • Posts: 8824
  • Location: Avalon
Re: 51 years old-can I retire next year…or now?
« Reply #4 on: November 20, 2022, 02:20:06 AM »
Looking your figures, on the income side if you worked another year full-time as planned you would have another $38k to add to your current $900k, plus reinvested dividends plus any market increase.  You also have $4.8k in rental income which at 4% is another notional $120k.  Together, barring a big drop in the market, they would put you at the 4% rule.  Adding to that the likelihood of your partner continuing to work and you are fine to retire at the end of another year's full time work.


I am burned out! Tired, and so tired of routines. Tired of office politics, grumpy coworkers, sitting in a cubicle, inflexible rules, workplace stress.

But: ongoing work positives are kind colleagues, being well compensated with good health insurance for self & family, meaningful work, and patient interactions.

You have asked for financial advice but the above is what really sticks out to me - the 4% rule works but doesn't take account of emotions.  In fact, it is designed not to, it is designed to make people stop relying on their emotions and think logically and rationally based on a very useful piece of information they may not come across otherwise.  But your feelings come across so strongly in those two sentences that they are what I noticed most about your case study.

I see that you are a nurse in government health care.  Is there a possibility of reducing the hours you work?  Before I FIREd I worked a four day week for a number of years and it did wonders for keeping the good things about work and limiting the impact of the bad.  The beneficial effect of working 4 days with 3 days off as against 5 days with only 2 days off is significant.  Other part time working options may be available.  Or indeed other part-time jobs.  The thing to do is to consider alternatives to the cliff edge of working full time and then nothing.  If work can be made more congenial to you than it is at the moment then you could live just as well on a part-time income, putting less into your pension but letting it grow rather than taking money out.

You do have some big expenditures that could be reduced or cut out if things got tight:  travel, charity and gifts.  I agree with Ladychips that if you are going to retire you need to be sure of your expenses, you would need to keep a complete record for the next year to see how they pan out in detail before taking the plunge.  I would also note on expenses that you have not accounted for major expenses such as car replacements, replacement appliances, and property updates and improvements.  I also note you have an adult child still at home: are they a net financial contributor or expense and how long are you expecting them to stay?

Overall, I agree with other posters: you have put yourself into an excellent position and have the freedom to make some big choices.


Omy

  • Handlebar Stache
  • *****
  • Posts: 1727
Re: 51 years old-can I retire next year…or now?
« Reply #5 on: November 20, 2022, 07:21:34 AM »
This scenario would be too lean for me, but it's definitely workable - especially if you are open to part time work and/or tightening the belt as needed. Full disclosure: I'm super conservative, so I needed a stash that would allow me not to worry ever about money....so I'm at the other end of the spectrum.

However, we have spent much less than expected in our 3+years of being FIREd. The ACA has been a huge help in keeping premiums manageable. We use way less gas than before, our dining out is a fraction of what it was prior to FIRE, and travel expenses have been low thanks to the pandemic.

If you are resourceful and frugal, you will find ways to optimize your expenses and make money when you need to cover a shortfall. This was something I didn't fully understand when I was oversaving for FIRE.
« Last Edit: November 20, 2022, 12:50:56 PM by Omy »

snic

  • Bristles
  • ***
  • Posts: 377
Re: 51 years old-can I retire next year…or now?
« Reply #6 on: November 20, 2022, 09:25:56 AM »
I see that you are a nurse in government health care.  Is there a possibility of reducing the hours you work?  Before I FIREd I worked a four day week for a number of years and it did wonders for keeping the good things about work and limiting the impact of the bad.  The beneficial effect of working 4 days with 3 days off as against 5 days with only 2 days off is significant.

My wife works in health care and I can absolutely second this. Especially when our kid was in elementary and middle school and she had a high-stress job, working 4 days/week did wonders for her mental health. (She's since lucked into a full-time job that is a lot less stressful than her previous jobs, so she's happy working full time for now, probably until we retire.)

Dicey

  • Senior Mustachian
  • ********
  • Posts: 22322
  • Age: 66
  • Location: NorCal
Re: 51 years old-can I retire next year…or now?
« Reply #7 on: November 20, 2022, 09:48:23 AM »
I see a couple of red flags: you say you think your partner wants to continue working...

As others have pointed out, this is something both partners need to be in sync on. One doesn't have to look far for tales of post-FIRE divorces.

Of more concern is your partner's lack of savings.  It's one thing if they were the SAHP, but the reason for this is an important consideration,. Are they spendy? You have enough (or close to enough) to support yourself, but your partner's situation could torpedo your plans.
« Last Edit: November 20, 2022, 05:57:15 PM by Dicey »

MinouMinou

  • Stubble
  • **
  • Posts: 102
Re: 51 years old-can I retire next year…or now?
« Reply #8 on: November 20, 2022, 11:22:25 AM »
Thank you all so much for your thoughtful and thought-provoking replies.

@Ladychips , you are correct, this are rounded-up numbers and not actual amounts. I'm pretty sure that actual spending is below what's here. It's a little hard to account for because of the way my partner and I divide expenses; I pay for some and he for others, and we don't sit down and compare at the end of month. I know that monthly average for groceries AND HH sundries is closer to $400; we are both fairly frugal, but myself more so.

My partner isn't exactly spendy (he does like tech upgrades but those seem to be paid for by his business...) and he is supportive of FIRE for me. He can see that I'm not happy and wants me to be. It took him a long time to come around to the idea that he would ever want to retire one day, but he's there now! However, he really likes what he does, just would like to slow down and take on fewer clients.

The 88k in a state target-date plan is separate from the monthly pension. In my state 3% of each paycheck goes into this account. some organizations have employees pay it but other employers contribute on behalf of employees (my situation).

@Omy , I am conservative too, just feeling so urgent some weeks. For a long time I thought that I should have our family expenses x 25 to be able to cover it all, and just recently realized that I might be able to look at it a different way and be closer to FI than I thought.

@former player , you're right, it's the emotional side that is the key. I am feeling so frustrated with my current situation. If I could go down to 4 days a week (or 3! The dream!) in my current position it would be much better. Government isn't known for its flexibility...my employer is no exception. For the last 6 months, I have been trying various ways to get to 32 hours a week and encountering roadblocks for various reasons. I will keep trying but it doesn't appear promising.

For the last few years my goal has been to invest at least 52k/yr  between retirement/HSA/taxable accounts, and then employer puts in 1.5k for HSA and 3k to state IAP fund. So one more year would add to my stash quite a bit. Logically I know I should stick it out, and see where finances are at end of 2023.

@Dicey , I have a little hesitation too, I think that once I do RE my partner may decide he wants to join me. H doesn't have as many hobbies though--his work is kind of his hobby, he likes to volunteer in the same field. The reasons for his smaller savings are complicated, he remains suspicious of investing in the market, which is why the rental duplex (and larger cash stash). It's tangible and feels safer to him. I think of our rental property as being his though in both of our names. Previously he had worked to pay off our home mortgage early, but then we had to take out a mortgage on it to buy the rental.

Thank you all, reading your responses I have some good steps to move forward:
1) Track shared expenses with partner to get a complete picture and see where we might trim or need to add (home repair)
2) Build up a spreadsheet looking at where the money would come from for each year of early retirement until pension/SS
3) Keep trying to negotiate a 4 day a week schedule (and maybe spend out my PTO this year)
4)Talk more with partner about his/our plans
5) Look into ACA and talk with adult child about what this means for them

For the emotional part, I'm sure there are threads elsewhere, but do you have suggestions for pushing onwards through burnout?

MaybeBabyMustache

  • Walrus Stache
  • *******
  • Posts: 5356
    • My Wild Ride to FI
Re: 51 years old-can I retire next year…or now?
« Reply #9 on: November 20, 2022, 11:42:49 AM »
I'm not a rental property expert, but why do you own it if it's only generating under $5k assets/year?

MinouMinou

  • Stubble
  • **
  • Posts: 102
Re: 51 years old-can I retire next year…or now?
« Reply #10 on: November 20, 2022, 12:14:34 PM »
@MaybeBabyMustache , it’s the hope that it will generate more income soon! Unfortunately due to my error, we rented one of the units under value (to my coworker…) in the beginning. Partner is also paying $200/mo for landscaping services, which I could eventually take over.

Ladychips

  • Handlebar Stache
  • *****
  • Posts: 1449
Re: 51 years old-can I retire next year…or now?
« Reply #11 on: November 20, 2022, 12:19:26 PM »
Yea! Now you are thinking in concrete actionable terms. THAT'S how I dealt mostly with my burnout. I spent alot of time on the mechanics of how to fire. It took the focus off my job and also helped me feel confident in my decision. Win-win.

Love the idea of using your PTO to make your own 4-day weeks.  I had a ton of time built up.  My last 3 years I worked only a handful of 40 hour weeks. I highly recommend it.  I also wanted to say that with your stash and the shortage of health care folks, you probably have more leverage than you think.

Ps - am I the only one who chuckled at @Omy response with the user name of ONE MORE YEAR!! @Omy ,You might link your journal...I've always found it  very interesting conversation about the decision making process of retirement, omy-ing, and security (I mean that sincerely).

Omy

  • Handlebar Stache
  • *****
  • Posts: 1727
Re: 51 years old-can I retire next year…or now?
« Reply #12 on: November 20, 2022, 12:48:06 PM »

MinouMinou

  • Stubble
  • **
  • Posts: 102
Re: 51 years old-can I retire next year…or now?
« Reply #13 on: November 20, 2022, 01:26:07 PM »
@Omy , that was a great thread! You were in a much more secure/padded place financially, but it really illustrates the emotional parts of both FI and RE. How are you liking your own RE?

MinouMinou

  • Stubble
  • **
  • Posts: 102
Re: 51 years old-can I retire next year…or now?
« Reply #14 on: November 20, 2022, 01:28:32 PM »
Thanks @Ladychips ! I think you’re right, it is time to get concrete with plans. For 2024!

Psychstache

  • Handlebar Stache
  • *****
  • Posts: 1594
Re: 51 years old-can I retire next year…or now?
« Reply #15 on: November 20, 2022, 01:38:54 PM »

I am burned out! Tired, and so tired of routines. Tired of office politics, grumpy coworkers, sitting in a cubicle, inflexible rules, workplace stress.


I know this wasn't really the question, but others have covered the financials. Given the critical shortage of nurses can you just....not do the stuff you don't like? Ignore political or grumpy coworkers (like walk away from them anytime they try to talk to you), ignore BS rules (assuming they are not related to patient care), and just generally give several shits less than you do now? I know this is easier said than done, but it could go a long way to helping your mental state. Even if they ignore the critical need and do let you go, then worst case you can either make it work on your current budget or find another RN job to fill in the gap.

MinouMinou

  • Stubble
  • **
  • Posts: 102
Re: 51 years old-can I retire next year…or now?
« Reply #16 on: November 20, 2022, 02:16:15 PM »
@Psychstache This is good advice but I find it hard to put into practice. I will keep trying though.

There are just so many other things that I want to be doing instead of going to work. Fixing up my yard and home. Reading, writing, knitting, baking, hiking, drawing, yoga.

feelingroovy

  • Bristles
  • ***
  • Posts: 361
Re: 51 years old-can I retire next year…or now?
« Reply #17 on: November 20, 2022, 03:44:17 PM »
You really shouldn't push through the burnout.

Even if you're not quite there for retirement, you do have FU money. You're not stuck in this particular job.

If they won't let you go part time, you absolutely can do any and all of the following:

Take 6 or 12 or 24 months off.
Find a new part time job.
Start working per diem, and only take shifts when you want.

I'm not in nursing but my understanding is there is high demand and many options for flexibility.

You are in a position where you have options.

Omy

  • Handlebar Stache
  • *****
  • Posts: 1727
Re: 51 years old-can I retire next year…or now?
« Reply #18 on: November 20, 2022, 07:23:33 PM »
@Omy , that was a great thread! You were in a much more secure/padded place financially, but it really illustrates the emotional parts of both FI and RE. How are you liking your own RE?

It's going well. I don't miss working, but retiring right before covid put a damper on our travel plans. The process of figuring out what to do with ourselves has been interesting.

BikeFanatic

  • Pencil Stache
  • ****
  • Posts: 826
Re: 51 years old-can I retire next year…or now?
« Reply #19 on: November 21, 2022, 03:15:33 AM »
When I was a clinical nurse and burnt out, but didn’t have enough money  to retire, I was able to cut back to 32 hours and that made a huge difference. I also eventually walked into a full time desk job probably a year later, and finished up my career with a new position, that helped me hang on longer as I was challenged in a new way, and not taking care of patients took a lot of stress away. I was at my desk job when Covid hit and was able to move as I was working from home.  Well 3 years at the desk job , I was comfortable enough to pull the plug.
Then Divorce happened!
Stock market crash too and inflation. Well now 2 years later , I did some very part time work, but mostly 100 percent retired and loving it. I wound up making some extra money on real estate sales so we could separate assets, and from that Covid price inflation I ended up with more than I planned for, despite loosing money in the divorce.
All that said no you should hang on a bit longer, work your PTO in for less hours right away, then look for part time work so you can hang on. I feel it is so difficult to go back once you left. Like I feel it would be a disaster for me to go back to work now! But it was easier when I was working to feel that part time work was a vacation and even the desk job was like vacation almost at the beginning, so different in the intensity of the job.
Good luck I hope you find a sweet spot for your mental health and financial well being!


GilesMM

  • Handlebar Stache
  • *****
  • Posts: 1494
  • Location: PNW
Re: 51 years old-can I retire next year…or now?
« Reply #20 on: November 21, 2022, 07:58:20 AM »
Your retirement margin is pretty slim.  I would be more comfortable at 3.5%.  Using your $50k/yr number this works out to about $1.4 million.

The rental duplex is a risk as it could require significant maintenance at any time.  It is grossing less than 1% (should be $5500/mo).  Inflation could push rents up or a recession could see them fall along with property value. I would sell this and put the proceeds (maybe $150k) in your post-tax investments.  This gets you up to about $1.05 million saved.

If you could save another $70k/yr then you could retire in five years.  If sooner, you risk having to cut into the "wants" budget significantly.

Dicey

  • Senior Mustachian
  • ********
  • Posts: 22322
  • Age: 66
  • Location: NorCal
Re: 51 years old-can I retire next year…or now?
« Reply #21 on: November 21, 2022, 08:59:55 AM »
Your retirement margin is pretty slim.  I would be more comfortable at 3.5%.  Using your $50k/yr number this works out to about $1.4 million.

The rental duplex is a risk as it could require significant maintenance at any time.  It is grossing less than 1% (should be $5500/mo).  Inflation could push rents up or a recession could see them fall along with property value. I would sell this and put the proceeds (maybe $150k) in your post-tax investments.  This gets you up to about $1.05 million saved.

If you could save another $70k/yr then you could retire in five years.  If sooner, you risk having to cut into the "wants" budget significantly.

You may have missed this response after I asked why the partner's NW numbers were so low:

@Dicey , I have a little hesitation too, I think that once I do RE my partner may decide he wants to join me. H doesn't have as many hobbies though--his work is kind of his hobby, he likes to volunteer in the same field. The reasons for his smaller savings are complicated, he remains suspicious of investing in the market, which is why the rental duplex (and larger cash stash). It's tangible and feels safer to him. I think of our rental property as being his though in both of our names. Previously he had worked to pay off our home mortgage early, but then we had to take out a mortgage on it to buy the rental.
Not likely that selling the rental is an executable option. Probably not interested on partying over at the DPOYM clubhouse either.

MinouMinou

  • Stubble
  • **
  • Posts: 102
Re: 51 years old-can I retire next year…or now?
« Reply #22 on: November 21, 2022, 06:34:18 PM »
@BikeFanatic , thank you for your nursing perspective. I am going to try to engineer 4-day weeks using PTO, and also shift focus a bit.

@GilesMM , we are hoping that the rental duplex will become more profitable next year. It should in our local market…but who knows.

@Dicey , I have to ask, what is the DPOYM clubhouse???

Freedomin5

  • Walrus Stache
  • *******
  • Posts: 6485
Re: 51 years old-can I retire next year…or now?
« Reply #23 on: November 21, 2022, 08:35:55 PM »
@BikeFanatic , thank you for your nursing perspective. I am going to try to engineer 4-day weeks using PTO, and also shift focus a bit.

@GilesMM , we are hoping that the rental duplex will become more profitable next year. It should in our local market…but who knows.

@Dicey , I have to ask, what is the DPOYM clubhouse???

I'm not Dicey, but DPOYM stands for "Don't Pay Off Your Mortgage".

Dicey

  • Senior Mustachian
  • ********
  • Posts: 22322
  • Age: 66
  • Location: NorCal
Re: 51 years old-can I retire next year…or now?
« Reply #24 on: November 22, 2022, 12:04:58 AM »
@BikeFanatic , thank you for your nursing perspective. I am going to try to engineer 4-day weeks using PTO, and also shift focus a bit.

@GilesMM , we are hoping that the rental duplex will become more profitable next year. It should in our local market…but who knows.

@Dicey , I have to ask, what is the DPOYM clubhouse???

I'm not Dicey, but DPOYM stands for "Don't Pay Off Your Mortgage".
Thank you, @Freedomin5!

https://forum.mrmoneymustache.com/throw-down-the-gauntlet/dont-payoff-your-mortgage-club/

zoro

  • Stubble
  • **
  • Posts: 139
Re: 51 years old-can I retire next year…or now?
« Reply #25 on: December 19, 2022, 05:24:33 PM »
I would model out different SS claiming strategies. with that age gap, you may be better having him claim at 62 getting a reduced amount, then when you claim at 70 flip him over to the higher spousal amount.

Abe

  • Magnum Stache
  • ******
  • Posts: 2647
Re: 51 years old-can I retire next year…or now?
« Reply #26 on: December 19, 2022, 09:06:03 PM »
Are there other options in your town for work? “Traveling”, etc? Even short periods away from a routine may help get you out of the burnout zone. I’ve slowly winded my way into research/quality improvement and away from pure clinical work. That keeps me sane! The toxicity of healthcare jobs is strongly related to the institution, in my experience.

Regarding finances - I think healthcare out of pocket approaching $8000 is possible with current policies, so I’d budget for that just to be safe.

index

  • Pencil Stache
  • ****
  • Posts: 655
Re: 51 years old-can I retire next year…or now?
« Reply #27 on: December 22, 2022, 08:26:32 AM »
@MamaMinou. You need to account for irregular large expenses related to your home and vehicles as well. Many budgets presented in the this section neglect things like new appliances (A/C and Furnace are the big ones), new roof, replacing vehicles etc. If you model these things in Excel you will find the $15k roof, $10k HVAC, and $15K vehicles. You are going to need to figure out how much you need to save for these one offs - in our case it is $450/month.

MinouMinou

  • Stubble
  • **
  • Posts: 102
Re: Now 52 years old-can I retire next year,,,or now? UPDATE
« Reply #28 on: August 15, 2023, 09:34:19 PM »
Updated Case Study

Hey there, after reading Crabby Van Man’s case study today, I was struck by the idea that though his situation is different, our numbers are similar (except, he has no debt). Last time I submitted a case study I was calculating based on separate finances, but thankfully my DH and I are now operating more as a financial team. Hence, I wanted to resubmit to get your opinion on whether I can now FIRE.

Situation:  I am 52 and my husband is 60. We have two sons that are 26 and 24.  The oldest is out on his own, and the youngest still lives at home. Our current combined gross income is ~140k (me 100k, DH 40k).

The FIRE movement came into my radar while I was in nursing school, about 15 years ago.  Before that, I was frugal by necessity.  Once I began working as an RN, I began saving in earnest. This accelerated once Son #1 finished college. Son #2 is working and not interested in further school (at this time).

I wish I was handy like Crabby Van Man…one daydream I have is learning home repair skills once I FIRE. However, I *do* have the handy ability to make warm objects out of yarn and sticks (LOVE knitting) and used to grow vegetables and preserve food. We probably would not starve either. Plus, I’m very skilled at giving shots.

Assets – Primary house valued at $450k -$470k.  We own 1 vehicle, a 2005 economy sedan. Mileage is getting high but car is still ticking. DH would like to upgrade to an electric vehicle in the next 2 years. Rental property valued at 600k.

I live in a medium high COL region (Pacific NW)

Debts – 538k
Primary Home Mortgage-180k
Rental Mortgage-358k

Total Retirement Savings for family ~1.08M, or 1.32M with rental equity included
> $370k 453
> $177k Roth IRA 1
> $145k Brokerage Acct
> $141k Trad. IRA
> $ 86k IAP Account (Public Employee)
> $43k 401k
>41k HSA
> $ 36k SEP IRA
> $25k Cash
> $20k Roth IRA 2
>240k Rental Equity
Current AA overall is about 75/20/5 - Stocks/Bonds/Cash. 

Likely a little bit of future inheritance coming but not including either; probably will funnel to kids.

Social Security (if no future contributions) – Me 24k @ 70, Husband 24k @ 67
Public Employee Pension (if no future contributions) Me 24k @65

Retirement Income – My husband plans to continue working until age 63-64 for ~20-35k/yr.  He still enjoys his self-employed job (S-Corp) but would like to downshift and not take on so many projects. I want to take a sabbatical for at least 6 months to 1 year and then do small side jobs, or if the right opportunity, possibly part-time nursing. I plan on bringing in a minimum of 3k/year, could be more, and can be flexible. Husband hopes I will learn QuickBooks and help some with his business. Our rental property (2 units) in currently bringing in 36k gross (not sure of net but covers both mortgages with some to save/spare for repairs).
Retirement Life- I’m eager to retire so that I can read, write, garden, meditate, and make things. DH is supportive.

Spending – current yearly spending including luxuries/travel is about 50k.  Bare bones spend around 42k. This includes 6k/yr for home repair; also $700/month for healthcare which could be less with ACA subsidies (or more if a heavy healthcare year). Will also need to budget for dental. If I add in taxes it brings total to around 55k.

I too have run the numbers over and over on cFIREsim, Rich, Broke or Dead, and When Can I Retire? The numbers work if I add in state pension and SS, which I originally wanted to avoid, but I can realistically hope will still be there.

I’ve tried three times to engineer a formal part-time position at my current job, and can imagine staying longer if it had worked, but was unsuccessful. Currently using vacation time to work 4 days/week. This will run by March 2024. I could stay until then, but I think there is some benefit to getting onto an ACA plan in January.

Like Crabby Van Man, I want to make sure I’m not missing anything. With our current savings, rental income, and plans for future side income, while collecting pension at 65 and SS at 70 plus DH’s work), does it seem foolish or feasible to leave in January? 


zolotiyeruki

  • Walrus Stache
  • *******
  • Posts: 5603
  • Location: State: Denial
Re: 51 years old-can I retire next year…or now?
« Reply #29 on: August 16, 2023, 07:36:19 AM »
Hooray for an update!

I think step 1 is to run the numbers on your rental.  Figure out exactly what you're netting from it.  If you're netting $24k/year from it, that's great.  If it's breaking even, or even grossing only $12k/year, then that equity might do you more good if it were invested in index funds.

Step 2 is to build the spreadsheet, charting yearly spending, income, and balances to/from/in various places.  That'll let you simulate various scenarios for future pension/SS payouts.

Step 3 is to get Son #2 to launch and/or start paying rent like the adult he is.  It'll be a benefit to him in the long run, and brings with it the nice side benefit of improving your finances.

Must_ache

  • Bristles
  • ***
  • Posts: 316
  • Age: 52
Re: 51 years old-can I retire next year…or now?
« Reply #30 on: August 16, 2023, 07:56:31 AM »
Here's an important question: Is the $24K pension be fixed, or will it go up with inflation? 

Let's assume your expenses are $50K/yr today
For the first six years you will need that much until year 7
In year 7 your husband will get $24K/yr SocSec.  In today's dollars that is 24,000/1.03^7=$19,514.
In year 13 you will get $24k/yr Pension.  In today's dollars that is 24,000/1.03^13=$16,342
In year 18 you will get $24K/yr SocSec.  In today's dollars that is 24,000/1.03^18=$14,097.
(What I'm doing here is saying that if your husband receives $24,000 in 2030, that is the equivalent of $19,514 today.  That way we can do all the calculations at the same time period which is crucial),  All your expenses are assumed to be $50,000 this year, $51,500 next year, 53,045 the year after etc.  3% inflation)

That means that assuming 3% inflation, in today's dollars you need $50,000 for the first 6 years, $30,486 for the next 6 years, $14,144 for the next 5 years, and after that these three sources will cover your expenses completely.  So you need $300K to get through the first 6 years, $183K to get trhough the next 6 years, and $71K to get through the 5 years after that, a total of about $554K which you definitely have.

The main problem is that I am assuming the dollars above continue to keep up with inflation and we can't assume that for the pension.  In year 13 might be worth $16,342 in today's dollars, but in year 23 it will only be worth $12,161. 

My simplistic argument says you need $554K (maybe $650K or $700K with the pension value withering away) and you say you have 1.08M in retirement income and I'm ignoring any rental profits so I THINK YOU'RE IN VERY GOOD SHAPE.  I'm also ignoring how the $1.08M might move in the future.  Even if all of it were chasing the 5%+ available Treasury/CD yield right now it would cover your expenses.  There's one more catch though...

You're going to need $50K/yr to start off with, HOW ARE YOU GOING TO ACCESS IT?  Your husband is over 59.5 so he can access retirement accounts penalty-free but you are too young for that.  This is the part of the process where you actually want to separate out who has what.  You can touch $145K brokerage and $25K cash but how will you get the rest?  You might need to work a bit longer.  if you sold the rental property and netted $200K that would probably do it.  Just saying that cash flow is your problem now.

I think you do need a spreadsheet to help navigate the expenses and the sources of income and what they are worth at any point in time, inflation assumptions, etc.
« Last Edit: August 16, 2023, 08:07:51 AM by Must_ache »

crabby.van.man

  • 5 O'Clock Shadow
  • *
  • Posts: 9
Re: 51 years old-can I retire next year…or now?
« Reply #31 on: August 16, 2023, 08:32:54 AM »
Coming from this 5 o'clock shadow, you should be good.  I think you may be underestimating your spending a little bit given you're including 10k+ for your primary residence mortgage within the 50k yearly spending number.  But even at 60k, you're probability of success when I throw your numbers into the Flexible Retirement Planner (really robust tool, don't know why it isn't talked about here more) is in the mid 90% range (at 3.4% inflation, 6% returns to 65 and 5% thereafter assuming a more conservative AA). That's ignoring the rental equity (also, I didn't include COLA on your pension).  As mentioned,  the hurdle is bridging the gap between now and when you turn 59.5.  Between your husbands income for the next 4 years, him being able to access his 401k and IRA penalty free, brokerage account and cash you should be fine.  Worse case is maybe having to go casual nursing for a few days a month if the market corrects and the portfolio losses make you nervous.

Frugal people adapt.  You'll be fine.
« Last Edit: August 16, 2023, 08:39:11 AM by crabby.van.man »

Laura33

  • Magnum Stache
  • ******
  • Posts: 3479
  • Location: Mid-Atlantic
Re: 51 years old-can I retire next year…or now?
« Reply #32 on: August 16, 2023, 08:57:36 AM »
Second the request for more clarity on the rental numbers.  In the original post, you said it was grossing $4K/mo. with $3600/mo. in costs; now you say it's grossing $3K/mo.?  If you are going to rely on rental income as part of your assets, you need to treat it like a business -- you need to know how much it grosses, how much it costs to manage/maintain, what more significant repairs are likely down the road (e.g., new roof), etc.  How else can you tell whether it's a good investment?  Mutual funds do all that math for you and send out lovely updates with performance information regularly.  For a rental property, you need to do the same yourself.

Beyond that, I think you're probably fine -- you've amassed a goodly sum, you're pretty close to being able to rely on SS/pensions, which will cover a large percentage of your costs, and your DH's plans to continue working for a few more years will help lower your risks further.  So if you're ready to pull the plug, sit down and make a plan on where you are going to pull the money from to cover yourselves until pension/SS kick in, and then go for it.

Villanelle

  • Walrus Stache
  • *******
  • Posts: 6657
Re: 51 years old-can I retire next year…or now?
« Reply #33 on: August 16, 2023, 09:26:31 AM »
I see it has been covered, twice, but chiming in to the chorus asking for details on the rental.  How much would it sell for today?  How much do you get in rent (are you up to full FMV now, since you said before you weren't?)?  What are your expenses (and how are you coming up with your maintenance number, since so many people grossly underestimate that)?

It seems like you might do just as well, with less risk and stress, and perhaps better, if you sold the rental, but we need numbers to help you figure that out.

What is your plan for healthcare if you quit?

At a minimum, given how close-ish you are to SS and pension, I think you can significantly downshift.  Find a new, very part time nursing job, after a break.  But if you have the healthcare dialed in well and accounted for on those numbers, congrats, you can light the match and FIRE, now, or in January if you wish to wait that long!  (If the 4 day weeks aren't taking the edge off the burnout, can you go to 3 days a week and retire when that vacation time runs out, before January?  Or 3.5 day weeks?) 

(Note that the question about whether your pension is inflation-adjusted is a good one.  I'm not sure it changes my answer on whether you are ready to FIRE, but it is certainly something of which you should be aware and planning for if it isn't.)

MinouMinou

  • Stubble
  • **
  • Posts: 102
Re: 51 years old-can I retire next year…or now?
« Reply #34 on: August 16, 2023, 02:36:37 PM »
Thank you for taking time to reply ! It’s super helpful and appreciated.

Pension has COLA.

I had to get rental info from DH. The details :
Yearly income from 2 units: $50,400 (both now at market value but it’s dropped)
Unit 1 3bed 2 bath $2300/mo; Unit 2 2 bed 1 bath $1900/mo
Yearly expenses:
$20,496 mortgage
$5000 property tax
$3528 property manager
$3120 yard work (I could do this)
$1800 water bill (will go away in November b/c had separate water meters installed)
$6000 maintenance savings
Total expenses $39,944
Income - Expenses = $10,456

Wow, now that I look at it, that *just* covers our mortgage and that’s it.
Zillow says rental value  is 600k (we bought for 550k); likely closer to 625k

MinouMinou

  • Stubble
  • **
  • Posts: 102
Re: 51 years old-can I retire next year…or now?
« Reply #35 on: August 16, 2023, 03:04:09 PM »
I forgot to answer a question about access before age 59.5. The 457b account allows for penalty-free access before that age.

MinouMinou

  • Stubble
  • **
  • Posts: 102
Re: 51 years old-can I retire next year…or now?
« Reply #36 on: August 16, 2023, 07:40:25 PM »
And health insurance is still my big question. Both sons now have insurance through work. I hope we will qualify for some subsidies through the ACA, but I am not sure how rental income might affect that..

calimom

  • Handlebar Stache
  • *****
  • Posts: 1364
  • Location: Northern California
Re: 51 years old-can I retire next year…or now?
« Reply #37 on: August 27, 2023, 08:53:18 PM »
Is the rental remote? Is the yard care for the rental or your personal residence?

If it's close, some obvious savings come from self-managing as well as doing the landscaping yourself.

Beach_Bound

  • 5 O'Clock Shadow
  • *
  • Posts: 47
Re: 51 years old-can I retire next year…or now?
« Reply #38 on: August 28, 2023, 09:52:50 AM »
You're in great shape and can retire now if you want to. I think there's so much information in your case study (which is a good thing!) that it's muddying the water. You don't need your investments to cover all your expenses for 30 years, you just need to bridge the gap until your social security and pension start.

All numbers below assume that income, expenses, social security, and pensions are inflation adjusted, so I'm just working in 2023 dollars.

Income streams
$25k, 2023 - 2026, DH income (based on him working $20 - $35k until he's 63 or 64)
$24k, starting 2030, DH social security at age 67
$24k, starting 2036, your pension at age 65
$24k, starting 2041, you social security at age 70
$12k, rental income ($10.4k net + $1.8k water bill reduction, rounded to nearest $1k)

Investments
$1.08M, 75/20/5 stocks/bonds/cash

Spending
$55k, including $700 per month healthcare and $5k per year taxes

Link to cFIREsim results:
https://www.cfiresim.com/0fed1999-4723-4544-8a43-07d9558f3481
In no historical 30 year scenario do you even come close to running out of money.

Withdrawal rate estimates
2023 - 2026: income $37k, withdrawal $18k, withdrawal rate 1.7%
2027 - 2029: income $12k, withdrawal $43k, withdrawal rate 4.0%
2030 - 2035: income $36k, withdrawal $17k, withdrawal rate 1.6%
2036 - 2040: income $60k, exceeds spend rate
2041 - onward: income $84k, exceeds spend rate

Factors that may negatively impact this plan:
- This does not include large irregular expenses, like a new car or roof. I still think you have plenty of buffer to absorb a $10k expense here or there.
- Medical costs. At your ages and with a ~$55k income (you should check your 2022 taxes to see how the rental property affected your income, but I'm assuming it's income - expenses), you are likely to qualify for large tax credits, and your current budget of $700 per month will likely cover most if not all of your ACA premiums. Depending on your healthcare use, you may have out of pocket expenses on top of that. You can check out existing plans online to get a better idea of costs. Tax credits may decrease (and your costs increase) when DH moves to Medicare.
- The rental may not be a great investment, but it sounds like your DH is more comfortable with rental property than stock market investing. The rental property may be a necessary compromise for marital harmony.

Factors that may positively impact this plan:
- Rental income could be increased if you take on yard work and/or property management.
- DH may want to continue working in some capacity past age 63/64
- You may want to do some part time work
- Taxes will be lower when your income decreases
- Rental income will likely increase over time as rent increases with inflation but the mortgage does not

MinouMinou

  • Stubble
  • **
  • Posts: 102
Re: 51 years old-can I retire next year…or now?
« Reply #39 on: August 28, 2023, 05:57:35 PM »
@calimom, rental is right in our neighborhood. It makes me crazy that the tenants are not watering the bushes and they are drying up. I’m a little intimidated by the property management aspect though.

@beachbound , that is so encouraging. It seemed like the old timer Mustachians never included their SS or any pension in their stash. But realistically they will be there.

I am thinking about timing and padding. End of year is a good time to leave for ACA, but my employer contributes 3k to HSA in January. Traditionally I front-load and fill up my 457b and HSA by June, then move on to Roth. That would make a good cushion. But it seems so long.



ToTheMoon

  • Pencil Stache
  • ****
  • Posts: 858
  • Location: BC
Re: 51 years old-can I retire next year…or now?
« Reply #40 on: August 28, 2023, 06:17:40 PM »
@calimom, rental is right in our neighborhood. It makes me crazy that the tenants are not watering the bushes and they are drying up. I’m a little intimidated by the property management aspect though.

Could this be solved with a soaker hose and a timer at the spigot?

Beach_Bound

  • 5 O'Clock Shadow
  • *
  • Posts: 47
Re: 51 years old-can I retire next year…or now?
« Reply #41 on: August 29, 2023, 03:15:09 PM »
@calimom, rental is right in our neighborhood. It makes me crazy that the tenants are not watering the bushes and they are drying up. I’m a little intimidated by the property management aspect though.

@beachbound , that is so encouraging. It seemed like the old timer Mustachians never included their SS or any pension in their stash. But realistically they will be there.

I am thinking about timing and padding. End of year is a good time to leave for ACA, but my employer contributes 3k to HSA in January. Traditionally I front-load and fill up my 457b and HSA by June, then move on to Roth. That would make a good cushion. But it seems so long.

Well, the "old timers" who retired in their 30's had to make their investments last roughly 30 years before SS. There's a lot more uncertainty in that scenario about whether their investments will last, or how SS or pensions will be funded.

As far as timing goes, the ACA doesn't have to be a big factor. Losing your employer-provided healthcare is a qualifying event that will let you sign up for ACA coverage outside the normal enrollment window. Some other timing factors to consider:
- If you get bonuses, understand when they will be paid and consider waiting to give notice until after you get the bonus.
- Use up your vacation or make sure it will be paid out upon leaving. Understand when your vacation time becomes available. if it accumulates throughout the year, then the timing doesn't really matter, but if it refreshes at the start of the year, then leaving early in the year maximizes the ratio of vacation to work time.
- Often healthcare coverage lasts through the end of the month, which is an incentive to leave at the beginning of a month.

There's a helpful pre-FIRE checklist pinned to the top of the Post-FIRE section.
https://forum.mrmoneymustache.com/post-fire/pre-fire-checklist/



MinouMinou

  • Stubble
  • **
  • Posts: 102
Re: 51 years old-can I retire next year…or now?
« Reply #42 on: August 31, 2023, 02:30:13 PM »
Thank you @Beach_Bound. I found that Pre-FIRE checklist and it has been super helpful. Working on all the healthcare things (ALL the appointments/checkups) for self and family this fall, as well as getting into a very good dental home care routine.

I think I have decided to OMM myself a few times into the middle of 2024. This will allow me to meet a few financial goals:
1) hopefully- 1M invested self (not DH) by contributing max to tax-advantaged accounts for 2024
2) start a DAF for charitable giving
3) Have 6-12 month cash cushion for my half of expenses
4) Use PTO for a previously planned long vacation early in the year

Nine months from now. Both long and short. I had the insight this morning that it's the approximate length of a human pregnancy. A FIRE gestation.

Now wise friends--any suggestions on how to switch my brain to creative living-best-life-now thinking? Focusing on Fast FIRE has been my stress-brain response for quite a few months and it has become wired in, but it is not bringing me joy right now.

zolotiyeruki

  • Walrus Stache
  • *******
  • Posts: 5603
  • Location: State: Denial
Re: 51 years old-can I retire next year…or now?
« Reply #43 on: August 31, 2023, 04:53:05 PM »
That's a good question. What do you like to do on your spare time when you're not tired or busy with normal chores? Is there something you've thought "if only I hadore time, I'd totally love to...."?

mistymoney

  • Handlebar Stache
  • *****
  • Posts: 2417
Re: 51 years old-can I retire next year…or now?
« Reply #44 on: September 01, 2023, 04:23:05 PM »
@calimom It makes me crazy that the tenants are not watering the bushes and they are drying up.


I'm amazed that you would even have such an expectation unless it was written into the lease and they get a discount to take care of the bushes.

« Last Edit: September 01, 2023, 04:26:17 PM by mistymoney »

MinouMinou

  • Stubble
  • **
  • Posts: 102
Re: 51 years old-can I retire next year…or now?
« Reply #45 on: September 03, 2023, 03:17:32 PM »
@zolotiyeruki, so many things! Yoga, baking, reading, writing, gardening, hiking, learning home repair skills. I’d like to learn to play an instrument. Just needed a little time to down-regulation time to settle into that mindset.

@mistymoney, total newbies here. The last owners of rental property were exceptional gardeners and the property was gorgeous at one point. Our first tenant in larger unit was retired and enjoyed working in the garden, so we were very spoiled. Learning as we go…

 

Wow, a phone plan for fifteen bucks!