Author Topic: Best time of year to RE?  (Read 5449 times)

Lucky13

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Best time of year to RE?
« on: December 31, 2019, 06:12:09 PM »
Any thoughts on best time of year (season, month) to retire, either for tax consequences or other factors?

p.s. thanks for all the great posts from all the Post-FIRE folks very inspiring!
« Last Edit: December 31, 2019, 06:26:28 PM by Lucky13 »

Greystache

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Re: Best time of year to RE?
« Reply #1 on: January 01, 2020, 11:32:21 AM »
I chose to retire at the end of the year and start the new year retired (this was five years ago). I chose that time for a couple reasons:
1. I qualified for pension payments in November and I thought I'd stick around to collect on paid holidays in November and December.
2. It was just simple to have no earned income in the new year. It made it easy to calculate ACA subsidies and withdrawal rates for the year.
None of these are really compelling reasons, mainly, I just liked the idea of starting my new retired life on Jan 1st.

xbdb

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Re: Best time of year to RE?
« Reply #2 on: January 01, 2020, 12:26:33 PM »
Time is the only currency you have. Once you hit your number, you should retire as soon as possible. If your boss and co-workers are treating you well, or make sure you don't leave them in the lurch.

Lucky13

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Re: Best time of year to RE?
« Reply #3 on: January 01, 2020, 06:36:26 PM »
YES I like the "retire as soon as possible" advice that is great. Starting a new year off fresh is good too. (I need to read up on the ACA subsidies stuff, thx for the reminder!) I'm feeling motivated by having the summer off, so current plan is to quit in the spring, I guess there is no wrong time. :D 

Gronnie

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Re: Best time of year to RE?
« Reply #4 on: January 01, 2020, 06:54:23 PM »
Max out 401k and any other retirement accounts ASAP in a given year then retire would be my plan.

Trudie

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Re: Best time of year to RE?
« Reply #5 on: January 11, 2020, 09:14:48 PM »
Max out 401k and any other retirement accounts ASAP in a given year then retire would be my plan.

I agree.  Then don’t hang on any longer than you need to.  I think time of year that’s best can vary depending on interests and circumstances.

Regarding “not leaving people in the lurch” — I ruminated over this before I left and it caused many a sleepless night.  My boss was an asshat... not inclined to give me the resources necessary to do the work of our department in the best of times, then blew a gasket when I gave him a month’s notice right after I had closed out our fiscal year and before other projects were going to ramp up.  (I thought my successor should hire the new staff, not me since I wasn’t going to be there.) Anyway, you can try to do the “right thing” for your employer, but in the end you can’t control everything.  For him, me leaving the organization— especially since I wasn’t taking a job elsewhere — was a betrayal.  He perceived things that way because he was egocentric and insecure.  I couldn’t have changed that and so I improved my life immensely by cutting the cord from the toxic work culture.  I don’t think about it much now since it’s been two years, but sometimes I feel a bit peeved.  And then I just say, “It doesn’t fucking matter.”  I know I burned a few bridges, but it was necessary to put my health and future first.  Best.  Decision.  Ever.

herbgeek

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Re: Best time of year to RE?
« Reply #6 on: January 12, 2020, 10:05:57 AM »
I quit at the end of May last year so that:

- I could enjoy the summer
- had just maxed out my 401K, received our yearly bonus
- would keep my income at a certain level to qualify for ACA subsidy

mgnhrvth

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Re: Best time of year to RE?
« Reply #7 on: January 12, 2020, 10:14:13 AM »
You should add/create a poll in the Post-FIRE form as well - it'd be interesting to see the data and any trends etc.

FIRE 20/20

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Re: Best time of year to RE?
« Reply #8 on: January 12, 2020, 12:21:59 PM »
Today is the best day to FIRE.  If you can't, then tomorrow.  Repeat until FIREd.

In all seriousness, there are so many individual factors it's tough to make a general recommendation. I looked at a few things.  I wanted to max my 401k, I wanted to keep my income low enough to avoid the 12% to 22% tax bracket jump, and I wanted to stay long enough to collect a potential bonus.  It was nice to FIRE in spring / early summer.  However, while those were all logical reasons, in reality I hit 25x projected spending and then planned to work 1 extra year (yes, I couldn't take my own advice).  I had a very easy high paying job that would be impossible to return to after being out for a couple of years, and I really wanted to never worry about finding work ever again.  I only made it 9 months after hitting 25x, but that gave me a significant buffer.  Not only did I avoid spending down my stash for 9 months but I added about 2 years of spending and investment growth add a couple more.  We're now at a 3% withdrawal rate, and the extra peace of mind has been worth the extra time we put in.  But again, that was easy for me because after passing 20x expenses I moved into a very low stress job that I could do while burning hundreds of hours of PTO.  If you're suffering then quitting at 25x really should be safe.

JoJo

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Re: Best time of year to RE?
« Reply #9 on: January 13, 2020, 06:52:46 PM »
At my company, end of March is best - You get HSA matching on Jan 1, and bonus paid at the end of March, and if you're making decent money, you can pretty much get your annual contribution in by March. 

John Galt incarnate!

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Re: Best time of year to RE?
« Reply #10 on: January 14, 2020, 11:29:37 AM »
The best time of year to FIRE is on January 1st or as soon thereafter as possible.

Ha ha!

ixtap

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Re: Best time of year to RE?
« Reply #11 on: January 14, 2020, 12:09:33 PM »
A) I keep kind of hoping that the best time for DH is with a generous severance package. However, I don't think the megacorp is going to do a lay off of one, so not the best option overall.

B) RSUs vest in May. Since we would stop ESPP contributions a few months earlier, he could easily max out 401k which is matched per contribution.

C) A bigger percentage of RSUs vest six months later, at the same time as the cash bonus is paid out. The problem then is the new RSU grant, plus a risk of promotion, both of which could go to his head.

In other words, if you give a mouse a cookie...

SuperSecretName

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Re: Best time of year to RE?
« Reply #12 on: January 14, 2020, 12:51:56 PM »
for those that max 401k early in the year before bailing, would you do a Roth if you have that option?  Since the overall income for the year won't be high (e.g. low tax rate), and you want some income anyway for ACA, that might be preferred.

Paul der Krake

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Re: Best time of year to RE?
« Reply #13 on: January 14, 2020, 12:59:11 PM »
Two obvious candidates:
1) first week of December to keep employer coverage through EOY. Start year fresh for tax purposes, making things easier.
2) as soon as you've maxed out your tax-advantaged accounts for the year

robartsd

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Re: Best time of year to RE?
« Reply #14 on: January 14, 2020, 01:19:03 PM »
Lots of factors that might make some times of year better than others. I'm under a pension system where if you were retired on 12/31 you get the COLA for that year, so lots of retirements are effective 12/30. The same system also credits 1/10 of a year per month of full-time service with a max of one year of service per fiscal year, so full time employees don't add to their service credits for retirement for the last two months of the fiscal year (May and June); providing a small incentive to retire at the end of April.

JSMustachian

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Re: Best time of year to RE?
« Reply #15 on: January 21, 2020, 03:09:13 PM »
I really like the idea of retiring December 31st. It makes things a lot less complicated the next year.

Hunny156

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Re: Best time of year to RE?
« Reply #16 on: January 27, 2020, 12:53:11 PM »
Hubby will FIRE in March or April of next year.  His crappy company only does 401k match once/year, so we have to wait till they drop the match into his account before he can call it quits.  Every year, they seem to push the match out by another 2 weeks; last year it hit mid March, so we will see what they do this year.  If they match at the end of March, we can expect them to match again mid April, so that's why we don't know for sure what his end date will be.  We'll probably just front load the 401k next year, so we can start 1/1 fresh on one paycheck, and bank the remaining paychecks once he reaches the max.  Hard to tell for sure, as a big chunk of his pay is commission based.

As for me, I'm going to stay in a little bit longer; I will qualify for a month long paid sabbatical in 6 months from today, and I'll use it sometime next summer, after hubby's had some time to get settled into his FIRE routine.  I like what I do, I have flexibility and great benes, so I may stay in another year or two.  When I do leave, it will also be in March, after I get my bonus check.  Plus my employer drops nearly $2K in HSA and bonus 401k gifts on the first paycheck of the year, so I want to make sure I get those perks!

Lucky13

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Re: Best time of year to RE?
« Reply #17 on: January 27, 2020, 01:05:20 PM »
Interesting to hear everyone's strategies! I didn't realize some employers do the 401K match in bulk, pretty sure mine does it every pay period but I"m going to double check. For my last day, decided to stay until mid-May. I don't expect to push it further as I really want to have the summer off!  (I'm not hating my job or else I probably would have bailed already)
« Last Edit: January 28, 2020, 01:02:32 PM by Lucky13 »

robartsd

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Re: Best time of year to RE?
« Reply #18 on: January 27, 2020, 02:39:20 PM »
Interesting to hear everyone's strategies! I didn't realize some employers do the 401K match in bulk, pretty sure mine does it every pay period but I"m going to double check. For my last day, I was thinking of March after my bonus, but now decided to stay until mid-May. I don't expect to push it further as I really want to have the summer off!  (I'm not hating my job or else I probably would have bailed already)
Yep, some do it on a per paycheck basis; so to get that you have  to contribute from each check, others do a bulk match.

Vertical Mode

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Re: Best time of year to RE?
« Reply #19 on: January 28, 2020, 10:08:47 AM »
April 1st. Joke's on you, folks! I'm outta here!

merlin7676

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Re: Best time of year to RE?
« Reply #20 on: January 28, 2020, 11:02:07 AM »
Unfortunately I started late so I won't able to retire until I'm 55 which is 2031.

My plan is that my last day will be Friday July 4th, 2031.

That way I get my annual bonus (in April), my 401K quarterly bonus (end of June..i.e second quarter's worth. We don't get matches here), and holiday pay for the actual 4th of July.

Then this gives me the rest (and best part) of summer to relax and decompress before starting my next venture/hobbies/volunteering/etc in the fall or winter.

BTDretire

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Re: Best time of year to RE?
« Reply #21 on: February 22, 2020, 07:17:46 AM »
After a hurricane that damages your home and destroys your business.
It worked for me!

American GenX

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Re: Best time of year to RE?
« Reply #22 on: February 22, 2020, 07:39:19 AM »

Spring, right after I earn another year's worth of vacation (which I get to sell back), get a yearly bonus, and will be off for the summer, my favorite time of year.  It's also early enough in the year, I'll be able to get my MAGI low enough for ACA subsidies, if they are still around when I FIRE.

spartana

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Re: Best time of year to RE?
« Reply #23 on: February 22, 2020, 03:53:49 PM »
I retired in Fall (first week of Sept long ago) for no other reason then I lived in a hot dry wildfirery place (SoCal) and I couldn't handle another fall there. So quit with the plan to GTFO asap for cooler greener places.  The fact that it was a lot less expensive time to go somewhere, and much less crowded everywhere,  made it better. I left the day after I quit. I was on COBRA and had maxed out my 457 and IRAs for the year already so no financial reason. So for those who want to travel, then fall might he best.