Trying to decide if I should/could retire

[nomadh]

I work for a city government and I have a pretty good pension plan. Too good it seems as they are offering $15k if I retire by dec. Just got a job bump and a cola for about 7.5% so only about 1/3 of my pay increase would average into my retirement. And I need to decide by wed.
It's a nice job and I like the people but for a decent desk job I come home exhausted. Which is odd because on a long weekend I may work in the yard for 10 hours and feel great. I'm turning 56 soon. .I have a few rental prop 1 mort is going 0 bal.
My pension should be about 78% but I pay 8% plus some money into 457 so that stops. Unfortunately 1 get $1k a mo tax free for health ins and that's going away and isnt calculated into my pension. As the last kid moves out we got a relative that's renting a room and I have a granny flat to rent out.
Basically I'll be about 2k a mo short but ill be gaining 1k as a rental pays off and I'm adding 1 or 2 boarders. Plus I can pull from the 457.
At this point I'm looking for gotchas and things to consider that I've missed.

[mickey]

Well, sounds like you are it a similar position to where we were in back in 1997-8.
Taking the advice of a good tax attorney (my brother) I sought out a good Certified Financial Planner (CFP)
We were lucky in that we were living in Nashville, a town where too many people have too much money.
Nashville is full of good to great money men. But I would warn that CFP's vary from great to con-men.
So shop carefully for a CFP. Go prepared to lay all your cards on the table & certainly be honest.
He should want some time to study your situation in detail, put a plan together for you then meet again
for him to lay out your options (and expect total honesty in return from him.)
Our guy (whom I still use) showed us how we could make more by retiring than we could by continuing to work.
Today I make about double what my wife & I together earned before we retired.
When you consider that my expenses some years have been less than my guitar purchases, the pot keeps growing.

He could lay out a plan by doing x, y & z you could retire in ? years.
Or he might tell you don't expect to retire before age 96?
Retirement is scary for most of us, until you have done it.
Seek the advice of an expert, that is what they are there for.

[Milkman]

I’m about 6 years out from cutting loose, so I’ve started thinking about it too.

I have a friend who retired, and decided to take a job running auto parts as a favour for another friend (He used to be a public health research guy). Well, he LOVES it! He works 5 hours a day, 4 days a week, knows every mechanic in the region (Helpful for a guy who loves cars), and gets paid. There’s NO pressure for him because he doesn’t NEED the job, and he has ZERO desire to move up or even sideways, which changes one’s approach to life, I imagine.

I guess I’m suggesting that you consider the possibility of taking a job that you may enjoy, that wouldn’t normally pay enough for you to keep if you weren’t also collecting a pension. A job is a while different thing when you do it on your own terms.

[fatjack]

And to add to what [mention]mickey[/mention] said I'd seriously Consider using just a fee based CFA. You pay a fee every time you need him but he does not make money off your money. in short he doesn't try to sell you something that he makes money from.

[PsychoCid]

I’m about 6 years out from cutting loose, so I’ve started thinking about it too.

I have a friend who retired, and decided to take a job running auto parts as a favour for another friend (He used to be a public health research guy). Well, he LOVES it! He works 5 hours a day, 4 days a week, knows every mechanic in the region (Helpful for a guy who loves cars), and gets paid. There’s NO pressure for him because he doesn’t NEED the job, and he has ZERO desire to move up or even sideways, which changes one’s approach to life, I imagine.

I guess I’m suggesting that you consider the possibility of taking a job that you may enjoy, that wouldn’t normally pay enough for you to keep if you weren’t also collecting a pension. A job is a while different thing when you do it on your own terms.

I would love to see more of this.

[peskypesky]

I HIGHLY HIGHLY recommend you join the Bogleheads Forum and seek advice there. Those people really know their stuff.
https://www.bogleheads.org/forum/index.php


They have a couple of sections where you can get advice on your personal situation. Invaluable.
https://www.bogleheads.org/forum/viewfo ... 621b1563ec
https://www.bogleheads.org/forum/viewfo ... 621b1563ec

[nomadh]

Well, sounds like you are it a similar position to where we were in back in 1997-8.
Taking the advice of a good tax attorney (my brother) I sought out a good Certified Financial Planner (CFP)
We were lucky in that we were living in Nashville, a town where too many people have too much money.
Nashville is full of good to great money men. But I would warn that CFP's vary from great to con-men.
So shop carefully for a CFP. Go prepared to lay all your cards on the table & certainly be honest.
He should want some time to study your situation in detail, put a plan together for you then meet again
for him to lay out your options (and expect total honesty in return from him.)
Our guy (whom I still use) showed us how we could make more by retiring than we could by continuing to work.
Today I make about double what my wife & I together earned before we retired.
When you consider that my expenses some years have been less than my guitar purchases, the pot keeps growing.

He could lay out a plan by doing x, y & z you could retire in ? years.
Or he might tell you don't expect to retire before age 96?
Retirement is scary for most of us, until you have done it.
Seek the advice of an expert, that is what they are there for.

I sort of did this 2 times now. 1 free consultation didnt get me much and they seemed more interested in picking my wife's brain for her ebay biz plan. Then they sent me a big bill while I was still considering.
Another was a retirement specialist. He was a free consult and also makes no money off my money. He gave a few ideas but said I was doing great but there was very little wiggle room to manage. Fixed pension, decide how much to pull out of 457. Manage property or sell it. He said he'd like to start converting stuff to a Roth on the assumption taxes will only be higher later but he said I'm mostly stuck that way be prepared to keep paying taxes.

[bleys21]

I'm about 5 years or so out from retirement at the earliest, but in a similar situation, since I work in K12 education, and also have a pretty nice pension plan. The one thing I keep hearing from others I have worked with who have retired is that, even though the numbers look less (like in your case, 78%) once you retire, the pension money isn't taken out anymore, and your tax situation can change (usually goes down a bit) so you end up making the same money.

In your situation, with mortgage paid, and rental properties, etc, you should be fine. I would run the numbers on what your pension would be if you stayed long enough for that COLA to hit. In my case, it would be a no-brainer, as my pension is based on the highest single year, so I'd be waiting for that next big single year, and a straight $15k wouldn't even be worth it, as I'd make that up in no time via higher pension.

[nomadh]

I’m about 6 years out from cutting loose, so I’ve started thinking about it too.

I have a friend who retired, and decided to take a job running auto parts as a favour for another friend (He used to be a public health research guy). Well, he LOVES it! He works 5 hours a day, 4 days a week, knows every mechanic in the region (Helpful for a guy who loves cars), and gets paid. There’s NO pressure for him because he doesn’t NEED the job, and he has ZERO desire to move up or even sideways, which changes one’s approach to life, I imagine.

I guess I’m suggesting that you consider the possibility of taking a job that you may enjoy, that wouldn’t normally pay enough for you to keep if you weren’t also collecting a pension. A job is a while different thing when you do it on your own terms.

I may do something like that or my new job may just be rental prop handyman. Or helping my wife's ebay or raising and selling her specialty rabbits and chickens.

[nomadh]

I'm about 5 years or so out from retirement at the earliest, but in a similar situation, since I work in K12 education, and also have a pretty nice pension plan. The one thing I keep hearing from others I have worked with who have retired is that, even though the numbers look less (like in your case, 78%) once you retire, the pension money isn't taken out anymore, and your tax situation can change (usually goes down a bit) so you end up making the same money.

In your situation, with mortgage paid, and rental properties, etc, you should be fine. I would run the numbers on what your pension would be if you stayed long enough for that COLA to hit. In my case, it would be a no-brainer, as my pension is based on the highest single year, so I'd be waiting for that next big single year, and a straight $15k wouldn't even be worth it, as I'd make that up in no time via higher pension.

Yes I've heard multiple times to hit about 80% but I think that should include healthcare. But if I make it up in the 457 I should be good.
To get the 15 k I need to decide by wed.

Waiting till around next july then my pension would include my new highest year plus my time and age multiplier. In dec it only included about 5 months of it. But it's only 5% plus 2.5% cola.
So about a $400 mo raise an early pension would leave about half that on the table x 78% so 15k would pay for being retired for 5 yrs. 3ish after tax. But in 3 years I might get 2 2% colas. Maybe 3, cumulative it gets close.
Plus other options like selling a house and buying an annuity or other investment. Or stay with houses and rents should go up as I'm just now dropping payments from refi.
Frankly a lot of my new job would be just stopping my wife spending and finding ways to save that now I'm to tired working to do. After all the easiest money you'll ever make is the dollar you never spent. And its tax free..

My wife wants me to retire. I told her if you thought I was cheap before wait till I am home all day to figure out ways to save. Cel phone cable and internet should be what $30 a mo?

[bleys21]

Yeah, I forgot to add that, as part of our retirement package, I can continue to pay the district and keep my healthcare until I'm 65. Then I gotta switch to Medicare. Of course, the healthcare issue may affect me anyway, as I wasn't planning on staying in California, and I my lazy research has shown that most of the plans we have at work are CA based.

Not to get off topic, but one of the things that always seemed to make sense to me was allowing people who are say, over 50 or maybe 55 and retired to buy into Medicare for their insurance. At least gives them an option heading into the 65 age group.

Hopefully you can find a reasonable option for healthcare. Good luck with the big decision!

[DonM]

Getting the higher salary into your retirement annuity Is the gift that keeps on giving. I retired eight years ago. There’s a lot of expenses you don’t really think of that go away when you retire. No more suits, dress shirts, dry cleaning, etc needed when you wear t-shirts, jeans or shorts like I do. A lot of food expenses go away too. Sounds like you’re fully planning this out which is a good thing. It’s a big decision that’s irreversible so you want to get it right. Good luck.

[Rollin Hand]

[mention]nomadh[/mention], is there any way you can get them to give you more time to decide? Is there any way you can get them to up your offer?

I suggest talking to someone too. I am 10 years away, but my daughter will be 13 when I retire, so keeping some money coming in could be somewhat necessary. This is compounded by the fact that I don't like my job very much any more.

We will be OK, I am sure, but I am a bit of a fraidy cat about money.

I will say this: working from home has definitely lowered my overall expenses (no parking, no gas, no lunch, no pants).

[fatjack]

2 questions You say you're mentally and physically worn out now.(burn out) How are you going to be in a year or 3 if you don't retire? Would goats fit in the wifes business? Become a goat roper.

[Tonray's Ghost]

I’m about 6 years out from cutting loose, so I’ve started thinking about it too.

I have a friend who retired, and decided to take a job running auto parts as a favour for another friend (He used to be a public health research guy). Well, he LOVES it! He works 5 hours a day, 4 days a week, knows every mechanic in the region (Helpful for a guy who loves cars), and gets paid. There’s NO pressure for him because he doesn’t NEED the job, and he has ZERO desire to move up or even sideways, which changes one’s approach to life, I imagine.

I guess I’m suggesting that you consider the possibility of taking a job that you may enjoy, that wouldn’t normally pay enough for you to keep if you weren’t also collecting a pension. A job is a while different thing when you do it on your own terms.

I would love to see more of this.

Husband of an old friend left a family business after legal squabbles with siblings, took a job as a meter reader with PSEG in NJ. He was about 10 years from retirement age when he made the move. He was overweight and depressed before leaving but within 2 years he had lost 40 lbs (due to the walking required when reading meters) , rescued numerous stray dogs and cats he encountered on his route, and was happier than ever before. Sometimes change can be a very positive thing.

[OMB]

The one onus in all this is healthcare costs. I paid $1,400 a month just for myself. My wife and son were less. I packed it in at 59 but didn't officially retire until 60. As far as our investments go we stayed in Funds (mostly index or low cost) and some IRA's. We now have 50% more in equity than we did 8 years ago. I am an anxious person so not very good at non-critical advice.

[tonebender]

Yeah, I recommend a financial consultant. I just semi-retired, cut back to three days a week and I get full benefits. My adviser was key in helping me plan so I could get walk away from full time work at 62. It's quite nice, Monday is hump day, Wednesday is Friday and every week is like Thanksgiving, Thursday thru Sunday off. Health insurance is key.

Good luck and I hope you get to retire early. If you have enough income otherwise, then you could work part time and make just enough to cover health insurance.

[nomadh]

I’m about 6 years out from cutting loose, so I’ve started thinking about it too.

I have a friend who retired, and decided to take a job running auto parts as a favour for another friend (He used to be a public health research guy). Well, he LOVES it! He works 5 hours a day, 4 days a week, knows every mechanic in the region (Helpful for a guy who loves cars), and gets paid. There’s NO pressure for him because he doesn’t NEED the job, and he has ZERO desire to move up or even sideways, which changes one’s approach to life, I imagine.

I guess I’m suggesting that you consider the possibility of taking a job that you may enjoy, that wouldn’t normally pay enough for you to keep if you weren’t also collecting a pension. A job is a while different thing when you do it on your own terms.

I would love to see more of this.

I could work at a pawn shop getting first pick of all the guitars that come in. I'd be bankrupt in the year

[aullucci]

I’m about 6 years out from cutting loose, so I’ve started thinking about it too.

I have a friend who retired, and decided to take a job running auto parts as a favour for another friend (He used to be a public health research guy). Well, he LOVES it! He works 5 hours a day, 4 days a week, knows every mechanic in the region (Helpful for a guy who loves cars), and gets paid. There’s NO pressure for him because he doesn’t NEED the job, and he has ZERO desire to move up or even sideways, which changes one’s approach to life, I imagine.

I guess I’m suggesting that you consider the possibility of taking a job that you may enjoy, that wouldn’t normally pay enough for you to keep if you weren’t also collecting a pension. A job is a while different thing when you do it on your own terms.

I would love to see more of this.

I could work at a pawn shop getting first pick of all the guitars that come in. I'd be bankrupt in the year

This is not a bad idea. My mom looked forward to retirement for years. All she wanted to do was just sit and putter in her garden watering flowers all day. She was retired for a couple of months, felt kinda bored, and so she went and got a job at Home Depot, watering the flowers in the garden department. Now she gets paid three or four days a week to water flowers at Home Depot. She made enough part time money to fly to Paris last fall.

If somebody offers you $12/hr to go make their guitar store look nice, JUMP ON IT.

[Rollin Hand]

A friend's dad retired from teaching a few years back. He had the pension, and didn't need the money, but he took a part time job at the local Radio Shack, just to visit with people and get out of the house. He also enjoyed the discount. He isn't doing it anymore because they are all over the place in their camper trailer.

[andrewsrea]

As usual, lots of good advice here on AGF. I had a similar offer from my employer and retired this past June. This was two years ahead of my plan, which I have been working pretty consistently since 2008.

Great if you can do it. Some things to consider:
- Paying for medical until you are eligible for Medicare. Is it just you and you are healthy, or more and someone has significant health concerns?
- How is your family debt?
- Where are you in the life cycle of major expenses (furnace, roof, cars, etc.)?
-How spendy is your normal lifestyle? Do you have things you can cut back on if things get tight?

In my case: my wife and I are empty nesters and live a simple life. Our cars are newer, paid for and practical. We aren't extravagant and take good care of our belongings. Almost everything in our house is updated, above builder quality and newer. My wife has a medical condition, so that is costing me.

But I have no regrets.

Also, see if your employer would declare your job a reduction in force due to Covid-19. In the USA and most states, this qualifies you for unemployment. Congress just sent a letter to the president, urging him to extend the $600 / week Covid-19 unemployment adder payment to the end of 2020.

[nomadh]

I would love to see more of this.

I could work at a pawn shop getting first pick of all the guitars that come in. I'd be bankrupt in the year

This is not a bad idea. My mom looked forward to retirement for years. All she wanted to do was just sit and putter in her garden watering flowers all day. She was retired for a couple of months, felt kinda bored, and so she went and got a job at Home Depot, watering the flowers in the garden department. Now she gets paid three or four days a week to water flowers at Home Depot. She made enough part time money to fly to Paris last fall.

If somebody offers you $12/hr to go make their guitar store look nice, JUMP ON IT.

I know someone that did the hd gig. I was thinking that wouldnt be bad. Just for the discount. But the garden dept sounds like getting paid to be in a meditation garden. Once again I'd bankrupt myself buying plants.

[nomadh]

As usual, lots of good advice here on AGF. I had a similar offer from my employer and retired this past June. This was two years ahead of my plan, which I have been working pretty consistently since 2008.

Great if you can do it. Some things to consider:
- Paying for medical until you are eligible for Medicare. Is it just you and you are healthy, or more and someone has significant health concerns?
- How is your family debt?
- Where are you in the life cycle of major expenses (furnace, roof, cars, etc.)?
-How spendy is your normal lifestyle? Do you have things you can cut back on if things get tight?

In my case: my wife and I are empty nesters and live a simple life. Our cars are newer, paid for and practical. We aren't extravagant and take good care of our belongings. Almost everything in our house is updated, above builder quality and newer. My wife has a medical condition, so that is costing me.

But I have no regrets.

Also, see if your employer would declare your job a reduction in force due to Covid-19. In the USA and most states, this qualifies you for unemployment. Congress just sent a letter to the president, urging him to extend the $600 / week Covid-19 unemployment adder payment to the end of 2020.

All good points. And the answers are a little crazy. My wife has had 4 health issues. Cancer, diabetes, overweight and congestive heart failure. But most or all self caused to some extent. So part of my job is going to be helping her health.
Our debt is terrible. Youd think that plays against my decision but looking hard at how slow my pension will grow I am realizing I need to quit to maximize my money. One is I'm home to control expenses. 2 I'd be able to repair my own rentals and fix my own house. Add more solar, reroof, insulate. 3 is manage my property, raise rents, possibly rent out parts of my house. Maybe add a trailer type granny flat on my 1/2 acre. Passive income is king. All of these things will make me more money going forward than waiting for my pension to tick up. And I have an outstanding pension. Probably the type never to be seen again in the history of this country.
So good that part of my calc is to jump out and collect on it before it goes the way of detroit pensions. Ever heard about their pay cut? Some of those "haircuts" were 30 or 50% iirc. More a beheading.
Another calc is I truly am thinking this could be the end of america. A country divided against itself cannot stand and frankly on average Americans don't deserve America. This next election could make my dec exit actually too late. Whoever wins how does it not become a civil war. Venezuela here we come? Thats the one reason to stay actually. Maybe a city employee would have some level of protection above the average person but in the scheme of things I aint that important.

Healthcare is a big sticking point. ITs about 1200 for us 2 a bout $130 a mo help from employer is it. And no we are not spendy. We have never had a new car. Usually about 20 years old. I dont buy fancy clothes to work. Its only a few miles away and I eat leftovers nearly every day for lunch. Of course my kids never brown bagged it a day in their lives so I'm just getting sick of it all.

[Houblues]

I could work at a pawn shop getting first pick of all the guitars that come in. I'd be bankrupt in the year

In all seriousness, that might be something to consider. I have a friend who manages one, so I have a slight bit of insight. The downside is the workforce seems to not be the most professional, the upside is if your are good, you will advance. They like people who know a market (guitars, tools, guns, jewelry, consumer electronics) and entrepreneurship in general. Clearly you would qualify on at least a couple of those points.

[nomadh]

Still debating internally. I think I got some pretty good projections that if I retire in dec I would be left with a $2k a mo deficit. I could probably do ok pulling from my 457. But because of my new raise I could have a $350 a mo bump by around aug of next year. In 1 way my $15k bonus to leave early could be seen as paying for that difference for 3+ years and letting me go early. Or I can look at it as leaving about $80k on the table if I live 20 more years. $120k if I live 30.
I did a test run this week on trying to save money. I have a rental dishwasher down. So I found a melted solenoid. Replaced it for 2 hrs work and 45$. It went fine but it seems the locked solenoid burnt up the pump. Of buy a pump? No they only sell a pump and motor assembly even though my motor is fine. And what does the assembly also include? That damn $45 solenoid! Its a $300 ish 2 yr old dishwasher. So time or money or as I like to do it.... BOTH! So if I'm screwed anyway. And nothing works anyway. Hell my pension fund will probably be either politically stolen of inflated away anyway so really why work. If you get ahead either the mob of the beurocrats will steal it. In the end all you ever really have is time. And thats going fast.