Advice for My "Situation"

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tylerrr
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Post by tylerrr »

o.k.
I debated whether or not to post this....But why not, right?
I know there are a million factors that could influence this decision, but I'd like to know your general input.
I'm 38 and I can "retire" from my IT related job in 2 years with a pension, which I will immediately start receiving. It will be over 2k per month from the government.
That's less than a 3rd of my current income.
I'm wondering if I should immediately retire in 2 years and take an ERE related, different path in life.
- I don't have any debt.

- I don't own a house.

- I own a small Toyota Yaris, debt free.

- I divorced last year and I have no kids(I'm open to possibly marrying or finding a partner to have kid(s).

- I have typically lived in small apartments in big, expensive cities and I kind of like the city. I also like the woods and countryside, but I'm used to living in big cities.

- I have less than 100k in savings, but it will be over 100k in 2 years.

- I have a bachelor degree in Business.
I'm definitely not passionate about my work at all. Yet, I'm amazed at how much money I make for such an easy job.
I love doing art work and playing music. I've never made any serious money in either except for a few paid gigs when I was a drummer in bands. I'm not proficient enough to teach music or art.
I also have an urge to get my Masters Degree in Social Work or Mental Health Counseling and open a private practice possibly.
So there you have it....Am I crazy for considering staying in my job past the minimum retirement age?
I welcome all opinions.


chenda
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Post by chenda »

Imo, I think you should definitely retire in 2 years, I see lots of benefits from your post for retiring and no benefits to staying on. Except perhaps for some more cash, but looks like you have enough for the things you want to do.


CelticTiger
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Post by CelticTiger »

If I was you I' just do what ever you felt like. You will be financially independent so you have leeway to do whatever you wanted. Don't stress about it, just live the dream! You have achieved it


jacob
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Post by jacob »

You have a 2k pension for life? Is it COLA adjusted?
If so that's equivalent to an 800k net worth!!
How much do you spend per month?


Chad
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Post by Chad »

As Toska points out it appears your savings rate is rather low for a high paying gig. You would really need to get that under control for a year or two to prove you can live that way before you quit.
Also, if I were you I would get myself to a position where what I have saved would always increase every year even after my spending. With your pension that shouldn't be hard to do and this would "future" proof you to a certain extent.
My final observation is that there is a problem with your main question(s), which is "what do I want to do with my life." Unfortunately, it is unanswerable by everyone on here. We can give you all the logic and answers surrounding your issue, but unfortunately we can't answer your main question. User all the responses to eliminate the chaff from your question and then see what decision presents itself.


Dragline
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Post by Dragline »

Jacob makes a central point. Query if the pension rises if you stay on, and at what rate. Every $1 per month is the equivalent of saving another $300 in net worth. It may be worth another few years, but do the math.


RealPerson
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Post by RealPerson »

"I have less than 100k in savings, but it will be over 100k in 2 years."
You don't specify how much less than 100k you have in savings, but let's assume it is 80k. If it takes 2 years to save 20k, you save 10k on a salary of some 70k for one person. Annual spending is 60k. Your pension is say 25k/yr. At a 3% SWR with 100k savings, you could spend 28k/yr. You would need to reduce your annual spending by 32k. I would definitely live for a while on no more than 28k/yr before giving notice. Just my thoughts.
The other important factor is whether or not this is COLA adjusted, as Jacob mentioned. If longevity runs in your family, you could have 60 years of pension payments!


buzz
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Post by buzz »

You're not crazy to want to get off of the career treadmill at 40.

But do the math as others suggested, and think about what you would do during the time you would normally be at work to be sure this is something you want to do.


1000Ways
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Post by 1000Ways »

I don't know this from first hand experience, but I've been told by an extremely wise ERE-er that once you CAN retire, all the bullshit that drives you nuts doesn't seem to be as bad. The job might be tolerable for another 2-3 years as others have suggested you do.
However, if it's the desire to be free and do something you love, only you can figure out if it's work selling the 2-3 years of a very finite resource.


tylerrr
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Post by tylerrr »

thanks everyone for the input.
Here is some more info:
- Living downtown Boston right now where I walk to work.
- My monthly expenses are about 2500 right now.
- My rent is 1500 for a studio in nice part of downtown Boston.
- Car insurance is about 200.00 per month. I don't use the car much.
- Cell phone is about 60.00 per month. No contract.
- This is a little embarrassing, but I spend over 400 per month on food because I blend so many green smoothies with lots of greens, vegetables, and fruits. I had bowel surgery years ago so giving my body lots of micro nutrients is really important to me.
- I will have full health insurance under 200.00 per month if I retire in 2 years at a discounted rate.
- Yes, my pension would be COLA adjusted every year. The pension is not state taxed in certain states, such as Massachusetts. The pension would be around 2k per month in cash after taxes.


chenda
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Post by chenda »

So if you retire in 2 years looks like you'll need the full income from your savings to supplement your pension - assuming you will keep the same level of spending in retirement. Nothing wrong with that, but (despite what I said earlier) I personally would want a bit more slack in the system, so my net worth was always increasing. Some of the plans you mentioned like children or a private practice could be expensive, so building up additional cash over time seems prudent. This could be done either by reducing expenditure or working a bit longer - or some combination of the two. Doing some part time work might be a way of easing yourself into retirement with additional financial security.


vireoes
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Post by vireoes »

To echo what Chenda said: A couple of your ideas for after retirement might require some capital. Going back to school, how will you foot the bill for tuition and opening your own practice? You are open to the idea of finding a new partner and having kids, your current retirement plan will just barely cover your expenses. Even if you find a financially like-minded spouse, kids will add to your expenses. I would want a bigger buffer than you have at your current expense rate to cover these potential added expenses. That or use these couple of years to really figure out how to drop those expenses. Housing seems the obvious place you could make a cut. If you are not willing to make a cut there now as a single person, how would you be able to keep it low with a partner and children?


tylerrr
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Post by tylerrr »

yes, I understand. It would be tight if I make the jump into retirement and I DO need more of a cushion like you said...
I totally agree that I would do part time work of any kind to have some extra cash and I also have a small stream of income coming from a website I've owned for years. It can make me close to 1k per month if I show it a little love. I easily made that in the past.
So basically, I could keep my net worth growing with my part time work while my pension could cover all my monthly expenses.
So I would definitely have some extra income besides my pension.
In addition, I could sell my car and just use a zip car when I need one once per week or so... I live in the city and don't really need a car if I retire from job. I bicycle mostly except for the winter.
As far as school tuition, I have almost all of that covered from a government benefit and it wouldn't eat into my budget hardly at all. I refuse to go into school debt. I already paid off a debt for my bachelor degree years ago.


tylerrr
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Post by tylerrr »

Any more opinions? I'm all ears....


Strick
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Post by Strick »

Seems pretty simple to me. Given the savings opportunities and sweet retirement and the fact the current job doesn't seem to be beating you down (just something you're not passionate about), there's just one question that needs to be answered. Are you looking for ERE or a career change (private practice)?
If ERE, stick with the current job until you determine the additional savings/pension takes care of you for life, sounds like it wouldn't take long as long as you are sure you can leave big city $1500/month rent life.
If career change, then you might as well do it at 40. Anyone who can live at an ERE expense level and who also wants to work can do anything they want to, right now. The pension will be quite the fall back if you end up questioning the choice later.


Strick
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Post by Strick »




tylerrr
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Post by tylerrr »

@Strick,
yes, thanks. As long as my expenses are within my monthly pension, 2k or less(I'm getting pretty close to getting my expenses that low), then it's a no brainer....I should early retire from my job at 40, go to school for 2 years and get my Masters Degree, and make the career change.
Like you said, if I change my mind while in school or I don't like my new career a lot, I will be fine because my expenses will still be lower than my monthly pension/investment income.


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