Howdy! I followed a link to the ERE blog recently and just received the book. This fits with what we want very well besides the age we want to retire. Hubby wants a bit under 10 more years for the 10 years of free health care per his contract. He can work only 20 hours a week and still qualify for the 10 year of free health care upon retirement .
We are both almost 43. I work very part time and hubby full time. I love my job and plan to do it for free for people who can't afford it once we retire. Hubby's job is not the same fun and he would not like to continue it forever like I would with mine.
We are not huge earners and will fall a tad under $60K this year with his full time and my 10-12 hours weekly. We are a family of 4. We should have our youngest through college by 2017. The money is there for him. The oldest is still at home, working full time but not in school. His school money is there also with the stipulation he loses it at a certain age.
We have zero debts.
Home worth $220K
Savings and investments of $375K
We set up savings/investing for 33% this year.
I am hoping to learn enough to take this to 40% this year. I would love nothing more than for my husband to retire as early as possible. He is union and fully vested in his pension. Their first available draw is age 59 with a minimum of 10 years of service. So even if he retired early he would have a small pension at 59.He is not 59 of course but has the 10 years. He is actually aiming for 20 for the free retirement health care benefits guaranteed for 10 years after retirement. However if he dropped to part time the last few years he would still qualify for this.
We are starting to look into income producing property but am not very knowledgeable yet.
I'm hoping we have a shot at ERE. I welcome any suggestions.
newbie/ added budget to last post
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secretwealth
- Posts: 1948
- Joined: Mon Jun 27, 2011 3:31 am
Let me get this straight. You have 375k in investments--is your home paid for? Your passive income would be $15k/yr. at a 4% SWR, but you could easily bump that up to $20k or maybe more since you have a pension to look forward to in a decade.
I wouldn't say you have a shot at ERE--I'd say you're at ERE now. What's the expense side of things look like?
I wouldn't say you have a shot at ERE--I'd say you're at ERE now. What's the expense side of things look like?
Yes, You have the facts correct. Yes our home is paid for.
I will come back tomorrow with the budget if ya'll don't mind looking. I do know currently dh's company pays 26K for our family's insurance plans. Insurance for 4 is a big factor for us. We do not need such a $$ policy though.
We have been savers a long time so this money we have has been gathered over time. So it was not extreme savings.
I have just started the book so I am not real familiar yet. I am pretty confident we can not do ERE right now due to the fact we would need health care coverage. I could be wrong though. When it is just hubby and I we could maybe swing it in a few more years. Hubby is almost 43 and can not draw an pension until 59. So 16 years.
Our property taxes alone are $4K even with a paid off home. We have no plans to move until we can't maintain it. It is paradise and we can hunt and fish right in our backyard but yet are not far from things.
I have a lot more to learn! Our investments are likely too safe also and not earning enough right now. I won't even admit how much is in a MM. That was on reason we were contemplating buying rental property.
Thanks for responding
I will come back tomorrow with the budget if ya'll don't mind looking. I do know currently dh's company pays 26K for our family's insurance plans. Insurance for 4 is a big factor for us. We do not need such a $$ policy though.
We have been savers a long time so this money we have has been gathered over time. So it was not extreme savings.
I have just started the book so I am not real familiar yet. I am pretty confident we can not do ERE right now due to the fact we would need health care coverage. I could be wrong though. When it is just hubby and I we could maybe swing it in a few more years. Hubby is almost 43 and can not draw an pension until 59. So 16 years.
Our property taxes alone are $4K even with a paid off home. We have no plans to move until we can't maintain it. It is paradise and we can hunt and fish right in our backyard but yet are not far from things.
I have a lot more to learn! Our investments are likely too safe also and not earning enough right now. I won't even admit how much is in a MM. That was on reason we were contemplating buying rental property.
Thanks for responding
Ok back with the budget. Since we have enough $ in cash 33% will come off the top in 401k. I wont include savings in the budget. Just what is left. I budget with YNAB so I end up with sinking funds for many of our categories. This leaves a little over $100 not in the budget. This is for a family of 4. I also don't include interest in our income. We just let it keep building.
Taxes and home ins~ $400
Phone/internet ~ 98.00
electric/gas ~ 200 ( these are winter bills.)
Water 40
Netflix 8.47
Food 400
household good 25
pet food 45
garbage 16
Verizon 78 ( required for hubby's job and second line mine $20 of it is not required)
Yard maint(gas etc) 10
School fees 75
grooming 10
Home maint fund 50
xmas/Bday/charity 125
vet fund 30
hunting 10
vacation fund 50
otc/meds 5
dr/dentist/chiro 100
clothing 50 ( most of this goes to a very fast growing teen whom is too tall, too skinny and has too big of feet to easily buy used)
car/ life insurance 200
gas 120
car repairs 100
car tags 15
car wash 10
Taxes and home ins~ $400
Phone/internet ~ 98.00
electric/gas ~ 200 ( these are winter bills.)
Water 40
Netflix 8.47
Food 400
household good 25
pet food 45
garbage 16
Verizon 78 ( required for hubby's job and second line mine $20 of it is not required)
Yard maint(gas etc) 10
School fees 75
grooming 10
Home maint fund 50
xmas/Bday/charity 125
vet fund 30
hunting 10
vacation fund 50
otc/meds 5
dr/dentist/chiro 100
clothing 50 ( most of this goes to a very fast growing teen whom is too tall, too skinny and has too big of feet to easily buy used)
car/ life insurance 200
gas 120
car repairs 100
car tags 15
car wash 10
*taxes and home insurance: Can you break these out?... I'd consider appealing taxes if your market has declined and getting a 10k deductible insurance.
*electric/gas: this could probably be reduced by 50% by programing a thermostat, using space heaters, heat-tape + insulation on pipes.
*Phone(s)/internet: Does this include a cell, or two landlines?... Anyway I just did my parents and they're getting cell ($22/mo), 8mb/s internet ($38) and landline ($12)... Sure there is room for improvement here.
Also, looks like you're spending quite a bit on car(s). Lots of discussion here on how to get that down... Drive an inexpensive car, and drive it infrequently being best option (if you need a car).
*electric/gas: this could probably be reduced by 50% by programing a thermostat, using space heaters, heat-tape + insulation on pipes.
*Phone(s)/internet: Does this include a cell, or two landlines?... Anyway I just did my parents and they're getting cell ($22/mo), 8mb/s internet ($38) and landline ($12)... Sure there is room for improvement here.
Also, looks like you're spending quite a bit on car(s). Lots of discussion here on how to get that down... Drive an inexpensive car, and drive it infrequently being best option (if you need a car).
The tax assessment is fair. I am in the city with a few acres of woods joining county woods. They actually have it under valued for taxes a bit. We had it appraised a few months back when we purchased it. On of the reasons we decided to buy it was it was a great value compared to the price paid. The actual appraisal was $248500.I just figured $220000 is a nice safe number to include for net worth in case there is any drop in the last four months. We paid $175000 cash. We snatched it the first day on market and didn't expect our first offer to be taken. Taxes are just really high in our state. We rank in the highest few states.
I will check into raising the deductible. I never thought of that. It is $1000 now. The insurance and taxes are actually $50 monthly less than I estimate. I just give myself a buffer.
200 is an estimate on heating and electric since we have not had a winter here yet. Last month's combined bill was $150. We do have a programmable thermostat. Our settings are 60 at night and when gone. 67 when home. I know my electric would be less without teenagers.The company just raised rates 7.1 percent again on Jan 1. We can however also burn wood. We need to do that. Save $ and I could quit freezing!That would drop the gas part.
phone/ internet is charter phone and internet service. This doesn't include cellular. I will call around for internet and phone prices.We set it up with charter when we moved a few months ago in a hurry. There was the seperate Verizon in the budget. I could drop my part of it to save $20. Hubby is $58. He stays with Verizon because most of his contacts for business are also with them. It is common for him to use 7000 mobile to mobile minutes.
I agree we spend a bit on cars. I lumped our car insurance and life insurance together since I just save monthly for insurance. The oldest does kick in for his insurance since he has a car on our policy. I let the difference build up for the deductibles in there in case of a claim. I guess I should change my figures since he pays $50 monthly to be saved for the yearly bill. So make that $150 for car and life insurance.
The car ins rate it high due to the teenage sons. I could probably quit saving the $100 monthly for repairs. Both are low mileage, a few years old and I have a good $2700 set aside in that category. Kiddo is on his own for his repairs.
We for sure need our cars at this point. The younger teenager and I share. Hubby has his own. The oldest has and is responsible for his own. I do think once the younger son is on his own Hubby and I could work out a 1 car deal. I know people tough enough to bike 10 miles in below zero weather at dawn but We are not that tough yet.
I have to say once I type it out it seems my budget categories have mini emergency funds since I over budget and let the surplus build. I'm a weirdo and like seeing them build up in the YNAB. program. When I had a good surplus in some categories I didn't Ned it the end of Dec. I put in in my or IRA
I appreciate you taking the time to reply. You have given me a few things to consider and look into.
I will check into raising the deductible. I never thought of that. It is $1000 now. The insurance and taxes are actually $50 monthly less than I estimate. I just give myself a buffer.
200 is an estimate on heating and electric since we have not had a winter here yet. Last month's combined bill was $150. We do have a programmable thermostat. Our settings are 60 at night and when gone. 67 when home. I know my electric would be less without teenagers.The company just raised rates 7.1 percent again on Jan 1. We can however also burn wood. We need to do that. Save $ and I could quit freezing!That would drop the gas part.
phone/ internet is charter phone and internet service. This doesn't include cellular. I will call around for internet and phone prices.We set it up with charter when we moved a few months ago in a hurry. There was the seperate Verizon in the budget. I could drop my part of it to save $20. Hubby is $58. He stays with Verizon because most of his contacts for business are also with them. It is common for him to use 7000 mobile to mobile minutes.
I agree we spend a bit on cars. I lumped our car insurance and life insurance together since I just save monthly for insurance. The oldest does kick in for his insurance since he has a car on our policy. I let the difference build up for the deductibles in there in case of a claim. I guess I should change my figures since he pays $50 monthly to be saved for the yearly bill. So make that $150 for car and life insurance.
The car ins rate it high due to the teenage sons. I could probably quit saving the $100 monthly for repairs. Both are low mileage, a few years old and I have a good $2700 set aside in that category. Kiddo is on his own for his repairs.
We for sure need our cars at this point. The younger teenager and I share. Hubby has his own. The oldest has and is responsible for his own. I do think once the younger son is on his own Hubby and I could work out a 1 car deal. I know people tough enough to bike 10 miles in below zero weather at dawn but We are not that tough yet.
I have to say once I type it out it seems my budget categories have mini emergency funds since I over budget and let the surplus build. I'm a weirdo and like seeing them build up in the YNAB. program. When I had a good surplus in some categories I didn't Ned it the end of Dec. I put in in my or IRA
I appreciate you taking the time to reply. You have given me a few things to consider and look into.
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George the original one
- Posts: 5406
- Joined: Wed Jul 28, 2010 3:28 am
- Location: Wettest corner of Orygun
> I am pretty confident we can not do ERE right now
> due to the fact we would need health care coverage.
Define need. If none in your family have health problems, then you probably could go with a high-deductible health plan and save some serious $$$/mo.
On the other hand, if you have someone with a chronic problem (diabetes, pain, etc.), then you have a true need.
> due to the fact we would need health care coverage.
Define need. If none in your family have health problems, then you probably could go with a high-deductible health plan and save some serious $$$/mo.
On the other hand, if you have someone with a chronic problem (diabetes, pain, etc.), then you have a true need.
George, 3 people are very healthy. I have had diabetes since childhood. However it is totally managed with a strict keto diet, exercise. Routine twice a year testing and test strips are not terribly expensive. If i decide to go off the keto diet it would be very $$$$. I consider myself healthy ( as does my Dr.) but it is a big strike for insurance even if I run totally normal numbers with such a controlled diet and exercise. No meds.
We pay nothing for our medical, dental, eye, long and short term disability or dh's extra life ins. His employer pays for the whole package. The $100 in my budget is if I see the chiro or we have a copay etc. I will admit again I do have a surplus sitting there and could easily budget it at $50 monthly.
I do know approx what high deductible insurance costs since all of my coworkers buy their own. I am going to be very honest and say I can't see even with cutting things like cell phone and the cut-able areas in the budget where we would be able to do ERE now and afford it. As SECRET WEALTH MASTER pointed out we could retire now on $15K a year. I can't see that working with a family of four given property taxes at $4K of that alone. I can quite see us living on $11k if that includes buying health care for 4 people.
Now I can be super wrong as that does happen on a regular basis I am here to learn and see another way.
Dh and I were discussing the fact that since he has passed the 10 year mark his small pension is secured. Granted if he stays 20 it would be $5K monthly with free benefits the first 10 years. That is a good amount in our minds. If he were to exactly half his current hours he would still be building time that counts towards the free health care at retirement and would get free health care as long as he worked 20 hours a week. It would add very little to his pension on the other hand. We are going to ponder this some more. I'd continue my part time job because I really do love it. I would even be happy to do it for free for people who couldn't afford it. Besides my pay it only $8k yearly for my few hours a week.
Huh, upon typing that it just dawned on me that I love my job. My $8K in income plus the $15K we could supposedly live on from investments is equals $23K I have our current expenses estimated at $27,630 for our family of four yearly . Those numbers are not that far apart are they??? I'd need to add in health insurance though if Dh was not employed and see how far apart that made those numbers. Plus I would need to keep saving for deductibles monthly since I wouldn't want to touch principal. Ok so there is option 1.
That tells me things may not be as far from ERE as I thought. If anything it tells me if we can't do it now it is closer than I think
option 2
dh continue to work part time for free benefits. His income alone part time would be very close to covering yearly expenses.
option 3
dh will have a chance this year to change positions and pay will raise $25K if he decided to accept it. He had already planned on doing this not necessarily because of the $ but because it is way less stress. A year or two of this would be nothing but all extra to the investments.
I'm very glad I posted your replies. You have my mind really going. It will likely really get going when I get to read more of the book. I thank you for getting me to start thinking a bit more out of the box!!!
Back to edit and ponder something else. AM I correct in assuming we can not tap 401K and traditional IRA $ until we are 59??????????? If so that does change things doesn't it?I hope I am wrong wrong wrong!!!
I know dh has a small amount of company stock. I dont think it is over $2k but I forgot to count that. I should get a statement this month so I will know how much it is.
We pay nothing for our medical, dental, eye, long and short term disability or dh's extra life ins. His employer pays for the whole package. The $100 in my budget is if I see the chiro or we have a copay etc. I will admit again I do have a surplus sitting there and could easily budget it at $50 monthly.
I do know approx what high deductible insurance costs since all of my coworkers buy their own. I am going to be very honest and say I can't see even with cutting things like cell phone and the cut-able areas in the budget where we would be able to do ERE now and afford it. As SECRET WEALTH MASTER pointed out we could retire now on $15K a year. I can't see that working with a family of four given property taxes at $4K of that alone. I can quite see us living on $11k if that includes buying health care for 4 people.
Now I can be super wrong as that does happen on a regular basis
I am here to learn and see another way. Dh and I were discussing the fact that since he has passed the 10 year mark his small pension is secured. Granted if he stays 20 it would be $5K monthly with free benefits the first 10 years. That is a good amount in our minds. If he were to exactly half his current hours he would still be building time that counts towards the free health care at retirement and would get free health care as long as he worked 20 hours a week. It would add very little to his pension on the other hand. We are going to ponder this some more. I'd continue my part time job because I really do love it. I would even be happy to do it for free for people who couldn't afford it. Besides my pay it only $8k yearly for my few hours a week.
Huh, upon typing that it just dawned on me that I love my job. My $8K in income plus the $15K we could supposedly live on from investments is equals $23K I have our current expenses estimated at $27,630 for our family of four yearly . Those numbers are not that far apart are they??? I'd need to add in health insurance though if Dh was not employed and see how far apart that made those numbers. Plus I would need to keep saving for deductibles monthly since I wouldn't want to touch principal. Ok so there is option 1.
That tells me things may not be as far from ERE as I thought. If anything it tells me if we can't do it now it is closer than I think
option 2
dh continue to work part time for free benefits. His income alone part time would be very close to covering yearly expenses.
option 3
dh will have a chance this year to change positions and pay will raise $25K if he decided to accept it. He had already planned on doing this not necessarily because of the $ but because it is way less stress. A year or two of this would be nothing but all extra to the investments.
I'm very glad I posted your replies. You have my mind really going. It will likely really get going when I get to read more of the book. I thank you for getting me to start thinking a bit more out of the box!!!
Back to edit and ponder something else. AM I correct in assuming we can not tap 401K and traditional IRA $ until we are 59??????????? If so that does change things doesn't it?I hope I am wrong wrong wrong!!!
I know dh has a small amount of company stock. I dont think it is over $2k but I forgot to count that. I should get a statement this month so I will know how much it is.
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LiquidSapphire
- Posts: 510
- Joined: Thu Jul 28, 2011 6:40 pm
Are you in the US? Due to PPACA, starting Jan 1, 2014 insurers cannot charge you any more than others for pre-existing conditions like your diabetes. It's unknown how much premiums will be but possibly lower than they would have been for you otherwise.
What do you do that you love so much? Not many people here love their jobs and I am always looking for fun ways to make $$.
edit: oh, and you can tap your 401(k) early but you will really have to cross your t's and dot your i's - You will have to roll over to an IRA (I think) and begin 72(t) withdrawals - Google 72(t) for more info. It's an option but locks you in to withdrawing a certain amount every year until 59.5 whether you want to or not, but once you are in your 50s it might be palatable.
What do you do that you love so much? Not many people here love their jobs and I am always looking for fun ways to make $$.
edit: oh, and you can tap your 401(k) early but you will really have to cross your t's and dot your i's - You will have to roll over to an IRA (I think) and begin 72(t) withdrawals - Google 72(t) for more info. It's an option but locks you in to withdrawing a certain amount every year until 59.5 whether you want to or not, but once you are in your 50s it might be palatable.
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LiquidSapphire
- Posts: 510
- Joined: Thu Jul 28, 2011 6:40 pm
forgot to add, you can also check into Roth Conversions, I think it's a 5 year process to access your 401K money and you will have to pay taxes on it up front but it's another way to get at that money without paying an early withdrawal penalty.
One thing that occurs to me is if you are in an emergency situation and must withdraw from your 401K, if you are able to withdraw less than the ceiling of the 0% tax bracket you are only out the early withdrawal penalty which I believe is 15%. For this to work you need all income to be in the 0% bracket so if you plan to keep your PT job that might not work. Anyway, this is why I contribute the max to my 401K even though I have a long ways to 59.5 to go.
One thing that occurs to me is if you are in an emergency situation and must withdraw from your 401K, if you are able to withdraw less than the ceiling of the 0% tax bracket you are only out the early withdrawal penalty which I believe is 15%. For this to work you need all income to be in the 0% bracket so if you plan to keep your PT job that might not work. Anyway, this is why I contribute the max to my 401K even though I have a long ways to 59.5 to go.
Seems like you're doing pretty well-- saving greater than 50% of income with an income of $60k and 4 kids is pretty far above the norm.
I actually like your initial 10 year plan. It isn't the earliest possible retirement date, but it seems pretty bulletproof. If I understand right, your husband gets to cut back to half-time for the next 10 years, then leave completely. If he does this you get health benefits for the next 20 years(worth what? $300k-400k?), which covers you health wise until age 63. At 59, a $5k per month pension arrives-- which is twice what you currently spend... Over the next 10 years it seems that you'll still be saving-- probably have around $450k in contirbutions alone at that point-- not even factoring in investment gains over the next 10 years. We haven't even mentioned social security yet...
Meanwhile all the kids should be pretty well on their own feet by the end of this-- and they may benefit from the family health policy until mid twenties or so.
Your husband doesn't work more than 20 hours/week after age 43, and not at all after 53. You do something you love. You live in a paradise that you bought at a bargain price...
I haven't heard many better plans than this.
My suggestion (worth what you're paying for it!): try the half-time thing out with your husband. It may make his job much more tolerable to him. The free time it gives may allow him to pursue another interest that makes up for some lost income, or it just may make it so that he doesn't mind his job nearly as much.
I actually like your initial 10 year plan. It isn't the earliest possible retirement date, but it seems pretty bulletproof. If I understand right, your husband gets to cut back to half-time for the next 10 years, then leave completely. If he does this you get health benefits for the next 20 years(worth what? $300k-400k?), which covers you health wise until age 63. At 59, a $5k per month pension arrives-- which is twice what you currently spend... Over the next 10 years it seems that you'll still be saving-- probably have around $450k in contirbutions alone at that point-- not even factoring in investment gains over the next 10 years. We haven't even mentioned social security yet...
Meanwhile all the kids should be pretty well on their own feet by the end of this-- and they may benefit from the family health policy until mid twenties or so.
Your husband doesn't work more than 20 hours/week after age 43, and not at all after 53. You do something you love. You live in a paradise that you bought at a bargain price...
I haven't heard many better plans than this.
My suggestion (worth what you're paying for it!): try the half-time thing out with your husband. It may make his job much more tolerable to him. The free time it gives may allow him to pursue another interest that makes up for some lost income, or it just may make it so that he doesn't mind his job nearly as much.
LiquidSapphire~ Thanks. That is good to know. Yes we are in the US. I work as a stylist. I have for 20+ years but have been just a few hours a week for the last few. It is seriously not like work at all. I also do it free of charge at the shelter a few hours a week also. I will have to read up on the conversions.
Mo~ Sorry, I didn't do a very good job of explaining above. If my spouse goes part time for say the next 10 years he will get the free insurance while working. He will get 10 more years of free insurance after retirement. The pension will not build to $5K unless he stays full time. If he went part time tomorrow I believe the highest pension he could build to would be around $2000. If he quit today it would be $956 at age 59. There is a penalty with the pension for going part time or stopping work at 10 years.
I have two kids. The youngest should be done or a year out from college graduation in 2017 it would seem. So they will definitely all be on their own.
We were talking about this last night and hubby says he really needs to think about it. I think he is hung up on the pension difference, and the fact his pay could go up $25K if he made the position change this year. He has always had 1.5 million in his mind for retirement. I also think a lot of this has to do with the fact he has never not worked. Many years ago he got a temp layoff and after a week was so bored he went to work part time for a temp service. He does love golf, hunting and fishing now so that would keep him busy now. No pressure on my end. I will just keep planning and learning.
Mo~ Sorry, I didn't do a very good job of explaining above. If my spouse goes part time for say the next 10 years he will get the free insurance while working. He will get 10 more years of free insurance after retirement. The pension will not build to $5K unless he stays full time. If he went part time tomorrow I believe the highest pension he could build to would be around $2000. If he quit today it would be $956 at age 59. There is a penalty with the pension for going part time or stopping work at 10 years.
I have two kids. The youngest should be done or a year out from college graduation in 2017 it would seem. So they will definitely all be on their own.
We were talking about this last night and hubby says he really needs to think about it. I think he is hung up on the pension difference, and the fact his pay could go up $25K if he made the position change this year. He has always had 1.5 million in his mind for retirement. I also think a lot of this has to do with the fact he has never not worked. Many years ago he got a temp layoff and after a week was so bored he went to work part time for a temp service. He does love golf, hunting and fishing now so that would keep him busy now. No pressure on my end. I will just keep planning and learning.
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George the original one
- Posts: 5406
- Joined: Wed Jul 28, 2010 3:28 am
- Location: Wettest corner of Orygun
Like any lifestyle change, you have to plant the seed first before it will grow. Give him a reason to want to make the change, have him visualize the life he could live if he weren't working.
My father-in-law is definitely someone who had to retire 3 times before he hit his stride. I think he still struggles to avoid boredom, but he's adapted well. After he fell off the garage roof and broke a leg this spring (he's fully recovered), he's also acknowledged to himself that it's time to wind down the farm (age 77 or so), so he's delved into that project and it should keep him out of trouble
My father-in-law is definitely someone who had to retire 3 times before he hit his stride. I think he still struggles to avoid boredom, but he's adapted well. After he fell off the garage roof and broke a leg this spring (he's fully recovered), he's also acknowledged to himself that it's time to wind down the farm (age 77 or so), so he's delved into that project and it should keep him out of trouble