Early retirement or not?

M

Mason C. Bailey

New member
Ok, this is going to be a bit weird, but here goes. My wife and I worked at the same biotech company and we both got laid off late last August, 2006. Since then, between the two of us, we have interviewed 8 times and have not been offered jobs. We are told that we are over qualified, etc., etc., which basically means that we are too old. I'm almost 54 and my wife, well, I'm not telling. We received a good severance package and still have about 6 months until we loose any real cash savings.

We are fortunate, in that we live on a piece of property, 7 acres, with a very nice, almost new house, just south of Mill Creek in Washington State. This story could go on and on but to cut to the chase. Our options are:

1) Find any job(s) and stick it out here. It is a great place, nice house, creek, workshop, cabin on the creek, woodshed, separate garage, pumphouse and green house. To top it off, it is very private even though we are close to the City of Mill Creek. We are surrounded on two sides by a wetland park (North Creek Park) and our property on the other two sides.

2) Sell what we have and move. We could pocket enough cash, even after purchasing another home to not have to work and retire early.

Concerns: We have an 11 year old son, who loves soccer. It must be a large enough city/town to have organized soccer and other sports. We would all want to have close access to good moorage (covered if possible) and fishing opportunities, including Salmon, Halibut, Shrimp and Crab, etc.

We are currently starting to look at the Port Angeles, Port Townsend, Anacortes areas and a bit on the lower Columbia River area. I realize that to some people that this is a "good problem to have", as one of my old bosses used to say. But it is an extremely difficult decision for us to make.

Are there other areas in the Pacific Northwest that we should be considering? Keep in mind, close marine access with fishing opportunities, my son's education and sports and I suppose health care for us as well.

Also for you tax smart folks out there, what might the tax obligations be of selling a fairly high dollar house with property for a lessor value home? What % would we loose of our possible earnings?

I realize this is not your normal C-Dory posting or question. However I have come to respect the vast knowledge that the sum of you people possess. This will be an extremely difficult and possibly exciting decision for us to make and I'm hoping that some of you may be able to possibly make the decision easier for us. Not quite sure how, but I'm hoping!??

Sincerely, Mason Bailey

MacNaughty III[/b]
 
hi mason,
here goes,
keep what you have, stay where you're at and look for the best possible job options. be aggressive in your interviews, continue networking and don't give up. there are plenty of opportunities out there.
in my humble opinion, you're to young to retire, health care cost are expensive and college is not that far off.
you didn't mention what sale price range your residence would bring, if sold, so not sure on tax, if it's under say 1 mil and you've occupied same for last two years, shouldn't be taxed..
retirement isn't what it's cracked up to be.
look at other work opportunities, including self employment.
biggest problem i see with people in there 40's, 50's and beyond is height/weight ratio out of wack. i don't know you and i'm only making recommendations, you've asked for, so if you are not a member of a fitness center, then i'd join one, allot of networking goes on there. when everything else is equal, employers will hire the person who looks to be fit.
best regards and good luck
pat
 
Mason,

On the other hand, retirement is great and you'll not run out of things to do. I retired at 59 and up to that point never needed a day-timer! If you have been looking at the Olympic Peninsula, let me suggest Sequim as opposed to PA or PT. The 12" yearly rainfall is one of the best parts. There are lots of part time opportunities here for boat money, Costco, Home Depot, Staples etc. We are 1.25 hours from Cattle Pass and the San Juans by boat. Seems like lots of Soccer going on around town. PM me with any questions.

Good Luck,
 
Dreamer":2g6w0h2o said:
If you have been looking at the Olympic Peninsula, let me suggest Sequim as opposed to PA or PT. The 12" yearly rainfall is one of the best parts. There are lots of part time opportunities here for boat money, Costco, Home Depot, Staples etc. We are 1.25 hours from Cattle Pass and the San Juans by boat. Seems like lots of Soccer going on around town.
Click to expand...

Just to provide an alternative viewpoint, we decided to move to Anacortes for many of the same reasons Roger lists. A bit more rain here, maybe. The main factor for us was that there seemed to be more going on in Anacortes, plus we did not want to be tied to the ferry if we wanted to get to I-5, Seattle, BC, etc. Don't get me wrong, Sequim is nice and has grown rapidly because people have discovered it (ditto Anacortes.) Anacortes will probably grow faster than Sequim, which is a negative (for me.) Different strokes for different folks.

Warren
 
I see two "hookers"in this situation. One is the age of the son. You have multiple options--including taking up full time boating--but as the boy gets into high shcool age, he will be most happy in a domestic setting. You also have to consider his further educational needs/wishes. Is he going to get a scholarship from soccer or academics? Is he going to go to graduate school?

The other is the effect of inflation. This is a huge unknown. You have to invest, as well as tier your income to account for this. Ie: have enough funds to live well, without touching your principle and keep re-investing your income to let the nest egg grow to cover inflation. You also need to be sure that the entire family is well covered with medical/dental/eye insurances. Consider that you or your wife may live another 50 years. 50 years ago a nice car was $2,500, Today it is $25,000, will it be $250,000--or perhaps more important:50 years ago you could stay in a nice nursing home for $400 a month, now it is $4000 a month--and in 50 years may be $400,000 a month?


How much money is "enough" to retire? Of course it depends on your life style. I agree that Sequim area is wonderful--but property has become pricey up there (according to my friends who live there).

There is also the option of opening your own business or becomming self empolyed. We found all sorts of opportunities when we were retired, starting as volunteers, and then finding that there was a real demand for people who could get things done, as well as technical skills.

I don't see 54 as "too young"--I retired at age 56, but had taken a 4 year sabatical before that. You never know when ill health may limit your options. A number of my friends retired in their early 50's.

These are very personal decisions--and only you know what your financial situation is--I personally figure inflation at 10% and then am very happy if it is lower. The CPI does not reflect the real costs of living and raising a family.

Enjoy life! It is short.
 
thataway":mo6uyyww said:
How much money is "enough" to retire?
Click to expand...

Excuse the pun, but this really is the $64,000 question...it may not be the most important question, but it's the one that will bring one's retirement dreams to a screeching halt if the answer doesn't jive with lifestyle expectations.

Once you've answered some of the questions posed earlier in this thread, take a peek at FireCalc...it's the best calculator I've found for zeroing in on the "will I have enough money" question.

And also, as B~C mentioned earlier...I just can't recommend the Early Retirement Forums strongly enough. The collective wisdom and experience there, is unmatched by any other online resource I've found when it comes to the retirement decision. All of the questions/answers asked in this thread, have been covered time and again there, and the nuggets of information the place contains really are invaluable. Add to that, they are a generally friendly and welcoming group of folks, much like here.
 
Mason I was forced into retirement at 54 due to health issues. Fortunately unlike you my children were raised. When I read the description of your home I can tell from your writing you really love the area and home. I was faced with a similiar decision. I considered selling my home on the ICW which I dearly love. After a bit I realized that my retirement income was pretty darn good and my life style wasn't one that required a lot of money. My main concern was health care and I was real fortunate to be able to keep mine and along with medicare it's working out pretty good. I don't really have any advice for you but wish you well in what ever you choose. Incidently today 5 years into retirement you couldn't melt and pour me back on another job.
 
Hi Folks,

Bill said it in a nut shell. You have to sit down with a financial planner, not one of those life insurance salesman who say they are a Financial Planner, and see what your options are.

Two, being a Biotech company, you ought to check out all of them. Boston, the area I live in is big in Biotech firms. Just when you start to give up, something might come through.

Three, you could look at Biotech options, like teaching in a college or something.

Four, do what some people do, semi retire and go to work for West Marine part time. Maybe a local C-Dory dealer.

Don't worry about your son. He might just like Boston Area.

This happened to me. I ended up buying an inn on Nantucket. Had it for the last 13 years,and it is for sale now. Inn Keeping is a very rewarding occupation.

Fred
 
hey mason,
part of networking is also brain storming, and that's exactly what you're fellow c-brat friends are doing here.
all of our collective responses are pointed at helping you, (and each of us) sort out options.
only last week, my wife and i were talking about this very issue. while we have the ability to retire now, we also enjoy what we call work. as my wife likes to state, it takes a lot of money to float our boat. so, we've decided to continue to my age 60, (now age 57), or until that time work no longer is enjoyable. i concur with thataway.
for those of our c-brat friends who are currently retired, i salute each of you and would say to you, don't slow down, as i am right behind you.
please keep us advised as to how things are working out for you and your family.
in closing,
there are tall ships, and there are long ships, there are ships that sail the open seas, but the best ships are friendships that last eternity!
as always,
best regards to all
pat
 
Mason --
The earlier suggestions are good ones. We would add that one of the first tasks is to realistically assess your finances. You've had some experience now, not working, so should be able to work up a realistic assessment of costs and income. If, after evaluating, you still think there is a possibility of living on your 'retired' income (and cover future school costs and health insurance, etc) then next consideration is your ability to manage investments. If you have experience investing, then you can make projections into the future -- and, of course, inflation is only one of the figures you plug in, as well as estimates of return rates from your investing. We have found that its not how much the income, but how much you choose not to spend. If you need help, fidelity.com has an excellent retirement planner. Now, if financially, it appears possible to retire early, then ...

You and your wife will realsitically assess YOUR needs and desires (forget what society or the culture says, we suggest [but of course a good financial planner is helpful]). Hopefully, you have the financial ability to stay at your house (easier transition for all and it sounds like you love it) -- now weigh all that delightful time at soccer games, fishing, doing every school vacation together as a family, etc. against the internal 'need' for the two of you to be working. Every family has its own needs (elderly parents, dependent siblings, etc etc)

As commented about in the other thread on retirement, we went through all the financial and personal assessments and at age 50 voluntarily left our two teaching jobs that we loved -- for a lifestyle we have loved even more. As others said, you don't get to roll a clock backward. The opportunity to spend every minute of a lifetime, sharing with loved ones, is a precious gift that those who work on to 65 may or may not have (my Dad died at 63). El and I have had a glorious time together, traveling, experiencing, being with friends or family (now with a kid and his family and next to visit a brother and his wife), and having the freedom to choose how we live our lives and share our time. The hardest part for us is choosing from all the delightful options.

If you have personal questions, drop an email -- good luck on your decision.
 
Mason,

Yes, it's a nice problem to have. :D

I agree that you need to talk to a financial planner, I'd suggest a fee based one. I have no specific recommendation.

I am not a tax advisor but someone who has done his fair share of buying and selling real estate, so I strongly suggest that you verify my answers:

If the property you currently own has been your principal residence for 2 of the past five years, then you and your spouse can each take $250K out of the property without paying taxes. Combined it's $500K! There is no rollover clause anymore where you had to buy a home of greater value. That's gone. Anything over $500k gets taxed as captial gains, which is currently 15%.

The normal rule of thumb is to spend 3-4% of your investments each year in order to have the money last 30 years. This is where I get very depressed. That means for every $30-40K a year you want to replace as income you need to have $1m invested! If you get a pension, it changes things. The soonest you can collect Social Security is at 62, 8 years away.

Again, most 'advisors' state that you'll need only 70-80% of your 'working' income (no suits, no commutes, etc.).

If you're like me and not the greatest at budgetting, then considering an immediate annuity, which can pay you a set income per month for various timeframes (10, 20, 30 years or lifetime) might be a good option.

As in everything, inflation is the killer.

I too had a son at 43 years old. My thought on this is that he'll still be going to school so it's not like I'd be totally free to galavant around the globe. Since I have to be around each week, I might as well work at something I like to do....instead of have to do. Being a barrista is a thought, working at West Marine sounds like fun. BTW, Starbucks has medical coverage for all halftime (+) employees.

Food for thought.

Best of luck in whatever you decide.

-Carl
aka: Sarge
 
I'd say retire if you can afford it. We should all be able to retire at 50 and work hard at having fun. I retired at 56 on military and SS disability and i love it. Nothing but fishing and bumbing around all day. I'm not allowed to work and live on a tax free 42K a year. Life is uncertain-Life is short. Enjoy it!
 
Lots of great responses from this site, as well as a few e-mails. I remembered to change my e-mail address yesterday afternoon. So if anyone e-mailed me before then it is at my old place of employment.

Obviously we are not going to arrive at a quick decision but I believe that we now have the questions to answer to help us get there. Thanks to all of you. I will add the following:

Being retired will not be a problem for us. We are constantly busy and love it. We have too many hobbies and don't know how we got everything done when we were working.

Our sons college is paid for, mostly by his grandparents, before they passed on.

The retirement calculator and the Early retirement forums have been very helpful. It appears that we could retire now but of course the longer we wait the better off we would be.

Health care is an issue or at least an extra expense but we are dealing with that already and will include that in our expenses.

We do plan on staying in Washington State.

We are going to check out or find a financial planner.

We are considering semi retiring by obtaining part time jobs. Or maybe, only one of us will go back to work.

Finally, as quoted, "Life is short-Life is uncertain". I agree and thanks to your help, we may figure out the best way to make the most of it.

Thanks for your responses, I'll try to keep you posted on what we decide or end up doing.

Mason

McNaughty III
 
As far as money goes, one has to determine subjectively, when 'enough is enough'. Dotty and I retired on the same day, from the same place. I was 63 and Dotty 60, in 2000. While we had done 'the right things' such as paying into our IRA's and our deferred comp plans, and building up pension credits, we really didn't know how well our financial circumtances would work. To make a long story short, it's all working just fine. For that, we are deeply grateful, and glad we retired when we did. Finally, I want to put in a good word for 'not doing something, but just standing there". It's vastly under-rated.
 
I'd advise you to make a spreadsheet of your expense history over at least a year to 18 months. Get monthly amounts from bank statements, credit cards etc. Figure out your neccessary and discretionary costs per month and know what you've been spending.

When you retire some costs will go down but others will go up.

Common mistakes that people make are:
-Underestimating life expectancy
-Underestimating expenses
-Overestimating returns on investments
-Withdrawing too much too soon from investments
-Being overly conservative on investment allocations
-Not watching investment costs (chasing returns, ignoring expense ratios)
-Not controlling tax exposure (especially on future 401K distributions)

One thing for sure, taxes and inflation have got to rise given the mess our economy is now in.
 
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