Today, a reader is looking for some help. She is struggling with the decision to retire early or keep working for 4 more years. Please read and share your comment with us.
I have been following Joe’s blog for a bit to see if I am making the right decision to retire before 60. I am 53 and my husband is 51.
Here’s the problem. I am struggling every day at work, physically and mentally. I am a nurse and I work for a military hospital. I was ready to quit last week, but my boss told me I was burned out and to take a week off and think about it. So I came home and my husband booked me a flight to Puerto Vallarta for 5 days to really figure out if I want to quit my job or not. I am wondering if I quit my job now, will we be able to meet our financial goals?
I’ll be honest; I’m not much into investing. I’m a little nervous with us going to retire in 4 years and taking chances with the stock market. I know my husband says I’m making us poorer by not investing.
We married 13 years ago and decided then that we didn’t want to work forever. I make almost $50,000 a year and my husband makes $94,000 a year. Take home pay for my husband after medical, 457, retirement, and union dues taken out, is $4,600 a month. We bought our home with what we could afford on my wages and it is nearly paid off. We did all the work on our home ourselves, including the roof and remodeling all the rooms. We never took out loans, just paid cash, and did one project at a time. We are currently debt free. My husband works for the city and in 4 years, he will have 30 years in at the age of 55. I am also a public sector employee and in 4 years I will have 20 years in at the age of 57 1/2. Here is how we’re saving now.
- $4,000 per month into our saving account. The current balance is around $250,000.
- $500 per month to fund my husband’s 457 retirement saving.
- $600 per month toward his city retirement plan.
- $700 per month to my TSP account (a retirement account similar to 401k.)
When we retire in 4 years, we want to sell everything including our home and move to Puerto Vallarta with 2 suitcases. We have been going there a couple times a year for the last 14 years and have researched our move. We have dual citizenship.
Our Retirement Plan
After relocating to Puerto Vallarta, we will live off our savings account from 57½ till I turn 59½. We plan to rent in Puerto Vallarta.
- At 59 ½, we will withdraw $2,500 a month from my TSP for a year and a half, then my husband turns 59 1/2 and I will drop mine down to $1,250 and he will draw out $1,250 a month from his 457.
- At 62, I will receive $1,246 a month from Social Security and my husband at 62 will receive $1,628 a month from SS.
- At 65, my pension will be $1,200 a month and my husband will draw on his pension at 65 which would be $4,040 a month. I will have survivor benefits.
We have budgeted $30,000 a year for expenses including our medical insurance in Mexico. $2,500 per month is the high end for Puerto Vallarta.
If I retire early
Currently my husband has $220,000 in his 457 and I have $80,000 in my TSP. Even if I retire early, we will continue to add to our savings account at a slower pace. The rate of saving will decrease from $4,000 per month to $1,000 per month. I also won’t be able to add to my TSP since I will no longer be working.
Our current monthly expense is already low, but if I quit my job, we could cut back even more. I would ride my bike for daily small items at the grocery store and I can cook a lot more from scratch. I don’t have to spend extra money on clothes, shoes, and convenience foods. While we do not eat out, I buy a lot of convenience foods because I’m tired from work and don’t feel like cooking on weekdays.
Would you quit your job if you were in my position? We figured out that the difference in my retirement check would be $150 less a month if I quit now instead of in 4 years. When I ask the question of my peers, they all tell me nobody quits a $50,000 dollar a year job in this economy.
I would use the extra time to sell things in our house on ebay. We plan to put the house on the market in 3 years. So by that last year, we would have downsized and be ready to sell the house as soon as we are both retired. We would stay at my mother in law’s house during that last year after selling our home. The sale of our home, everything inside, and all 3 cars (including a completely restored 1966 Mustang) should bring in about $200,000 cash. Lastly, we do not have any big bills coming up after retirement because my son is grown up and he is supporting his own family.
Should I quit now?
Do you think this plan is doable or should I hang onto the job, even though physically and mentally it is draining me? Right now we are both healthy and have no health issues, but I can see more problems arising for me physically if I continue at this pace.
My husband is very supportive of me quitting my job. He doesn’t like seeing me upset every day. Lately, I spend every day crying because of the anxiety. I’m so overwhelmed and I don’t see light at the end of the tunnel. He was the one who booked the trip to Mexico for me to get away. I just got back on Wednesday by myself because he couldn’t get time off to go with me. He wanted me to make sure it was what I wanted to do. After the trip, I really want to put in my notice. But, I’m a young 54 and people around me just don’t see someone give up a good paying job with the economy the way it is. I just feel guilty for wanting to retire early, that’s why I would really like to hear what people have to say…
Any ideas or comments would be greatly appreciated.
Thanks Joe, for posting my story.
Thank you for sharing your story with us. I’m sorry to hear about your anxiety. I know how you feel because I had some physical and mental issues during my last few years at work too. Every day was a struggle and I’m really glad I don’t have to do that anymore.
You have been preparing to retire early for a long time and I think it is time to reap the benefit. Your coworkers won’t understand your decision to quit because they probably haven’t been saving up like you have. Their monthly retirement budget probably isn’t as low as your budget either.
The $2,500 cost of living in Puerto Vallarta is quite good. You should be able to afford that easily with your saving, pension, and social security benefit. Your plan looks great because you’ll have extra money as social security and pension kick in. Financially, it looks like you will have a pretty comfortable retirement. I don’t think the $150 decrease from your pension will be a huge deal in the grand scheme of things.
Four years will seem like an eternity when you don’t want to be there. I really think you should call it a career and start enjoying life again. Life is too short to be miserable, right?
My one advice would be to learn more about investing. If you retire early, you will have time to learn about it. Your retirement could be 30 to 40 years long. Your retirement looks really good for 15 to 20 years, but inflation will significantly erode your purchase power in 30 years. Investing some of your cash in conservative investments would be a good idea.
Image credit – flickr by Ian D. Keating
Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!
Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.
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