Monday, October 10, 2022

What's the Plan Now?

 Now that one rental house is sold, I technically have enough money in the bank to retire with a $2,000/month allowance until I am old enough to access my 401K. There are a few things that make me hesitate to take the plunge though. 

1) My job has been work-from-home since Nov. 2019. I really like the convenience and so do my dogs.

2) Inflation. Now doesn't seem like a good time to stop adding to my savings.

3) The wobbly stock market. Very hard to watch the dips but I am still investing new money.

4) Health insurance. I am in the process of getting a tooth replaced. Can a handle a big medical/dental bill if I stop working? Plus, my nephew is on my health insurance for another 3 years.

5) My propensity to spend money on new hobbies and habits. I bought a lottery scratcher ticket for the first time. Spent $10, won $10. I should probably stop while I've broken even. The local horseback riding business has a "buy 6 rides, get 1 ride free". That's a goal I would like to reach but at $50/hr. I probably shouldn't. On the other hand, if I can't afford a "fun money" category in my budget, I don't think I should retire yet. 

 And there are a few things that make me want to quit the full time job now.

1) Time is not unlimited.

2) Both of my parents died from dementia related issues after years of ill health in their 70's. 

3) How much money do I really need? Is it worth the trade-off?

4) Peer pressure from my friends in the 55+ community where I live even though I am only 50.

For now, I will keep working and do a few little things like weekend trips. First trip: Lockhart, Texas to visit my sister. She visits me twice a year (ok, so my house is kind of on the way to her vacation destinations) and I have never seen her house or met her dog. I am also stopping in Houston and dragging my college roommate with me. I haven't seen her in over 5 years and it is my turn to visit. It will be just like old times only a little grayer, with reading glasses.

After that, I want to go to Spokane, Sacramento, Portland, maybe Cincinnati, and Hungary. I am lucky that my nephew is willing to be my house and dog sitter. Hopefully he won't have too much trouble although all of my dogs are old, half blind, and prefer if someone accompanies them out to the yard.

One of my old dogs barking at the road runner who was pecking the glass.

It's even more fun to make plans now that I am closer to my goals. My dad retired at 55. I definitely need to retire before that! Maybe 54. 


Dave said...

Good to see you making a deep-dive post about your early retirement plans. I'd like to help you out, as someone who has gone through my own decision process when I was 45.

Your not having a commute (i.e. working from home since 2019) is definitely a good reason to hesitate making an early retirement.

High inflation can be a big if not silent enemy to those considering retirement or already retired.

Relying too much on a wobbly stock market can also impede a good early retirement.

With health insurance, there is the Affordable Care Act (ACA) and its premium subsidies which can greatly lower your health insurance costs. Managing your income becomes the goal here, something I have been doing for the last 8 years on an ACA plan. You may be able to get discounted dental insurance through the ACA but that could vary from state to state.

Two conditions I included in my ER plan were (1) include a buffer or cushion into my budget to cover smaller, unforeseen expenses, and (2) there would be no change to my everyday lifestyle.

Another thing I was glad to see in your plan was an implied splitting of your overall plan into two parts - the first part getting to a certain age (60?) when you can start accessing currently unavailable assets such as your IRA. Social Security would not be far behind that. My overall ER plan made the same split - getting from age 45 to age ~60 (I am nearly 60 now) using only my non-retirement assets, then start having access to my "reinforcements" such as my IRA, Social Security, and frozen company pension.

Can you generate $2,000 a month in investment income without touching principal? That was my income goal, more or less, and I have been able to stick to it.

I would be happy to discuss this further off line if you like.

Big Sis said...

It was so much fun having you visit! I just now walked my property and saw that the electric company had cut my fence and put up a cross wire without letting me know. Huh. No wonder Nova was taking a VERY long time to come back home after wandering...
You are welcome anytime. Maybe I'll have the guest cottage done by then and you can be the first visitor!

Daizy said...

Hi Dave, glad to hear you are able to make your finances work despite the wobbly market. At this time, I would have to dip into principle for things like travel or home improvement. If I wait until I am 55 I will be much better off. I do like the security of knowing that I could survive a lay-off without much trouble.