- Does Gen Z Have it Harder Than Millennials? - November 20, 2023
- When To Pay Off Your Low-Interest Mortgage - November 6, 2023
- Reader Case: Can’t Work Because of Health Issues and Worried - October 23, 2023
It’s been a while since we’ve done one of these, and now that we’re in ANOTHER lockdown, it’s as good a time as any to open up another reader case.
Ready?
Here we go:
Hello Firecracker and Wanderer,
Long time reader, first time writer. I need a sanity check about whether or not to leave my job. I know this is a no-brainer for you but hear me out. I am a U.S. special category federal employee, which means I get benefits that, from what I have heard/read, no longer exist. My employment category receives an even better pension than most other feds. Minimum retirement age for me is 50 and my pension would be approximately $55,000 annually if I retired at this age. Plus, and this is the big one for us Americans, as long as I am covered by my employer’s super affordable and subsidized health insurance plan during my last five years of employment, I can take that same health insurance with me into retirement. I have been very unhappy for the past few years and found out about the FIRE movement about 2-3 years ago including through your blog. By my calculations we are nearly FI right now, but……….. these very rare benefits of my job have me wondering if I would be crazy/stupid to leave it all behind. I am 40 so staying will cost me 10 more years of potential unhappiness at work. Another benefit is the option to take up to a three year leave of absence that would all still count towards my years of service for my retirement pension and therefore not force me to retire any later. But because I would not actually quit I could not use the more than $400k in our 401ks to test out an early retirement. After reading one of your articles I asked to see if I could cash out my pension but they only return what you have contributed which for me was less than $20k or something silly. Also, I am married, the breadwinner and have two young children.
One other thing you should know, in my job I am often assigned abroad during which time we can save a boatload of money because my employer pays housing and utilities, tuition for our kids to attend private school, and all moving expenses. Also we often live very close to work so transportation costs are pretty low. Honestly, we could have been FI much earlier if we had known what we were doing, but you don’t know what you don’t know I guess.
Here is my math:
| Gross annual family income | $157,000 from my salary |
| Net annual family income | $108,000 |
| Monthly family spending | $4500 per month |
| Debts | none – sold our home that had a mortgage in 2019 |
| Fixed assets | We have a paid off car worth about $12,000 |
| Investments | $575,351 total; $424,830 of this is in 401k plans |
| Savings | $437,809 |
We are accredited investors and yes we have a stupid amount of cash on hand. This is because we are about to buy some more investment real estate to increase our income independent of my W-2 job. Don’t worry we are not buying single family homes or even condos in this absurd real estate market. We are shopping for commercial real estate and we are being very, very conservative to make sure the deal is good. I know how much you hate real estate ;), kidding – you actually helped us see the light on this issue which is why we sold our home in 2019. One another note about real estate, we own two investment properties worth approximately $1.7 million which we bought for $120,000 which net us $25,000 in annual income after all expenses are paid. We owe $867,493 between the two mortgages.
We currently are on assignment abroad and so have no rent or mortgage for a primary residence. If we took the FI plunge or even just a leave of absence we would relocate to the U.S., at least initially, so we are also worried we may not accurately estimate our expenses because we have not lived there since 2011.
So what is your opinion?
- A decade is too long even if you take leave and only have 7 more years to work – take the plunge and get out of there!
- The pension and health insurance are gold, find a way to hang on.
Thanks for all the great content and inspiration.
FatPensionOrFreedom
I have to admit feeling really conflicted on this case study. Stock options and corner offices are one thing, but a defined benefit pension worth $55,000 a year plus subsidized health benefits, all backed by the federal government is such a shiny set of golden handcuffs that most millennials would blow Uncle Sam himself to get it.
On the other hand, the numbers for FatPensionOrFreedom are really compelling. Let us math shit up, shall we?
Math Shit Up!
OK, so our intrepid reader’s monthly spending is an estimated $4500. That equates to $4500 x 12 = $54,000 a year.
FatPensionOrFreedom also owns two commercial real estate investments. Now, before you think I’m going to automatically go off on them for owning real estate, investment real estate is a very different game than primary residences, and commercial real estate is another ballgame altogether as well. Commercial real estate is a lot of things, but it definitely isn’t passive, especially during a pandemic. Behind every shuttered storefront you see on the street is a stressed out owner and a pissed off landlord screaming at each other in small claims court. Not fun.
That being said, our reader’s real estate investments seem to have somehow worked out in this environment, and they report netting $25,000 a year in profit after all expenses are paid.
This $25,000 can go directly towards this family’s living expenses, so of the $54,000 in spending, only $54,000 – $25,000 = $29,000 needs to be covered by their retirement portfolio.
That portfolio is worth $575,351 + $437,809 = $1,013,160. The 4% rules states that their target portfolio size should be $29,000 x 25 = $725,000. So not only are they Financially Independent, they’re Financially Dependent by a healthy margin. A spending target of $29,000 and a portfolio worth over a million means their withdrawal rate is only $29,000 / $1,013,160 = 2.9%.
That’s as safe a retirement as you can ever have. No need for any more commercial real estate, just throw that sucker into an indexed portfolio and you’re done!
Money or Freedom?
So on one hand, we have really attractive golden handcuffs that promise not only an additional $55k a year in spending but subsidized health care as well. But on the other hand, as far as I can tell they can leave tomorrow and never look back.
Here’s where I think pre-pandemic Wanderer and post-pandemic Wanderer would have disagreed. Pre-pandemic Wanderer was extremely risk-averse, especially when it comes to money. The pension wouldn’t have been too interesting to me, but the health care coverage would have been very tempting. Pre-pandemic, I probably would have been advised them to tough it out for just a few more years to get those golden handcuffs cashed in. After all, even with 7 more years of work, FatPensionOrFreedom would retire at 47 and that’s not bad at all.
But then the pandemic hit, and as I wrote about before, my Dad was unexpectedly diagnosed with brain cancer. That upended all my priorities and made me realize that time, not money, is the most precious resource any of us have. Specifically, time spent with your loved ones being healthy.
Having health is what allows you to enjoy life, not having health insurance. Nobody who’s sick but has great health insurance is like “Sweet! I get to use my insurance now!” They would give up their health insurance in a heartbeat if they could get their health back. So staying in a job when you no longer have to just for the health insurance doesn’t really make sense.
This is doubly true if that job is risking your health. I’m not sure what kind of job our reader has, but they describe being stressed and unhappy. Stress is a real killer, and chronic exposure to the stress hormone cortisol has been shown to wreak havoc on your long-term health. Stress can trigger hypertension, weight gain, and panic attacks which, as FIRECracker will tell you, are no fun. In fact, our journey towards FIRE started when one of FIRECracker’s co-workers collapsed and almost died at his desk. He had been working double-shifts and was under constant pressure, and when he woke up in the ER, the doctors told him his vitals were the equivalent to someone who smoked two packs a day.
So now, post-pandemic me would say that financially, you have enough. You’re done. If you want to stay at your job because you like it, then fine. But don’t do it just to pad numbers onto a bank account.
Avoid Black and White Thinking
Last week FIRECracker wrote a post on How Not To Fail At Retiring Early, and one of the things she wrote about is to Avoid Black And White Thinking. The choices we face aren’t always binary. Stay or retire. Sometimes there’s a choice in the middle that might get you the best of both worlds. Here’s a few ideas.
Take a Partial Pension
Most pensions aren’t built such that you have to stay to retirement age or you get nothing. After all, if they did it would heavily incentivize employers to lay you off a day before retirement age so they can get out of paying you. Instead, most pensions have a vesting date in which you are entitled to a portion of your full pension, with that amount ramping up to 100% if you retire at a “normal” retirement age. Many pensions also allow you to defer taking your pension to a later date to increase the amount you would get.
Talk to your pension administrator to see what options you have. If you can leave now, but defer taking the pension to your 50’s, it might be possible to still get part of your pension at that time. And if this amount is enough to cover the insurance premiums on the ACA exchanges, then you get the best of both worlds: early retirement AND government subsidized health care!
Take a Sabbatical
FatPensionOrFreedom mentioned that they could take up to 3 years leave of absence, potentially reducing their 10 years of service to 7. My question: Why wait?
Start taking your leave of absence now, for a year at a time. Give yourself a year to recharge, then go back to work for a year or 2. After that, take another year off. Then go back for another year or to. Rinse and repeat until you can retire fully.
This gives you a few major advantages. First, you don’t have to wait to get a taste of freedom. You can do it now! Secondly, it keeps your job available for you to go back to, so no identity crisis. And finally, it gives you a chance to try out early retirement and see if it’s right for you. For many people, quitting their job and spending more time with their family is the dream. For others, it might turn out to be a nightmare. Especially if their families suck. And if it does, then all of a sudden, your annoying job may not seem so annoying anymore.
Either way, early retirement is a big life decision, and like you said not many people have the options that you have, so if you have the opportunity to try it out before jumping in with both feet, I say go for it.
Change Your Job
And finally, consider the idea that maybe you’re not unhappy with working, but just unhappy with your current job. Job satisfaction is influenced by many factors, including pay, the work itself, the people you work with, or your boss. Sometimes changing one or more of these factors can inject a fresh dose of happiness back into your life.
At my old job, even though I really did love it for the most part, I would find myself getting bored and restless after about 3 years. That’s when I would naturally start looking around for other teams and departments that had open positions. In my 10 years there, I worked in 3 different teams and each time I switched it was a whole new set of challenges that I could rally sink my teeth into. In many ways, it felt like starting a new job each time. So ask yourself if a change of scenery or job title might be what you need rather than retiring completely.
What Would You Do?
So that’s my take. If you were in our reader’s situation, what would you do? Would you stay or would you go? Or would you try to work out a solution where they get a little bit of both options? Let’s hear it in the comments below!
Hi there. Thanks for stopping by. We use affiliate links to keep this site free, so if you believe in what we're trying to do here, consider supporting us by clicking! Thx ;)
Build a Portfolio Like Ours: Check out our FREE Investment Workshop!
Travel the World: Get covid-19 coverage for only $45.08 USD/month with SafetyWing Nomad Insurance
Multi-currency Travel Card: Get a multi-currency debit card when travelling to minimize forex fees! Read our review here, or Click here to get started!
Travel for Free with Home Exchange: Read Our Review or Click here to get started.
One variable that you didn’t seem to account for is that their annual spending will increase substantially when they no longer have subsidized housing and free health care. Even so, they’re definitely pretty close to FI. I’d probably hang on until life returns to normal, post-pandemic, before making any big life changing decisions. But after that, I’d be short timing it for sure.
Agreed. Big miss on that variable. Health insurance plus housing for a family of four is not a trivial expense and should be factored in to the FI calculation.
Plus one for the sabbatical year… flex that FU money and take a break. Sounds sweet.
I like your idea of taking a year off, going back to work for 2, then off again, etc.
It gives you a taste of retirement with option of going back to work
Would that be true if he’s invested in the Japanese stock market index? Yeah 4% is a USA thing only and most of you forget that.
A well diversified portfolio should not be based on a single country. Having “home country” bias adds risk. Also, the 4% rule is a worst case that looked at a 30 year retirement.
Is there a link you can share, with the authority for the 3 year leave of absence, for a fellow federal employee.
Another +1 for the take a year off and reassess. Experiment, experiment, experiment. You can never learn to drive from the passenger seat.
With two young children, expenses are bound to go up. That’s definitely an important consideration when calculating future expenses and FI ratios.
Seems like some misses in this recommendation:
1. The reader cannot access his 401k until 59.5, unless he retires/quits at or after age 55.
2. Is the $4500/month expenditures in the presence of the companies support of health insurance, lodging, etc, or is it in the absence of that support. That’s a big difference.
3. Health insurance post-work should be included in the analysis
4. How do you buy 1.7 million of investment property for $120k but have a mortgage on them near $867k?
5. In retirement, I was able to take my employers insurance with me, but it was no longer subsidized. The reader should make sure what the retirement medical benefit is.
6. They have over $800k in equity in the investment properties netting only $25k a year? Sell them and add the $800k to the other assets. That should make the decision much clearer, and save a ton on headaches/worries down the road.
My advice is that the reader should talk with a CFP because I think their knowledge may not be deep enough to take such a drastic step as leaving retirement. On the surface it seems like they are ok, if they are happy without the “government subsidized” life they have.
Hi there BZ,
I wonder if they meant to say they put $120k down as a deposit on the commercial property and the $25k cashflow was after paying back the mortgage (which would include the interest as well as capital repayments). Thus, making the investment return actually higher than $25k. I too initially thought it was a very low return rate for an asset of that value!
You are correct Sam. And embarrassingly, that value of the commercial real estate is wrong. It should actually be only $1mil. So $120k down for two properties currently worth $1 million that produce $25k in cash flow annually. The mortgage amount in my original email was correct though.
Answer to #1, you can absolutely access a 401k or IRA early with no penalties using “Substantially Equal Periodic Payments”. The idea being that you can decide to start taking payments whenever you want, but you have to take a minimum monthly amount, based on a set of rules, and once you start, you can’t change it until you hit retirement age.
Ah, yes, you’re right. I forgot about SEPP. The payment requirement is annually I believe, but none the less, that is a path to tapping into a 401k early.
Options have value and the sabbatical option let’s you have your cake and eat it too. Take some time off and see how you feel about work after a year. You aren’t promised tomorrow. How many people can test drive FI in such a prudent fashion?
The leave of absence is definitely the answer here, sooner than later. It’s unclear if it’s possible to split up the max 3 year leave of absence over multiple leaves, but either way a break away from the stress to re-evaluate would be priceless.
Agree with others, future expenses seem to have been under-estimated.
You know what kills faster than stress? Serious illness or injury with no health insurance in the USA. That could run through all of their assets in a hot minute – and they would have to spend down literally EVERYTHING they own to access any kind of government help. Take it from someone who watched this happen to people I loved.
While I’m sympathetic to how he feels, with seven more years and two young children, I’m on team Tough It Out. The pension is nice, but the health insurance is what’s got him hogtied in the basement.
Also, I’d like to point out that FreedomorFatPension’s life isn’t FIRE or bust – and if it is, I don’t think early retirement is going to fix what’s bothering you. Wanderer’s story about moving departments every three years or so is good advice – do what you can to make your situation tolerable, but tough it out until you can access the pension (which will go a LONG way toward safeguarding your FI) and health insurance. In the meantime, seven years is enough time to do a lot of things to solidify your financial position and I would take advantage of it.
Or, to put it another way, there’s a middle ground between recklessness and cowardice. Retiring at 47 is still retiring early – I’d caution against Keeping Up with the FI Joneses. Your life is not a competition.
Wow, totally parallel lives. Was at this same decision a few months ago. Decided to choose my health and well-being and turned in my resignation. Would have needed to stay another 7yrs for full pension and 100% medical at 50. Current expenses are $4800, with a generous amount for vacation built in. We are a family of 4. We currently don’t pay housing costs, but it’s important for this cost to be built into the FIRE #. Also, subsidized insurance thru ACA will cost around $1100 max (this is for the blue shield gold), and we are also factoring in $3600 for rent or mortgage-HCOL, which brings us to another possible $4700 – that totals $9500/mos. Since we don’t need to worry about housing just yet and my spouse is working part time, I quit the golden handcuffs and will get $36k from pension at 50, and insurance cost out of pocket will become $900 for 4 of us at 50 too. There’s some nervousness of not having the full $9500 in passive income, but the idea of never returning to work has been sooooooo worth it. They offer to hold my item for 2yrs, but I don’t want any attachments to that work environment again (and mine was probably better than most). When I stepped away, I got a great perspective of how toxic govt employment can be. The suggestion of being off 1yr and working 2yrs sounds unappealing to me. I’ve taken much time off and you return to the same crap. Think that’s why they pay so well in the Govt.
Move on. I stayed till 44 to get the severance package. Could have left at 41. Looking back, I should have been bitchier sooner to get the severance package earlier. Fuck work. And that’s coming from someone who didn’t mind what he was doing. I just think I could have used my time better though. It’s not worth it when you’ve got enough money banked. Now, the only one who owns my ass is me. And a fine ass it is.
As a government employee that hung on until 54( my minimum age), I would stay and start thinking about what they are going to do with all that free time on their hands.
I have had a side hustle that I love doing for 12 years pre-retirement that went to become my full-time gig when I retired last year, which has been up and down in the pandemic, both financially and emotionally. It’s really nice to have that check roll in every month like clockwork.
Plus one on some kind of sabbatical or job change if you can do it.
I don’t see expected costs for kids school / university (assuming they want to help) – agree with the recommendation to take a year and decompress – and also – practice living on your budget in the location that you want to live post RE and see if it works for you.
This was a good read I’m in a similar conundrum not quite as cushy as this but similar hard yes/no logic
Like the problem solving approach you used here to put things on your terms
That full retirement pension and benefits is no joke. If you think about it seven years really isn’t that long. I like the idea of splitting up the sabbatical time to give you a taste of what it’s like for early retirement, and to give yourself some breathing time and time to reflect and do more research on investment ideas. You could use your pension to fund your index fund and other investments, which would make retirement a lot more enjoyable having projects to work on and more stability during the next crash. Could you retire now sure but how much of an opportunity would you be giving up for that. And I am only assuming that the insurance you would get is government insurance which is way better than private. I used to work for the military but decided it wasn’t for me and got out and ever since I’ve struggled with finding decent private insurance that will pay for a surgery that I need. The best that I have found will only cover 40% I’ll have to get secondary insurance or pay the rest myself…. Before making any decisions I recommend reading a few books first. The books I recommend are Robert Kiyosaki’s books called FAKE and WHO TOOK MY MONEY and while you’re at it you might as well read BEFORE YOU QUIT YOUR JOB. I believe that after you read these books you will find your answer to stay, quit or do more research on investments. And yess pensions are failing but you might as well use them as opportunities to build more assets while the pension is still there.
I will offer a perspective from a different viewpoint. My husband was a government employee with a really difficult job. I was self-employed in construction and consultation (ridiculously hard). We knew we wanted to retire as early as possible so his focus was working toward his pension and mine was doing house flips (in addition to my fulltime gig) to build a big cash war chest. Insurance was a HUGE consideration as it always should be. We understood that a good defined, pension is the literally equivalent of a 7-figure portfolio with immense stability. At 59, he pulled the retirement trigger but decided to remainder me on his pension at two-thirds. That reduced our monthly pension payment but offered the extension of his pension to me…for life. We geo-arbitraged by moving to Costa Rica. I continued “working” by buying the next flip which we enjoyed living in, but for eventual resale. We loved retirement completely and it was filled with travel, adventure, love, continued high-level mountain biking for him and hiking for me. He remarked often that years of a difficult daily grind had paid off in sweet ways he had never imagined and he was so grateful.
Shortly after our return to the States he died suddenly and completely unexpectly. Looking back from the age of seventy I thank all gods known and unknown for every moment we shared in both adversity and ease. And every month when his remaindered pension is deposited into my account I am grateful all over again that my partner and I shared a financial philosophy that allowed us to stick it out as we worked toward our dreams. I continue my “side gig” of flipping everywhere I live, including Mexico.
Many of you in the FI community are still young and I always am learning from you and am so often inspired. As an elder of seventy I can speak a bit from my perspective: Shit happens. Financial security is really, really, really important as you age….and age you will. Health insurance is simply not negotiable. Don’t end up as a Go Fund Me page. You may or may not reach median life expectancy, no matter how hard you work on your health. Median literally means half of us won’t. And lastly, I still believe that persevering through through true difficulty strengthens a character muscle that actually pays off in tangible and intangible ways forever….just like FI.
The contributor in this Reader Case actually seems awash in a wealth of good choices, especially the sabbatical option. Sending good energy his way!
I should have said “an elder of seventy”.
I just wanted to chime in and say…, truly inspiring so I appreciate you for sharing this with the forum! I am sincerely grateful and privilege to hear your story as well.
ImmigrantOnFire
Great article. I love all the reader case studies, but always perk up when the circumstances more closely mirror my own. The comments already made point out some good points to consider, and Wanderer’s views on time, relative to his father’s disease is spot on. That’s the big one; the unknown future. Here, I offer a few additional thoughts:
I am a few months from my own gov’t pension, though at the state, not federal level. It is tantalizingly close and will offer significant future comfort. Will your $55k have a COLA? Is it guaranteed? How about your health insurance? Is the amount capped, or is it indexed in some way that will keep up with increasing costs over time? Is there a deferral time frame built in to the health insurance, insofar as you can wait to tap it, post retirement at 50 if you choose to work somewhere else that has subsidized insurance? Is the health insurance benefit truly provided insurance – or subsidized in that you get money to spend as you see fit on insurance? Big differences there.
I could not agree more that time is the only truly valuable commodity, but life is also balance, and 10 (or even a sabbatical-assisted 7) years is more than golden handcuffs, its a crystal ball because you know it will happen, independent of future unknowns in the market. Its a relatively short time frame, and with your knowledge that it WILL happen (caveat: as long as you live that long – we can’t control everything), you get to choose to relax a little from the stress. That was the view I learned to take on several years ago when I felt exactly the same stress and frustration that you talked about; I had to learn to not let the day-to-day stress get to me so much because each day will end, the project will work out, and tomorrow is another day. Just count them down and leave when you can. In the mean time, you get to go home at the end of the day, look at your smart financial decisions and plan for the future. The pension/health care are less handcuffs than gifts you have to work a bit to earn – but earn them you shall. In comparison, so many other people work and work and work, with no guarantees beyond their own personal financial decisions (Wanderer and FIRECracker are perfect examples) with no pension waiting for them.
If you were many more years away from the pension, maybe it’d be something you could let go of, but I encourage you to take a deep breath, be thankful for what you have earned and saved so far, let the stress go a bit more to make the next few years more tolerable while you steadily move toward that 50th b-day present.
A few more questions: is the pension set at that amount regardless, or will pay raises or promotions potentially increase it? Ten years is a long time and a lot can happen, both bad and good things. Again, you are greatly in charge of the effort and decisions you make, so who knows where you’ll find yourself then. I see that Wanderer combined your current cash savings and your non-401k balances to work out what you could earn from them. You’d need to get that cash into some sort of market vehicle to accomplish that, but that’s easy enough to do.
In the meantime, while you work on your decision, time is passing – in your favor. Just think how much better prepared you’ll be each year that passes if you keep up the good savings habits you’ve already displayed. One more year, two more years, etc. If, at any point along the way, you decided “enough” then you pull the plug on work and you’ll be even better prepared than you are right now, even without the pension and health care. So you really have a lot of options. If you do decide to wait to 50 and take the pension, and you manage to keep your financial life in a similar status to what it is now, you will be incredibly set up, and still very young. From where I sit, 50 is not old, by any means.
I wish you good luck!
I’m in a similar situation and I ponder regularly how much longer I want to continue working. I’ve been thinking about retirement since I started my city job 20 years ago. I have a retirement countdown app on my phone that pushes out a notification every morning. I’m an engineer. I don’t hate my job but it can be stressful and there’s no job I want to do all day every day. I want to be the master of my own time.
In my case, I have a lifetime gov’t pension in which I’ll be eligible to receive a percentage of my highest 1-yr salary based on years of service at age 50 with a lifetime COLA tied to the local CPI. I’m a 44 yr old single woman with no children and make $140k/yr. I expect my salary to increase 1-3% per year. Based on my projections if I retire at age 46 when I reach age 50 I’ll get $61k/yr, retire at 47 I’ll get $65k at 50, retire at 48 I’ll get $69k at 50, and finally if I work until 50 I’ll get $77k/yr. This is with an assumption of my salary increasing 1.5% per year. For the record, if I worked until 58/59 I’d get 100% of my highest 1-yr salary. That’s the track I assumed I was on since it’s the common non-FIRE wisdom out there to not leave a great opportunity to get 100% or as close to it on the table.
The only debt I have is $500k for a 3-unit multi-family property worth ~$1 mil. I live in one unit and rent the other two. Their rent covers all expenses (debt service, taxes, insurance, utilities, maintenance, etc.) and leaves ~$500 per month for savings including for capital expenditures. My unit would rent for around $1900 so I consider the property makes ~2400/mo. My current budgeted monthly expenses are $1600 per month and my gross W-2 income again is $140k.
I only have $148k in a deferred comp plan ($143k roth 457, $5k trad 457), 8k in trad IRA, $12k in a trad 401k, and $25k in cash. The 457 plan doesn’t require you to be 59.5 before you can withdraw. It’s available to me at any age upon separating service.
Now that I’ve committed to finding my exit plan, I started maxing out my trad 457 plan ($19.5k/yr) and trad IRA (6k), I’ll put a little in cash and the remainder will go into the market. Based on my recent research I’m thinking a dividend ETF like SCHD. I’m on my first month of this plan. It took several months to get everything in order (Sold primary residence, paid off all consumer debt, lump sum maxed 2020 trad IRA, moved into rental and refi’ed it at 2.75%)
I have several spreadsheets set up with retirement scenarios for ages 46-50 with the pension assumptions I stated above and assuming market returns of 8% and inflation of 3%. In all of the cases, short and long term I think it would work but of course the longer I wait and save the safer it is. The plans include the pension, 457 plan, 401k plan, IRA, rental income, and cash. Upon leaving service I expect to cash out $36k-47k after tax from sick and vacation time accruals. Any age I leave before 50 I’ll have to use cash, dividends, 457 plan or brokerage accts, or part-time work to cover the monthly expenses until age 50. I feel like the sweet spot I’ve settled on is retiring at age 48. According to my Countdown app that’s 3 years, 9 months, 4 days, 23 hours, 22 minutes from right this minute :-). I already lined up a very very part time gig with an airline that includes free flight benefits but more importantly great healthcare benefits so that isn’t much of a factor. I can work as little or as much as I like for decent compensation and the healthcare is free. There are no premiums and the maximum annual out of pocket for care is <$3k (but it's a grandfathered plan so there's no preventative care).
If anyone has any comments on my plan please share. As I said this is new for me. I've only recently set it into action. I haven't put it out there anywhere else and I don't have any FIRE-minded people to confide in and receive feedback. Thanks!!
i think you doing great.
Thanks @Lee.
I had the same situation. USG. 40ish. Pension on horizon at 50. Posted overseas most of the time. I could have done the leave without pay option, but didn’t. It probably wasn’t the smartest move to be honest, but it worked out ok. The LWOP gives you a hedge in case you miss the expat lifestyle. I did a lot! Reach out to me personally if you want to talk this through with a fellow FIer who confronted the exact same decision. Cheers!
My advice is Proceed With Caution. Let me explain.
I went back and re-read the reader’s story. It’s possible that the story was edited and that Wanderer knows more than we do, but all I got from the story was that the reader was unhappy. There was no mention of stress. And there was no detail given on what was making him unhappy (although, having worked for a provincial government myself, I can take a few educated guesses….).
The other thing that struck me about the story was that the reader seems to be clutching onto FIRE to get him out of a situation. As Millennium Revolution likes to point out, FIRE should be about moving towards something, not running away from something. I get it, the case study is a summary and it’s possible that the reader already has something to move towards, but my gut tells me that if this was true, the reader would not be so conflicted about this decision.
So, from one formerly unhappy government worker to one presently unhappy government worker, take a deep breath and fill out the paperwork for that sabbatical. Take that year to work on yourself and explore what post FIRE life would be like and what you would be moving towards. Move back to the US and check and make sure you still want to live there (I hear it’s changed a lot over the last 4 years….). Make sure that it’s the job that’s the source of unhappiness rather than the job masking/getting the blame for what really ails you.
That’s the route I went. I took 2 sabbaticals, spaced 8 years apart, and spent them abroad (making up for not having a misspent youth). It saved my sanity. Even after the first sabbatical, when I returned to work it was so much easier to deal with the bullshit. It also helped knowing that I only had to deal with it for 3 years before I would get a whole year away from it.
I was gearing up to go abroad for my 3rd sabbatical when I decided, you know what? I don’t want to come back here ever. So instead of going on sabbatical I quit. I’m not going to lie, it was still a big scary step, but I was not conflicted about whether or not it was the right decision.
I wish you good luck with whatever path you choose.
I think there might be a math error in this post. On the Investments line it says this, “$575,351 total; $424,830 of this is in 401k plans” which implies that they only have the first amount with the majority of the amount in the 401k. If this is accurate then they don’t have the sum of those numbers and they still have a way to go until they hit the $725k for the 4% rule. The rest of the article has great advice and I always enjoy reading your articles. Keep up the great work.
Best Regards,
TheStickler
If it were me, I would, without a doubt, take the sabbatical and put all of that cash into a taxable brokerage account and invest in ETFs. Adding a third real estate property is unnecessary and risky (no matter how cautious a person is) as so much of the net worth is already tied up in RE. Do that and see how the years go. Love retirement? Great, don’t go back to work. Sick of retirement? Either find something else to do or go back to your job. It may be that time away is all you need. As an aside, I’m really wondering if the federal job is in the foreign service. My dream job post-FI is as an FSO, and I’m taking the FSOT next month.
I would test drive the retirement since there is 3 years you can take as sabbatical. That way you can be sure you want to be done. A year or 2 off might be enough of a recharge to get to the full pension and health care benefits. I am early 50’s but the wife still works to give us the insurance which is important in the US.
Rinse and repeat with the commercial RE then find the best property manager to reduce the stress with managing the property. Stick out the job for a few more years, find a new role to ease the daily burnout and a killer stress (I find jogging and meditation helps) Start to diversify into other assets, educate yourself on crypto….”Work hard at your job and you can make a living. Work hard on yourself and you can make a fortune.” – Jim Rohn
When I got cancer at 35, I did actually tell myself almost daily “Thank God for this excellent health insurance I have through work.” Even 3.5 years out from treatment, I still thank my lucky stars for my excellent work health insurance. Getting cancer isn’t a once and done thing. Now, every little thing needs to me checked out / biopsied. I know tons of folks that cancer right around the 35 years mark. Please don’t walk away from your insurance.
If you come back to the States, $4500/mo. will not cut it, unless you plan to live the van life and homeschool. You had some sweet perks, especially the private school tuition for 2 kids.
I’m a state government worker, sticking around for the health insurance and pension. I’ve had to deal with COBRA before this job, and twice denied health insurance on the private market. Consequently, even with ACA now, I would never leave without my insurance.
Sabbatical is a good idea, but to cushion this and absorb new expenses, can the spouse pick up a P/T job? The spouse can get back into the labor market, and that might be useful later.
About your job unhappiness: can you find another position within the organization? My pension is calculated based on highest ever salary, so if work gets really bad, I can take a lower-paying role anywhere in the same system and not have my pension based on the last salary.
Good luck.
She does have a sweet govn’t deal..3 years leave with years of service credit.. Sheesh, I’ve never heard of that type of govn’t employee benefit. I worked for Ontario govn’t and now for a municipality. Taking the leave is best. And she doesn’t need to go for full 3 years. She does have to plan as breadwinner and parent.