Can I semi-retire now?

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Topic Author
fnmix
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Can I semi-retire now?

Post by fnmix » Thu Apr 11, 2019 10:47 pm

Howdy,

This forum has been a tremendous help in sorting out my finances the past few years. Thank you. I am hoping to benefit from the forum’s wisdom on a specific question: Can I semi-retire in Fall (at the start of the next school year)?

Situation:
  • Married with two kids: this fall, the older one will be in 3rd grade, the younger one will start kindergarten (school is a public school)
  • I am 47, wife is 44
  • Savings: $1.8M (including $280K in two 529s; $650K in taxable), invested 60% stocks, 40% bonds + cash
  • Social security will be ~$3K/mo for me (this is likely an overestimate if I semi-retire); wife will not have any social security (she is a former public school teacher and has a very small pension based on 7 years of work as a public school teacher) [EDIT: Wife has not paid into the social security system which is normal for public school teachers in California; she is eligible for spousal social security benefits but won't be eligible for social security outside of that]
  • Live in a paid-off house; no debt [EDIT: value of house not included in Savings above]
  • Current yearly expenses: $55K (excludes $13K property taxes, health insurance premiums, federal and state taxes) [EDIT: $55K excludes all taxes and health insurance premiums]
  • Yearly expenses will drop to ~$45K in fall, as we won’t have to pay for pre-school anymore (That’s ~$10K/yr currently). We expect that $15K of the $45K will be kids related expenses (based on spending over the last ~2 years)
  • Live in a VHCOL area (SF Bay area) and would like to continue to stay here for family reasons (moving to a MCOL in northern california is a backup plan - we have some family in cities outside the bay area)
  • Wife does not work currently but is applying for teaching jobs in public schools. If she gets a full-time job and I am not working a regular job, we will have just enough to meet all expenses and contribute to her pension but not save anything else
  • In the fall, I want to semi-retire and work as a consultant to make up any shortfall (relative to expenses) from my wife’s income (in case her employment is less than full-time or in a school district that does not pay well). I will take care of the kids and the house. If there is time left over I will progress a small business idea that I have been working on
Summary of our plan:
  • I semi-retire and become a consultant in the fall. Wife gets on a path to returning as a full-time public school teacher. We do this for ~13 years when both kids are out of the house and in college or in a trade school. At this point we would consider fully retiring (but not before).
Can this work? Or are we cutting it too close?

[I didn’t go into the details of why I want to semi-retire. I have some strong reasons, but didn’t want to distract from my main question. Happy to post these or other details if it helps answer my question above.]
Last edited by fnmix on Fri Apr 12, 2019 6:58 pm, edited 2 times in total.

mega317
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Re: Can I semi-retire now?

Post by mega317 » Thu Apr 11, 2019 11:26 pm

Yes.

You have 40x expenses. You can retire fully now. Add in social security, pension, and possibly 2 sources of income, and you should have semi retired long ago. The wildcards are college if you're paying for that, future increased health expenses, and how much will you invest in the small business idea? But I think you're good to do whatever you want. I think the term is "financial independence." Congrats.

bhsince87
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Re: Can I semi-retire now?

Post by bhsince87 » Thu Apr 11, 2019 11:41 pm

What will you do for health insurance?
Retirement: When you reach a point where you have enough. Or when you've had enough.

Topic Author
fnmix
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Re: Can I semi-retire now?

Post by fnmix » Fri Apr 12, 2019 7:08 am

mega317 wrote:
Thu Apr 11, 2019 11:26 pm
Yes.

You have 40x expenses. You can retire fully now. Add in social security, pension, and possibly 2 sources of income, and you should have semi retired long ago. The wildcards are college if you're paying for that, future increased health expenses, and how much will you invest in the small business idea? But I think you're good to do whatever you want. I think the term is "financial independence." Congrats.
Thank you for the validation mega317.

For college our plan is to cover 4 years of in-state for both kids (if they choose to go to college or equivalently a trade school or similar).

For the small business, I will restrict myself to ideas that are no or very low capital. I.e. I'll invest time but not much capital, unless the capital comes from the profits of the business. The idea that I am working on fits this mold: high on time investment but low on upfront capital required.
bhsince87 wrote:
Thu Apr 11, 2019 11:41 pm
What will you do for health insurance?
Good question bhsince87.

Health insurance will be through my wife's employer. We don't know exactly how much we'll pay out-of-pocket as the insurance plan and associated costs will depend on the public school district that my wife ends up in.

carolinaman
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Re: Can I semi-retire now?

Post by carolinaman » Fri Apr 12, 2019 7:09 am

Does the expense exclusion of $13k apply just to property taxes or to all taxes and health insurance?

Your plan seems quite viable assuming your wife gets a full time teaching position with health benefits. Your consulting income, assuming that is viable, would provide even more assurance to your plan.

expatFIRE
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Re: Can I semi-retire now?

Post by expatFIRE » Fri Apr 12, 2019 7:33 am

mega317 wrote:
Thu Apr 11, 2019 11:26 pm
Yes.

You have 40x expenses. You can retire fully now. Add in social security, pension, and possibly 2 sources of income, and you should have semi retired long ago. The wildcards are college if you're paying for that, future increased health expenses, and how much will you invest in the small business idea? But I think you're good to do whatever you want. I think the term is "financial independence." Congrats.
Is it really 40x expenses? Is the $45k expenses actually $45k + $13k = $58k expenses? Will the $280k in 529s cover all educational expenses? Is the $1.8 mil savings including the house?

$58k / $1.52 mil (money outside 529s) = 3.82% withdrawal rate until Social Security comes.

If we assume SS is actually $1500/mo or $18k per year, then the withdrawal rate drops to 2.63% (40k / $1.52 mil).

If the expenses are accurate then there’s a good chance to stop working entirely, although I’m aiming for %3 to 3.5% without SS. If the part time work covers most or all of the expenses then part time is definitely doable.

However, if the house is included in $1.8 mil savings then it should be subtracted out of these calculations because you can’t expect an income from the house (unless you rent it out).

csm
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Re: Can I semi-retire now?

Post by csm » Fri Apr 12, 2019 7:38 am

I think it sounds like you are cutting it a bit close. All the pieces have to work out exactly as you describe for it to just work.

Some concerns are the age of your children - there will be a lot of expenses going forward, not just college, but activities between now and then.

Consulting and/or your small business idea will require some capital even if you don't plan it that way. Even if it's just for marketing.

You are doing great, but you are both young with young children and have a long retirement ahead of you. You are still ca. 20 years from drawing social security. And you want to stay in a VHCOL area.

How easy will it be to get some consulting gigs? Is this something where you are already quite sure that you have some work lined up - you don't mention the industry. This would perhaps make the difference for me as to how secure the plan is. For right now, it seems too uncertain, particularly as your wife has not yet gotten a job.

You say that this fall she will get on a path to returning to full-time teaching. If she already had a teaching job lined up with health care so you knew that part of the income side, and you are quite certain that the consulting work would occur (not just a "if needed, I'll go look for consulting work" thought), then it might work out fine.

But I'd be concerned about inflation over a 40-50 year retirement, particularly in SF Bay area, fluctuations in the market affecting your savings, and the number of events that are still in front of you with regard to the young children.

But good luck - it's not impossible, just maybe a little tight and too dependent on everything lining up exactly as it needs to in order to work.
Last edited by csm on Fri Apr 12, 2019 7:41 am, edited 1 time in total.

stan1
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Re: Can I semi-retire now?

Post by stan1 » Fri Apr 12, 2019 7:39 am

Yes, but I think you'd want your wife to have her teaching job with health insurance benefits first and put a little higher priority on the consulting/business ideas. Your expenses are very low. Remember there will be times when you need to replace cars, make expensive repairs to your house, take family vacations, or maybe contribute to parents care costs [if they need assistance]. I wouldn't include the 529s in your assets for purposes of this analysis since you plan to use them to fund your children's education. I'm also assuming you aren't including the value of the home in the $1.8M number.

renue74
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Re: Can I semi-retire now?

Post by renue74 » Fri Apr 12, 2019 7:52 am

Your situation is very, very close to our situation. I'm 45 and my wife is actually a full time school teacher now. Our NET worth is about $2.3M, but about 40% of that is paid off rental property that throws out about $100K in net income. With 529s fully funded for 2 kids. (state schools, 4 years, ... my kids are teenagers going to school in 2-4 years)

But we live in a LCOL area near Charlotte, NC.

I have a small business (web design) with 2 employees and have been thinking of changing.

You have enough to semi-retire. Healthcare is an issue as always. I love my wife and told her I NEVER want to get a divorce because she carries the family on $350/month insurance through the school system. :sharebeer

I will throw out some other "ideas" just to make you think about them:

• Sell home in hot real estate market and move to a lower COL area. Will increase your worth some.

• Make sure your wife is OK with the whole plan. I sorta kinda told my wife I wanted to switch careers...maybe manage our rentals and do 1 flip house per year. I've worked in an office for 20+ years...but am very, very handy and can do anything. But she doesn't like the idea of me not having an office for some reason.

• Before you make the jump, go to your primary care doctor and get a full work up of tests to make sure everything is good in your health. Your wife should do the same.

• Look at your budget really hard. Just make sure you account for all the things. I say this because next week is Spring Break in my town. My wife and kids are out of school. One of my kids is going to Disney World with a friend's family. We "only" had to pay for his park ticket. Which was $650. I didn't know about this and was "surprised."

• Life changes when we are in our 40s can be hard. Millennials jump from job to job and move all the time with no major stress. We don't have that "mental luxury." Just make sure your whole family is ready.

Good luck. I would love to hear an update of your decision and process.

jebmke
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Re: Can I semi-retire now?

Post by jebmke » Fri Apr 12, 2019 7:54 am

"Expenses" need to include everything. Taxes of any kind, capital items (car replacement .....).
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Time2Quit
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Re: Can I semi-retire now?

Post by Time2Quit » Fri Apr 12, 2019 7:56 am

You need to subtract the 529 from your assets as those are earmarked for educational expenses.
That leaves you with $1.5M +/- in investable assets which can spin off $60K/yr @ 4% which some may say is overly optimistic for such a long retirement period.

Three concerns I would have in your situation:

1.) Health insurance what will you do?
2.) Kids are very young and will have a much higher burn rate when they become teens.
3.) You are right on the cusp with your expenses with not much cushion should a major emergency come up. Once you are in your 50's it will be harder to get a full time job if you run into a situation where you need to work.

It is amazing that in a VHCOL you can live on the amount you do.
"It is not the man who has too little, but the man who craves more, that is poor." --Seneca

Strayshot
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Re: Can I semi-retire now?

Post by Strayshot » Fri Apr 12, 2019 8:04 am

I would wait until your wife has secured new employment and give things a few months to settle out, but yes you can retire. Your wife’s income should cover most expenses and give your nest egg more time to compound.

Topic Author
fnmix
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Re: Can I semi-retire now?

Post by fnmix » Fri Apr 12, 2019 8:45 am

carolinaman wrote:
Fri Apr 12, 2019 7:09 am
Does the expense exclusion of $13k apply just to property taxes or to all taxes and health insurance?

Your plan seems quite viable assuming your wife gets a full time teaching position with health benefits. Your consulting income, assuming that is viable, would provide even more assurance to your plan.
Thanks for taking a look carolinaman.

The exclusion applies to all taxes and health insurance premiums. I have edited the original post to be clearer about this. To say this differently, our expenses from Fall onwards will be: $45K + $13K property taxes + state and federal taxes + health insurance premiums

The state and federal taxes will likely be small given our families income going forward, but the health insurance premiums may not be, depending on the exact public school job my wife is able to get.
expatFIRE wrote:
Fri Apr 12, 2019 7:33 am
Is it really 40x expenses? Is the $45k expenses actually $45k + $13k = $58k expenses? Will the $280k in 529s cover all educational expenses? Is the $1.8 mil savings including the house?

$58k / $1.52 mil (money outside 529s) = 3.82% withdrawal rate until Social Security comes.

If we assume SS is actually $1500/mo or $18k per year, then the withdrawal rate drops to 2.63% (40k / $1.52 mil).

If the expenses are accurate then there’s a good chance to stop working entirely, although I’m aiming for %3 to 3.5% without SS. If the part time work covers most or all of the expenses then part time is definitely doable.

However, if the house is included in $1.8 mil savings then it should be subtracted out of these calculations because you can’t expect an income from the house (unless you rent it out).
expatFIRE - you are likely right that my savings are not quite rich enough for 40x expenses.

As I understand it, I am past the second social security bend-point. I do not 100% understand how much the payout at full-retirement-age will be if I stopped working in the Fall. From your calculations above, it appears that I should expect a 50% cut in social security benefits.

The house is not included in the $1.8M savings (I clarified my original post as well).

Thank you for reviewing - minimally I need to better understand the social security payout (although that pay out is some 20 years away).

BanquetBeer
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Re: Can I semi-retire now?

Post by BanquetBeer » Fri Apr 12, 2019 9:07 am

$1.8 - 0.28 = $1.52 *0.035 = 53k/yr

Your expenses are $55 + $13 (tax) + $6 (health insurance) = $74k/yr

Your taxes (lets guess 10% based on state/LTCG) so you need income of about $80k/yr

This does not include increased expenses from kids as they age and assume 529 is the limit of your college contribution.

You need to come up with a way to make (80-53=$27k/yr) for the next 20 years (until SSI roughly replaces this amount). However this does not include one off expenses (large house repairs, new cars/car wrecks, job losses)

There is probably not a lot of room to cut a $55k budget, especially without significantly impacting your children and what could be their most emotional years. How confident are you in your ability to generate positive cash flow from semi retirement and for your wife to be employed?

EnjoyIt
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Re: Can I semi-retire now?

Post by EnjoyIt » Fri Apr 12, 2019 9:24 am

BanquetBeer wrote:
Fri Apr 12, 2019 9:07 am
$1.8 - 0.28 = $1.52 *0.035 = 53k/yr

Your expenses are $55 + $13 (tax) + $6 (health insurance) = $74k/yr

Your taxes (lets guess 10% based on state/LTCG) so you need income of about $80k/yr

This does not include increased expenses from kids as they age and assume 529 is the limit of your college contribution.

You need to come up with a way to make (80-53=$27k/yr) for the next 20 years (until SSI roughly replaces this amount). However this does not include one off expenses (large house repairs, new cars/car wrecks, job losses)

There is probably not a lot of room to cut a $55k budget, especially without significantly impacting your children and what could be their most emotional years. How confident are you in your ability to generate positive cash flow from semi retirement and for your wife to be employed?
Bolded is wrong. Capital gains tax is $0 for income below $77,400. Plus a standard deduction of $24,400 and child tax credit of $4,000. I suspect $0 or very close to it in Federal taxes and about 4-6% going to California.
Last edited by EnjoyIt on Fri Apr 12, 2019 10:30 am, edited 1 time in total.

Miguelito
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Re: Can I semi-retire now?

Post by Miguelito » Fri Apr 12, 2019 9:33 am

I don't see it. Far too much risk.

You edited to say the house is in the savings. You can't live off your house. How much is that out of the savings? Being HCOL that must be a good chunk. Are your net investments then closer to $1M?

I plan to live to ~90. For you that means 40 years of living off your savings in a HCOL area with teenage kids. Yikes.

EnjoyIt
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Re: Can I semi-retire now?

Post by EnjoyIt » Fri Apr 12, 2019 10:36 am

fnmix wrote:
Thu Apr 11, 2019 10:47 pm
Howdy,

This forum has been a tremendous help in sorting out my finances the past few years. Thank you. I am hoping to benefit from the forum’s wisdom on a specific question: Can I semi-retire in Fall (at the start of the next school year)?

Situation:
  • Married with two kids: this fall, the older one will be in 3rd grade, the younger one will start kindergarten (school is a public school)
  • I am 47, wife is 44
  • Savings: $1.8M (including $280K in two 529s; $650K in taxable), invested 60% stocks, 40% bonds + cash
  • Social security will be ~$3K/mo for me (this is likely an overestimate if I semi-retire); wife will not have any social security (she is a former public school teacher and has a very small pension based on 7 years of work as a public school teacher)
  • Live in a paid-off house; no debt [EDIT: value of house not included in Savings above]
  • Current yearly expenses: $55K (excludes $13K property taxes, health insurance premiums, federal and state taxes) [EDIT: $55K excludes all taxes and health insurance premiums]
  • Yearly expenses will drop to ~$45K in fall, as we won’t have to pay for pre-school anymore (That’s ~$10K/yr currently). We expect that $15K of the $45K will be kids related expenses (based on spending over the last ~2 years)
  • Live in a VHCOL area (SF Bay area) and would like to continue to stay here for family reasons (moving to a MCOL in northern california is a backup plan - we have some family in cities outside the bay area)
  • Wife does not work currently but is applying for teaching jobs in public schools. If she gets a full-time job and I am not working a regular job, we will have just enough to meet all expenses and contribute to her pension but not save anything else
  • In the fall, I want to semi-retire and work as a consultant to make up any shortfall (relative to expenses) from my wife’s income (in case her employment is less than full-time or in a school district that does not pay well). I will take care of the kids and the house. If there is time left over I will progress a small business idea that I have been working on
Summary of our plan:
  • I semi-retire and become a consultant in the fall. Wife gets on a path to returning as a full-time public school teacher. We do this for ~13 years when both kids are out of the house and in college or in a trade school. At this point we would consider fully retiring (but not before).
Can this work? Or are we cutting it too close?

[I didn’t go into the details of why I want to semi-retire. I have some strong reasons, but didn’t want to distract from my main question. Happy to post these or other details if it helps answer my question above.]
You are very close to being able to retire completely therefor part time is very very doable.

Let’s remove the 529 out of the equation as that is not your money anymore destined to go to your kids. $1.5 million will fund ~$60k per year. At that income level with kids you will qualify for ACA subsidies. Your taxes outside of $13k property tax will be maybe $3k per year. I would say maybe 2-3 years of semi retired work and you would be golden to completely retire.

michaeljc70
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Re: Can I semi-retire now?

Post by michaeljc70 » Fri Apr 12, 2019 10:44 am

Yes, but there are some "ifs" in your scenario. If you don't move, don't make some supplemental income and your wife doesn't find a job, you will be cutting it close. As others pointed out, property taxes are obviously an expense. How accurate are the other expenses? I find a lot of people exclude non-recurring things (buying a car, need new roof, etc.) rather than averaging out expenses over 3 or 5 years.

CurlyDave
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Re: Can I semi-retire now?

Post by CurlyDave » Fri Apr 12, 2019 11:09 am

I think you need to realize that your children are at their least expensive part of their lives. As they get older costs of everything will go up, up up.

Second issue is inflation. I have been retired for 12 years and my personal inflation has outpaced the CPI. You are looking at 40-50 years of retirement.

I would not want my finances to be "tight" setting out on a venture like this.

How many major remodels, new roofs, new flooring, etc. will your house need over 40-50 years? How many new cars? Will the kids need cars in their teens?

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fnmix
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Re: Can I semi-retire now?

Post by fnmix » Fri Apr 12, 2019 11:16 am

Miguelito wrote:
Fri Apr 12, 2019 9:33 am
I don't see it. Far too much risk.

You edited to say the house is in the savings. You can't live off your house. How much is that out of the savings? Being HCOL that must be a good chunk. Are your net investments then closer to $1M?

I plan to live to ~90. For you that means 40 years of living off your savings in a HCOL area with teenage kids. Yikes.
Hi Miguelito - The house is NOT in the savings number of $1.8M (I just double checked the EDIT to the original post for accuracy).
michaeljc70 wrote:
Fri Apr 12, 2019 10:44 am
Yes, but there are some "ifs" in your scenario. If you don't move, don't make some supplemental income and your wife doesn't find a job, you will be cutting it close. As others pointed out, property taxes are obviously an expense. How accurate are the other expenses? I find a lot of people exclude non-recurring things (buying a car, need new roof, etc.) rather than averaging out expenses over 3 or 5 years.
Hello michaeljc70 - my current plan (in the original post) calls for semi-retirement contingent on my wife finding work as a public school teacher. There are some other configurations possible such as wife works part-time and I work to bring a target amount of revenue every year. The idea is to leave the current savings untouched till both kids are done with high-school.

The backup plan (if we can't get the above to work because we are not able to find suitable employment) is to sell our house and move to a MCOL area. Likely we can fully retire from this event. But, my wife does not like this idea as she is invested in the local community. She finds joy in the people and relationships around her.

As for expenses, I am reasonably confident that our expenses are in the ballpark. I have been carefully tracking them for 2+ years. This includes modest repairs to our cars and small house maintenance items. Perhaps I should increase the expense number to include a buffer for unexpected expenses and recalculate.

###

There have been other thoughtful posts on this thread and I will respond to those later in the day (and over the weekend)

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cowdogman
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Re: Can I semi-retire now?

Post by cowdogman » Fri Apr 12, 2019 11:26 am

When to retire is so fact and individual specific, it's hard to give advice. It's not just a spreadsheet decision.

I'm sure you have some good reasons for wanting to semi-retire now, and I'm not going to presume to give advice one way or the other.

I did want to comment on one of your facts. You have young kids. Looking back on my job and my family, I think the biggest benefit I enjoyed from making a decent salary was not a nice house, a nice car, etc., but the opportunities I could give my kids (sports, music lessons, summer camps, choice of colleges, etc.--and of course orthodontia!). Kids are expensive. Of all the factors you listed I think the age of your kids was the most important.

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beyou
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Re: Can I semi-retire now?

Post by beyou » Fri Apr 12, 2019 11:37 am

cowdogman wrote:
Fri Apr 12, 2019 11:26 am
I did want to comment on one of your facts. You have young kids. Looking back on my job and my family, I think the biggest benefit I enjoyed from making a decent salary was not a nice house, a nice car, etc., but the opportunities I could give my kids (sports, music lessons, summer camps, choice of colleges, etc.--and of course orthodontia!). Kids are expensive. Of all the factors you listed I think the age of your kids was the most important.
+1

Patzer
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Re: Can I semi-retire now?

Post by Patzer » Fri Apr 12, 2019 12:19 pm

fnmix wrote:
Thu Apr 11, 2019 10:47 pm
Can this work? Or are we cutting it too close?
My math on a 60/40 @1.52M is that you can expect ~45.6K in after tax return, inflation adjusted, forever, due to your low tax bracket in retirement, while preserving your principal's inflation adjusted value.
Sounds like you might need about 55K to cover your 45K expenses + Health Insurance + Property Tax.

That means you could semi-retire now, but you would need to make an extra 9-10K/year from your side gig, assuming you don't want to draw down, which I would not want to do at your age.
If the market outperforms, you could cut off the side job and fully retire. If it underperforms, you could always get a job again.

Alternatively, you could continue to work until your portfolio (excluding 529s) is worth 1.83M and fully retire, which is probably ~3 years out.
fnmix wrote:
Thu Apr 11, 2019 10:47 pm
Social security will be ~$3K/mo for me (this is likely an overestimate if I semi-retire); wife will not have any social security (she is a former public school teacher and has a very small pension based on 7 years of work as a public school teacher)
Pretty sure you are incorrect about your wife's social security. Once you are both eligible for social security, she can apply for social security based on your payout and as your spouse will get 50% of what you get, even if she only paid $5 into social security from a summer job at Burger King.

Social security is based on how much you pay into it from the values of your highest 35 earning years. Retiring early, you will have less earning years, but social security pays out a higher percentage the less you have paid into it, so you don't get punished from retiring early as much as you might think.

A few #s to help you.
If lifetime you paid 1M into social security, your payout would be $1,610/month @70 or $1,300 @67
1.5M = $2,080/month @70 or $1,680 @67
2M = $2,550/month @70 or $2,056 @67
2.5M = $2,950/month @70 or $2,379 @67
3M = $3,170/month @70 or $2,556 @67
For social security, remember to index your previous years for inflation(https://www.ssa.gov/oact/cola/awifactors.html).
For example, $100,000 in 2013 is worth $112,100.

In conclusion, I think you are safe to semi-retire as it is pretty easy to cover your 9-10K gap, and probably safe to fully retire once the kids are out of the house, but you can reassess as time moves along based on how the market performs and how your costs change as your family matures.

Based on your current situation there is a non-zero possibility you would have to work again if your plans with your wife don't work out, the market tanks, you can't get consulting working, and/or your kids cost more than you expect. If you can accept that without stressing, you should move forward with semi-retirement. If those concerns will keep you up at night, then it is worth working a few more years to build a buffer.
Last edited by Patzer on Fri Apr 12, 2019 12:42 pm, edited 4 times in total.

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Re: Can I semi-retire now?

Post by tyrion » Fri Apr 12, 2019 12:35 pm

We are not all that different. Same age. My wife is also a teacher - has worked the last 5 years after kids went back to school. Live in an expensive city. Expenses about the same - my spreadsheets indicate about 70k/year including property taxes. We have less taxable saved but pretty close overall, with a similar amount earmarked for kids college.

I feel like if push came to shove we could live off my wife's income (and health benefits) plus some reasonable 2-3% from our portfolio indefinitely. But it would be tight at times, and that causes me some stress. So I plan to keep working, and in the future explore reducing my hours as a way to 'semi-retire'.

I guess what I'm saying is it matters why you want to semi-retire. You could take time off if you wanted and look for a better opportunity. If your consulting brings in 20k/year or more and your wife likes her job things look pretty good. If your wife finds she doesn't enjoy teaching and your consulting opportunities don't pan out and the stock market drops then things don't look so good.

In any case, I would try to stick it out for a year for your wife to get settled in her career and see how she likes it.

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Re: Can I semi-retire now?

Post by majiaknight » Fri Apr 12, 2019 6:05 pm

I think the big uncertainties are kid edu cost and health insurance. The public schools in the Bay area are not that good unless you live in the top 3-4 school districts. We also have friends living in good school districts in South Bay but sending their kids to private school for some reasons. Given your two kids are still very young, if later on they find they fit better in private school or want to transfer to a better public school, the cost of moving or private school tuition could be very high. Why not at least wait until your wife gets a stable job?

Regarding social security, I read some articles on potentially reduced benefits by 2034 which is alarming for young retirees. Your savings may not be enough.

http://money.com/money/4213065/will-soc ... out-money/
"Don't rely on Social Security. We found that a quarter of Americans expect Social Security to be their primary source of income during retirement. Yet according to The United States Social Security Administration, Social Security is on track to be depleted by 2034, paying only 79% of benefits (from ongoing tax revenue). With half of Americans (51%) planning to retire at 65 or younger, it's crucial to save in other investment vehicles in order to maintain your desired lifestyle in retirement. "

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fnmix
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Re: Can I semi-retire now?

Post by fnmix » Fri Apr 12, 2019 7:25 pm

csm, majiaknight, cowdogman, CurlyDave, Time2Quit, BanquetBeer - thank you for your observations on kids.

From the K-12 point of view, we are well situated:
  • Our kids are in a lottery (and alternate) public school for K-5. My wife likes this school a lot and is a part of the school community in a big way.
  • This elementary school extends to middle school (6-8) as well. From what we know now, we will be keeping the kids in the same place for middle school.
  • We do have an option of transferring to the neighborhood middle school (this school is highly rated but wife does not go by ratings).
  • My wife likes the neighborhood high school (although its rating is middle-of-the-road).
  • Because of the location of the current elementary/middle school, our kids will have the option to go to a non-neighborhood but highly rated (and very competitive) high school. We haven't formed an opinion on whether this path is worth taking over the neighborhood high school.
I had not previously understood teen years to be significantly more expensive than the early (infant, toddler, pre-school) years. I thought I was done with the high cost years (outside of College, which I have already saved for). I suppose, I will need to adjust my expense estimate upwards to compensate and tweak (but hopefully not completely rethink) our plan some.
csm wrote:
Fri Apr 12, 2019 7:38 am

Some concerns are the age of your children - there will be a lot of expenses going forward, not just college, but activities between now and then.

<SNIP>

You are doing great, but you are both young with young children and have a long retirement ahead of you.
majiaknight wrote:
Fri Apr 12, 2019 6:05 pm
I think the big uncertainties are kid edu cost and health insurance. The public schools in the Bay area are not that good unless you live in the top 3-4 school districts. We also have friends living in good school districts in South Bay but sending their kids to private school for some reasons. Given your two kids are still very young, if later on they find they fit better in private school or want to transfer to a better public school, the cost of moving or private school tuition could be very high. Why not at least wait until your wife gets a stable job?
cowdogman wrote:
Fri Apr 12, 2019 11:26 am
I did want to comment on one of your facts. You have young kids. Looking back on my job and my family, I think the biggest benefit I enjoyed from making a decent salary was not a nice house, a nice car, etc., but the opportunities I could give my kids (sports, music lessons, summer camps, choice of colleges, etc.--and of course orthodontia!). Kids are expensive. Of all the factors you listed I think the age of your kids was the most important.
CurlyDave wrote:
Fri Apr 12, 2019 11:09 am
I think you need to realize that your children are at their least expensive part of their lives. As they get older costs of everything will go up, up up.
Time2Quit wrote:
Fri Apr 12, 2019 7:56 am

2.) Kids are very young and will have a much higher burn rate when they become teens.
BanquetBeer wrote:
Fri Apr 12, 2019 9:07 am
This does not include increased expenses from kids as they age and assume 529 is the limit of your college contribution.

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fnmix
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Re: Can I semi-retire now?

Post by fnmix » Fri Apr 12, 2019 10:33 pm

Hello csm, Patzer, EnjoyIt, BanquetBeer

Thanks for your comments on taxes, subsidies and social security.

I edited my original post to indicate that while my wife will be eligible for spousal social security benefits, as a CA public school teacher, she does not pay into the social security system. So she is not eligible for benefits on her own.

ACA is indeed a way for us to get healthcare insurance but we will likely only go down that path if my wife is not able to secure employment with benefits.

While the kids are still young, for peace-of-mind, we want to make sure that between the two of us we are meeting all expenses without dipping into our savings. If my wife finds work as a public school teacher, we will have the added benefit of increasing her pension payout.
csm wrote:
Fri Apr 12, 2019 7:38 am

You are still ca. 20 years from drawing social security. And you want to stay in a VHCOL area.
Patzer wrote:
Fri Apr 12, 2019 12:19 pm
Pretty sure you are incorrect about your wife's social security. Once you are both eligible for social security, she can apply for social security based on your payout and as your spouse will get 50% of what you get, even if she only paid $5 into social security from a summer job at Burger King.

Social security is based on how much you pay into it from the values of your highest 35 earning years. Retiring early, you will have less earning years, but social security pays out a higher percentage the less you have paid into it, so you don't get punished from retiring early as much as you might think.
EnjoyIt wrote:
Fri Apr 12, 2019 10:36 am
You are very close to being able to retire completely therefor part time is very very doable.

Let’s remove the 529 out of the equation as that is not your money anymore destined to go to your kids. $1.5 million will fund ~$60k per year. At that income level with kids you will qualify for ACA subsidies. Your taxes outside of $13k property tax will be maybe $3k per year. I would say maybe 2-3 years of semi retired work and you would be golden to completely retire.
BanquetBeer wrote:
Fri Apr 12, 2019 9:07 am
You need to come up with a way to make (80-53=$27k/yr) for the next 20 years (until SSI roughly replaces this amount).

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Re: Can I semi-retire now?

Post by HEDGEFUNDIE » Fri Apr 12, 2019 11:35 pm

Do it, do it now.

If you have Bogleheads telling you that it is on the edge of working / not working, then you should rest assured that you can absolutely retire.

I salute you for being one of the silent majority in the Bay Area not working in tech and making mid-six figures.

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VeganBH
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Re: Can I semi-retire now?

Post by VeganBH » Sat Apr 13, 2019 12:46 am

minimally I need to better understand the social security payout (although that pay out is some 20 years away).
I had similar questions about calculating SS using zero years/early retirement. Someone on the forum recommended this tool: https://socialsecurity.tools/app.html which I found to be fantastic. Just takes a few minutes (cut/paste from SS.gov), and a nice report is generated.
Good luck to you.
"Until we extend our circle of compassion to all living things, humanity will not find peace."​ ~ Albert Sc​hweitzer

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Re: Can I semi-retire now?

Post by Patzer » Sat Apr 13, 2019 7:07 am

fnmix wrote:
Fri Apr 12, 2019 10:33 pm
Thanks for your comments on taxes, subsidies and social security.

I edited my original post to indicate that while my wife will be eligible for spousal social security benefits, as a CA public school teacher, she does not pay into the social security system. So she is not eligible for benefits on her own.
Sure, just want you to know that with a government pension, your wife's Social Security benefit would be reduced by an amount equal to two-thirds of her government pension. So, she would get half of your benefit - 2/3 of her pension benefit. Even if her benefit is reduced to zero(sounds unlikely), she will still be eligible for Medicare at age 65 based on your record.
Another way to look at it is that between the two of you, you will get 1.5x your calculated Social Security benefit, plus 1/3rd of her pension benefit.

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Re: Can I semi-retire now?

Post by noco-hawkeye » Sat Apr 13, 2019 7:33 am

beyou wrote:
Fri Apr 12, 2019 11:37 am
cowdogman wrote:
Fri Apr 12, 2019 11:26 am
I did want to comment on one of your facts. You have young kids. Looking back on my job and my family, I think the biggest benefit I enjoyed from making a decent salary was not a nice house, a nice car, etc., but the opportunities I could give my kids (sports, music lessons, summer camps, choice of colleges, etc.--and of course orthodontia!). Kids are expensive. Of all the factors you listed I think the age of your kids was the most important.
+1
Agree with this also.

We are in a suburban area and a high school student with a car is pretty common, and we have done this for our kiddo (so that might be 5-10k for a car). Our kids are both in club sports now too, and thats about 250 / month for 2 kids as well. Older kids are also more fun to travel with and I think they get more out of it, so we travel now more than we did too. The point being, you have a decent shot of your expenses going up a fair bit as the kids get older.

I don't regret spending this extra money at all. In fact, this is the entire point of life - enjoy it! I'm sure some on this forum will poo-poo getting a kiddo a car, or paying money for kids to stay active with their friends - totally worth it in my book.

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Re: Can I semi-retire now?

Post by fnmix » Sat Apr 13, 2019 7:43 am

VeganBH, Patzer - thanks for your additional comments on social security

I used the tool linked to below and discovered that at full retirement age (67), using my earnings record upto 2019, the benefit amount will be $2400. That's a useful number to know!
VeganBH wrote:
Sat Apr 13, 2019 12:46 am
I had similar questions about calculating SS using zero years/early retirement. Someone on the forum recommended this tool: https://socialsecurity.tools/app.html which I found to be fantastic. Just takes a few minutes (cut/paste from SS.gov), and a nice report is generated.
Good luck to you.
Patzer wrote:
Sat Apr 13, 2019 7:07 am
Sure, just want you to know that with a government pension, your wife's Social Security benefit would be reduced by an amount equal to two-thirds of her government pension. So, she would get half of your benefit - 2/3 of her pension benefit. Even if her benefit is reduced to zero(sounds unlikely), she will still be eligible for Medicare at age 65 based on your record.
Another way to look at it is that between the two of you, you will get 1.5x your calculated Social Security benefit, plus 1/3rd of her pension benefit.

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Re: Can I semi-retire now?

Post by fnmix » Sat Apr 13, 2019 7:56 am

carolinaman, stan1, renue74, tyrion - thank you for your thoughts on teaching.

My wife is in the midst of applying to local school districts. I will not semi-retire till we have a better sense of her viability as a teacher (returning to paid work from an 8 year break to raise kids) and the local job market for teachers.

I wanted to get this post out now and collect this community's feedback so that I would be ready if/when my wife's teaching job lands.
carolinaman wrote:
Fri Apr 12, 2019 7:09 am
Your plan seems quite viable assuming your wife gets a full time teaching position with health benefits.
stan1 wrote:
Fri Apr 12, 2019 7:39 am
Yes, but I think you'd want your wife to have her teaching job with health insurance benefits first and put a little higher priority on the consulting/business ideas. Your expenses are very low. Remember there will be times when you need to replace cars, make expensive repairs to your house, take family vacations, or maybe contribute to parents care costs [if they need assistance]. I wouldn't include the 529s in your assets for purposes of this analysis since you plan to use them to fund your children's education. I'm also assuming you aren't including the value of the home in the $1.8M number.
renue74 wrote:
Fri Apr 12, 2019 7:52 am
Your situation is very, very close to our situation. I'm 45 and my wife is actually a full time school teacher now.
tyrion wrote:
Fri Apr 12, 2019 12:35 pm
We are not all that different. Same age. My wife is also a teacher - has worked the last 5 years after kids went back to school. Live in an expensive city. Expenses about the same - my spreadsheets indicate about 70k/year including property taxes. We have less taxable saved but pretty close overall, with a similar amount earmarked for kids college.
Last edited by fnmix on Sat Apr 13, 2019 1:52 pm, edited 1 time in total.

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Re: Can I semi-retire now?

Post by fnmix » Sat Apr 13, 2019 8:15 am

Regarding consulting: I have been trying it out (on the side) but consider myself relatively in-experienced in this area. Last year I made $8K via consulting. In the previous two years, the numbers were approximately $4K and $2K.

I have had a couple of inquiries about consulting jobs in 2019. One from a former manager at a different company (although by the time I am available this opportunity may not exist any more). I will attempt to semi-retire with a consulting offer in hand when the time comes, knowing that the consulting can go all-wrong.
carolinaman wrote:
Fri Apr 12, 2019 7:09 am
Your consulting income, assuming that is viable, would provide even more assurance to your plan.
csm wrote:
Fri Apr 12, 2019 7:38 am
How easy will it be to get some consulting gigs? Is this something where you are already quite sure that you have some work lined up - you don't mention the industry. This would perhaps make the difference for me as to how secure the plan is. For right now, it seems too uncertain, particularly as your wife has not yet gotten a job.
stan1 wrote:
Fri Apr 12, 2019 7:39 am
and put a little higher priority on the consulting/business ideas.
Patzer wrote:
Fri Apr 12, 2019 12:19 pm
Based on your current situation there is a non-zero possibility you would have to work again if your plans with your wife don't work out, the market tanks, you can't get consulting working, and/or your kids cost more than you expect.
tyrion wrote:
Fri Apr 12, 2019 12:35 pm
I guess what I'm saying is it matters why you want to semi-retire. You could take time off if you wanted and look for a better opportunity. If your consulting brings in 20k/year or more and your wife likes her job things look pretty good.

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fnmix
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Re: Can I semi-retire now?

Post by fnmix » Sat Apr 13, 2019 2:07 pm

HEDGEFUNDIE - you summarized it well. The plan looks feasible, but also needs a bit of update (wrt expenses) and some things to fall into place (wife's teaching job)

renue74 - I will post an update on this thread when we are a little further along.

Thank you all for your insights!

HEDGEFUNDIE wrote:
Fri Apr 12, 2019 11:35 pm
Do it, do it now.

If you have Bogleheads telling you that it is on the edge of working / not working, then you should rest assured that you can absolutely retire.

I salute you for being one of the silent majority in the Bay Area not working in tech and making mid-six figures.
mega317 wrote:
Thu Apr 11, 2019 11:26 pm
Yes.
carolinaman wrote:
Fri Apr 12, 2019 7:09 am
Your plan seems quite viable assuming your wife gets a full time teaching position with health benefits. Your consulting income, assuming that is viable, would provide even more assurance to your plan.
csm wrote:
Fri Apr 12, 2019 7:38 am
I think it sounds like you are cutting it a bit close. All the pieces have to work out exactly as you describe for it to just work.
stan1 wrote:
Fri Apr 12, 2019 7:39 am
Yes, but I think you'd want your wife to have her teaching job with health insurance benefits first and put a little higher priority on the consulting/business ideas.
renue74 wrote:
Fri Apr 12, 2019 7:52 am
You have enough to semi-retire.
Time2Quit wrote:
Fri Apr 12, 2019 7:56 am
3.) You are right on the cusp with your expenses with not much cushion should a major emergency come up. Once you are in your 50's it will be harder to get a full time job if you run into a situation where you need to work.
Strayshot wrote:
Fri Apr 12, 2019 8:04 am
I would wait until your wife has secured new employment and give things a few months to settle out, but yes you can retire.
EnjoyIt wrote:
Fri Apr 12, 2019 10:36 am
You are very close to being able to retire completely therefor part time is very very doable.
cowdogman wrote:
Fri Apr 12, 2019 11:26 am
When to retire is so fact and individual specific, it's hard to give advice. It's not just a spreadsheet decision.
Patzer wrote:
Fri Apr 12, 2019 12:19 pm
In conclusion, I think you are safe to semi-retire as it is pretty easy to cover your 9-10K gap, and probably safe to fully retire once the kids are out of the house, but you can reassess as time moves along based on how the market performs and how your costs change as your family matures.
tyrion wrote:
Fri Apr 12, 2019 12:35 pm
In any case, I would try to stick it out for a year for your wife to get settled in her career and see how she likes it.
CurlyDave wrote:
Fri Apr 12, 2019 11:09 am
I would not want my finances to be "tight" setting out on a venture like this.

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Re: Can I semi-retire now?

Post by am » Sat Apr 13, 2019 3:43 pm

fnmix wrote:
Thu Apr 11, 2019 10:47 pm
Howdy,

This forum has been a tremendous help in sorting out my finances the past few years. Thank you. I am hoping to benefit from the forum’s wisdom on a specific question: Can I semi-retire in Fall (at the start of the next school year)?

Situation:
  • Married with two kids: this fall, the older one will be in 3rd grade, the younger one will start kindergarten (school is a public school)
  • I am 47, wife is 44
  • Savings: $1.8M (including $280K in two 529s; $650K in taxable), invested 60% stocks, 40% bonds + cash
  • Social security will be ~$3K/mo for me (this is likely an overestimate if I semi-retire); wife will not have any social security (she is a former public school teacher and has a very small pension based on 7 years of work as a public school teacher) [EDIT: Wife has not paid into the social security system which is normal for public school teachers in California; she is eligible for spousal social security benefits but won't be eligible for social security outside of that]
  • Live in a paid-off house; no debt [EDIT: value of house not included in Savings above]
  • Current yearly expenses: $55K (excludes $13K property taxes, health insurance premiums, federal and state taxes) [EDIT: $55K excludes all taxes and health insurance premiums]
  • Yearly expenses will drop to ~$45K in fall, as we won’t have to pay for pre-school anymore (That’s ~$10K/yr currently). We expect that $15K of the $45K will be kids related expenses (based on spending over the last ~2 years)
  • Live in a VHCOL area (SF Bay area) and would like to continue to stay here for family reasons (moving to a MCOL in northern california is a backup plan - we have some family in cities outside the bay area)
  • Wife does not work currently but is applying for teaching jobs in public schools. If she gets a full-time job and I am not working a regular job, we will have just enough to meet all expenses and contribute to her pension but not save anything else
  • In the fall, I want to semi-retire and work as a consultant to make up any shortfall (relative to expenses) from my wife’s income (in case her employment is less than full-time or in a school district that does not pay well). I will take care of the kids and the house. If there is time left over I will progress a small business idea that I have been working on
Summary of our plan:
  • I semi-retire and become a consultant in the fall. Wife gets on a path to returning as a full-time public school teacher. We do this for ~13 years when both kids are out of the house and in college or in a trade school. At this point we would consider fully retiring (but not before).
Can this work? Or are we cutting it too close?

[I didn’t go into the details of why I want to semi-retire. I have some strong reasons, but didn’t want to distract from my main question. Happy to post these or other details if it helps answer my question above.]
How do you intend on withdrawing from tax deferred accounts? 72(t)?

I see posts all the time about 1+ mil investments in 40s, early retirement desire but some of money is often tax deferred. Seems like getting to this money is cumbersome and amount forced on you longer than you may need using the 72t.

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Re: Can I semi-retire now?

Post by Trader Joe » Sat Apr 13, 2019 3:47 pm

fnmix wrote:
Thu Apr 11, 2019 10:47 pm
Howdy,

This forum has been a tremendous help in sorting out my finances the past few years. Thank you. I am hoping to benefit from the forum’s wisdom on a specific question: Can I semi-retire in Fall (at the start of the next school year)?

Situation:
  • Married with two kids: this fall, the older one will be in 3rd grade, the younger one will start kindergarten (school is a public school)
  • I am 47, wife is 44
  • Savings: $1.8M (including $280K in two 529s; $650K in taxable), invested 60% stocks, 40% bonds + cash
  • Social security will be ~$3K/mo for me (this is likely an overestimate if I semi-retire); wife will not have any social security (she is a former public school teacher and has a very small pension based on 7 years of work as a public school teacher) [EDIT: Wife has not paid into the social security system which is normal for public school teachers in California; she is eligible for spousal social security benefits but won't be eligible for social security outside of that]
  • Live in a paid-off house; no debt [EDIT: value of house not included in Savings above]
  • Current yearly expenses: $55K (excludes $13K property taxes, health insurance premiums, federal and state taxes) [EDIT: $55K excludes all taxes and health insurance premiums]
  • Yearly expenses will drop to ~$45K in fall, as we won’t have to pay for pre-school anymore (That’s ~$10K/yr currently). We expect that $15K of the $45K will be kids related expenses (based on spending over the last ~2 years)
  • Live in a VHCOL area (SF Bay area) and would like to continue to stay here for family reasons (moving to a MCOL in northern california is a backup plan - we have some family in cities outside the bay area)
  • Wife does not work currently but is applying for teaching jobs in public schools. If she gets a full-time job and I am not working a regular job, we will have just enough to meet all expenses and contribute to her pension but not save anything else
  • In the fall, I want to semi-retire and work as a consultant to make up any shortfall (relative to expenses) from my wife’s income (in case her employment is less than full-time or in a school district that does not pay well). I will take care of the kids and the house. If there is time left over I will progress a small business idea that I have been working on
Summary of our plan:
  • I semi-retire and become a consultant in the fall. Wife gets on a path to returning as a full-time public school teacher. We do this for ~13 years when both kids are out of the house and in college or in a trade school. At this point we would consider fully retiring (but not before).
Can this work? Or are we cutting it too close?

[I didn’t go into the details of why I want to semi-retire. I have some strong reasons, but didn’t want to distract from my main question. Happy to post these or other details if it helps answer my question above.]
Why would is it only you that would "semi-retire"? What about your wife? Why should she continue to work?

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fnmix
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Re: Can I semi-retire now?

Post by fnmix » Sat Apr 13, 2019 5:54 pm

The plan above does not rely on 72(t) as our goal is to break-even against expenses while we have a kid in K-12. That is ~13 years by which time I will be ~60 and can tap into retirement savings if needed.
am wrote:
Sat Apr 13, 2019 3:43 pm
How do you intend on withdrawing from tax deferred accounts? 72(t)?

I see posts all the time about 1+ mil investments in 40s, early retirement desire but some of money is often tax deferred. Seems like getting to this money is cumbersome and amount forced on you longer than you may need using the 72t.

SoonerD
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Re: Can I semi-retire now?

Post by SoonerD » Sat Apr 13, 2019 6:34 pm

There is a trend taking place whereby:
1) healthy, able bodied, smart young men decide to stop working or semi-work while sending their wives to work full time. The reverse is not a new trend and therefor not noteworthy in this thread.

2) young couples with young children put their children's financial security at risk because a parent(s) can't handle the stress of working any more. There are healthy ways to reduce and manage stress without (semi) quitting work.

3) the risks of quitting and irreparable financial decisions are made with idealized plans for everything going well (and some "minor hiccups" are answered with things like "we'll move to LCOL or just pick up more work as needed")

In my opinion your plan is irresponsible as a father (and mother) of 2 small children.

Regardless of social norms, I think your plan is reckless. Your children have potentially unknowable future financial needs. Imagine one needs psychological help navigating teenage and early adulthood. Imagine one becomes in need of specialized medical equipment and 24/7 professional care. Yes these things can happen to a 30-year old too but it is the responsibility of the pre-30 year old to have proper insurance in place for disability needs; however the father of a teenager is fully responsible for the needs of his child.

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Re: Can I semi-retire now?

Post by EddyB » Sat Apr 13, 2019 6:53 pm

SoonerD wrote:
Sat Apr 13, 2019 6:34 pm
There is a trend taking place whereby:
1) healthy, able bodied, smart young men decide to stop working or semi-work while sending their wives to work full time. The reverse is not a new trend and therefor not noteworthy in this thread.

2) young couples with young children put their children's financial security at risk because a parent(s) can't handle the stress of working any more. There are healthy ways to reduce and manage stress without (semi) quitting work.

3) the risks of quitting and irreparable financial decisions are made with idealized plans for everything going well (and some "minor hiccups" are answered with things like "we'll move to LCOL or just pick up more work as needed")

In my opinion your plan is irresponsible as a father (and mother) of 2 small children.

Regardless of social norms, I think your plan is reckless. Your children have potentially unknowable future financial needs. Imagine one needs psychological help navigating teenage and early adulthood. Imagine one becomes in need of specialized medical equipment and 24/7 professional care. Yes these things can happen to a 30-year old too but it is the responsibility of the pre-30 year old to have proper insurance in place for disability needs; however the father of a teenager is fully responsible for the needs of his child.
What if the OP believes that his greater presence for his kids will reduce the likelihood of the need for that paid psychological help? My point being that while your perspective is valid, it’s uncertain, in an arena where competing “what ifs” can be tossed off easily. People have to make a “best choice,” and there’s no reason for them to ignore real options.

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fnmix
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Re: Can I semi-retire now?

Post by fnmix » Sat Apr 13, 2019 9:42 pm

When our first child came 8+ years, my wife and I went through some big changes in life-style. There were many stressful times. With both kids about to be in school, we have an opportunity to re-evaluate how we spend our time and how much to trade time (and whose time) for money. If possible, we want to increase the amount of time that I spend with the kids.

The discussion here points to allocating more for expenses for kids. While this can come from more savings, it can also come from raising the income bar for consulting (and/or my small business).

The consulting/small-business plan is something that I have to make more concrete for myself - the consulting will be in a subset of the area that I already work in. The small business in turn is in a subset of the area that I would consult in. While I am inexperienced getting consulting gigs (~$14K in revenue over 3 years from 3 opportunities), I am fairly experienced in the subject matter that I would be consulting in.

The small business on the other hand is much of a wild card and will take substantial vetting and investment of time. I want to investigate the idea, but the amount of investigation depends a bit on where my wife lands in her job search.
EddyB wrote:
Sat Apr 13, 2019 6:53 pm
What if the OP believes that his greater presence for his kids will reduce the likelihood of the need for that paid psychological help?
noco-hawkeye wrote:
Sat Apr 13, 2019 7:33 am
I don't regret spending this extra money at all. In fact, this is the entire point of life - enjoy it! I'm sure some on this forum will poo-poo getting a kiddo a car, or paying money for kids to stay active with their friends - totally worth it in my book.

EnjoyIt
Posts: 1973
Joined: Sun Dec 29, 2013 8:06 pm

Re: Can I semi-retire now?

Post by EnjoyIt » Sat Apr 13, 2019 10:13 pm

SoonerD wrote:
Sat Apr 13, 2019 6:34 pm
There is a trend taking place whereby:
1) healthy, able bodied, smart young men decide to stop working or semi-work while sending their wives to work full time. The reverse is not a new trend and therefor not noteworthy in this thread.

2) young couples with young children put their children's financial security at risk because a parent(s) can't handle the stress of working any more. There are healthy ways to reduce and manage stress without (semi) quitting work.

3) the risks of quitting and irreparable financial decisions are made with idealized plans for everything going well (and some "minor hiccups" are answered with things like "we'll move to LCOL or just pick up more work as needed")

In my opinion your plan is irresponsible as a father (and mother) of 2 small children.

Regardless of social norms, I think your plan is reckless. Your children have potentially unknowable future financial needs. Imagine one needs psychological help navigating teenage and early adulthood. Imagine one becomes in need of specialized medical equipment and 24/7 professional care. Yes these things can happen to a 30-year old too but it is the responsibility of the pre-30 year old to have proper insurance in place for disability needs; however the father of a teenager is fully responsible for the needs of his child.
OP has $1.5 million invested and 529s for the kids. OP is just semi-retiring and not going off to live on a commune. They are a far cry from putting their financial security at risk.

Maybe working less, living healthy, and spending more time with family is actually the best thing for OP and their family.

Let’s not be judgmental about other people’s life choices even if they don’t match our own.

malabargold
Posts: 546
Joined: Fri Aug 08, 2014 8:16 am

Re: Can I semi-retire now?

Post by malabargold » Sat Apr 13, 2019 10:29 pm

I would not.

My reasons (not necessarily yours):

We’re 10 years into a bull market that is likely to retrace
to an extent - sooner than later - and will be accompanied
by a rise in inflation.

Kids are much, much more expensive in older childhood.

If I were in a position to give my kids potentially life-
enriching and extraordinary educational experiences beyond the bare minimum, by not doing so I would be putting my wants
above those of my children.

HEDGEFUNDIE
Posts: 2250
Joined: Sun Oct 22, 2017 2:06 pm

Re: Can I semi-retire now?

Post by HEDGEFUNDIE » Sat Apr 13, 2019 11:10 pm

SoonerD wrote:
Sat Apr 13, 2019 6:34 pm
There is a trend taking place whereby:
1) healthy, able bodied, smart young men decide to stop working or semi-work while sending their wives to work full time.
Is it really a surprise that healthy, able-bodied, smart young men might actually want to use their health, intelligence, and youth to do something more satisfying than sitting in an office all day chasing someone else's vision?
Last edited by HEDGEFUNDIE on Sat Apr 13, 2019 11:38 pm, edited 1 time in total.

mnnice
Posts: 401
Joined: Sat Aug 11, 2012 5:48 pm

Re: Can I semi-retire now?

Post by mnnice » Sat Apr 13, 2019 11:35 pm

EnjoyIt wrote:
Sat Apr 13, 2019 10:13 pm
SoonerD wrote:
Sat Apr 13, 2019 6:34 pm
There is a trend taking place whereby:
1) healthy, able bodied, smart young men decide to stop working or semi-work while sending their wives to work full time. The reverse is not a new trend and therefor not noteworthy in this thread.

2) young couples with young children put their children's financial security at risk because a parent(s) can't handle the stress of working any more. There are healthy ways to reduce and manage stress without (semi) quitting work.

3) the risks of quitting and irreparable financial decisions are made with idealized plans for everything going well (and some "minor hiccups" are answered with things like "we'll move to LCOL or just pick up more work as needed")

In my opinion your plan is irresponsible as a father (and mother) of 2 small children.

Regardless of social norms, I think your plan is reckless. Your children have potentially unknowable future financial needs. Imagine one needs psychological help navigating teenage and early adulthood. Imagine one becomes in need of specialized medical equipment and 24/7 professional care. Yes these things can happen to a 30-year old too but it is the responsibility of the pre-30 year old to have proper insurance in place for disability needs; however the father of a teenager is fully responsible for the needs of his child.
OP has $1.5 million invested and 529s for the kids. OP is just semi-retiring and not going off to live on a commune. They are a far cry from putting their financial security at risk.

Maybe working less, living healthy, and spending more time with family is actually the best thing for OP and their family.

Let’s not be judgmental about other people’s life choices even if they don’t match our own.
+1

Also having time to yourself and time as a couple are also important.

My kids have been involved in sports, 4-H, band, robotics, piano lessons, theater, and even a movie. None of them have been particularly expensive in the places we have lived. Granted no one ended up as a musical prodigy that needed an expensive instrument or an Olympic ice skater or anything. We did pay for elder son to go with his AP history class to Europe. :D

Orthodontics is not a necessarily a requirement for a middle class American existence. Both my kids have gorgeous near perfect teeth even though I personally probably should have had braces (and so far all their cousins have had braces.)

Teenagers cost as much as you want to spend in most aspects. DS had an old car of mine he was driving. He wrecked it. Now he is walking and bumming rides (and saving to buy his own car). He is at his prom right now in his thrift store duds looking handsome as can be.

SoonerD
Posts: 191
Joined: Tue Jul 21, 2015 8:28 pm

Re: Can I semi-retire now?

Post by SoonerD » Sat Apr 13, 2019 11:45 pm

HEDGEFUNDIE wrote:
Sat Apr 13, 2019 11:10 pm
SoonerD wrote:
Sat Apr 13, 2019 6:34 pm
There is a trend taking place whereby:
1) healthy, able bodied, smart young men decide to stop working or semi-work while sending their wives to work full time.
Is it really a surprise that healthy, able-bodied, smart young men might actually want to use their health, intelligence, and youth to do something more satisfying than sitting in an office all day?
Most don't sit in an office all day (I think). That's a rarer work environment than BHs probably realize.

But I agree it's not a surprise.

What is a surprise, to me, is that the modern man, is willing to quite because of stress and send his wife to the office in his place! In my world that's inexcusable - I'd say more but don't want to be flagged as unkind. I realize work is stressful; the young men doing multiple tours in warzones show us the effects of stress that is both real and extreme. I don't wish this on anyone.

As a man, I can't fathom putting my family (young children) in a risky financial situation when I have the means to provide so well (as the OP) for them. Young families face innumerable challenges to launching productive, independent adults. What happens if the wife gets M.S. and can't work while needing extremely expensive care (medicine, etc.). What happens if a child has a bike accident and suffers a brain injury with the requisite expensive care, treatment and perhaps lifetime trust for financial security. Giving up earnings at this stage of the family's development is unconscionable - to me.

But I understand the OP will do whatever he intends, probably regardless of any comments in this thread. People generally don't want advise, even when they ask for it, they just want confirmation of their plan.

HEDGEFUNDIE
Posts: 2250
Joined: Sun Oct 22, 2017 2:06 pm

Re: Can I semi-retire now?

Post by HEDGEFUNDIE » Sat Apr 13, 2019 11:52 pm

SoonerD wrote:
Sat Apr 13, 2019 11:45 pm
As a man, I can't fathom putting my family (young children) in a risky financial situation when I have the means to provide so well (as the OP) for them. Young families face innumerable challenges to launching productive, independent adults. What happens if the wife gets M.S. and can't work while needing extremely expensive care (medicine, etc.). What happens if a child has a bike accident and suffers a brain injury with the requisite expensive care, treatment and perhaps lifetime trust for financial security.
This is the kind of fear-based thinking that gives Bogleheads a bad name. In the real world, no one structures his/her life around worst-case scenarios. They're too busy living and enjoying life for that.

EddyB
Posts: 711
Joined: Fri May 24, 2013 3:43 pm

Re: Can I semi-retire now?

Post by EddyB » Sat Apr 13, 2019 11:58 pm

SoonerD wrote:
Sat Apr 13, 2019 11:45 pm
HEDGEFUNDIE wrote:
Sat Apr 13, 2019 11:10 pm
SoonerD wrote:
Sat Apr 13, 2019 6:34 pm
There is a trend taking place whereby:
1) healthy, able bodied, smart young men decide to stop working or semi-work while sending their wives to work full time.
Is it really a surprise that healthy, able-bodied, smart young men might actually want to use their health, intelligence, and youth to do something more satisfying than sitting in an office all day?
Most don't sit in an office all day (I think). That's a rarer work environment than BHs probably realize.

But I agree it's not a surprise.

What is a surprise, to me, is that the modern man, is willing to quite because of stress and send his wife to the office in his place! In my world that's inexcusable - I'd say more but don't want to be flagged as unkind. I realize work is stressful; the young men doing multiple tours in warzones show us the effects of stress that is both real and extreme. I don't wish this on anyone.

As a man, I can't fathom putting my family (young children) in a risky financial situation when I have the means to provide so well (as the OP) for them. Young families face innumerable challenges to launching productive, independent adults. What happens if the wife gets M.S. and can't work while needing extremely expensive care (medicine, etc.). What happens if a child has a bike accident and suffers a brain injury with the requisite expensive care, treatment and perhaps lifetime trust for financial security. Giving up earnings at this stage of the family's development is unconscionable - to me.

But I understand the OP will do whatever he intends, probably regardless of any comments in this thread. People generally don't want advise, even when they ask for it, they just want confirmation of their plan.
Are you expressing that you’re troubled by one spouse being expected to “do all the work” (which generally includes, for a family with kids, both paid and unpaid work)? Or is it purely about paid labor? I don’t think the OP has said he won’t contribute more in other ways if he reduces his paid labor. I’m trying to understand the comment, but in my reading, it comes across as very sexist, and I don’t want to wrongly attribute that view to you.

EnjoyIt
Posts: 1973
Joined: Sun Dec 29, 2013 8:06 pm

Re: Can I semi-retire now?

Post by EnjoyIt » Sun Apr 14, 2019 9:30 am

HEDGEFUNDIE wrote:
Sat Apr 13, 2019 11:52 pm
SoonerD wrote:
Sat Apr 13, 2019 11:45 pm
As a man, I can't fathom putting my family (young children) in a risky financial situation when I have the means to provide so well (as the OP) for them. Young families face innumerable challenges to launching productive, independent adults. What happens if the wife gets M.S. and can't work while needing extremely expensive care (medicine, etc.). What happens if a child has a bike accident and suffers a brain injury with the requisite expensive care, treatment and perhaps lifetime trust for financial security.
This is the kind of fear-based thinking that gives Bogleheads a bad name. In the real world, no one structures his/her life around worst-case scenarios. They're too busy living and enjoying life for that.
Not no one. People like soonerD live life in fear. It is unfortunate. We see plenty of fear-mongering on this forum but as long as we step up and put it in its place it is not that bad.

Personally I think there is so much more to life than just toiling away for more and more money that we will never need.

I wonder how many millions soonerD thinks OP needs before they semi-retire. Is $3 million enough? What about $5 milllion. Or should OP, as a male work until 70 or die trying?

skp
Posts: 38
Joined: Tue May 01, 2018 8:12 am

Re: Can I semi-retire now?

Post by skp » Sun Apr 14, 2019 9:59 am

EddyB wrote:
Sat Apr 13, 2019 11:58 pm
SoonerD wrote:
Sat Apr 13, 2019 11:45 pm
HEDGEFUNDIE wrote:
Sat Apr 13, 2019 11:10 pm
SoonerD wrote:
Sat Apr 13, 2019 6:34 pm
There is a trend taking place whereby:
1) healthy, able bodied, smart young men decide to stop working or semi-work while sending their wives to work full time.
Is it really a surprise that healthy, able-bodied, smart young men might actually want to use their health, intelligence, and youth to do something more satisfying than sitting in an office all day?
Most don't sit in an office all day (I think). That's a rarer work environment than BHs probably realize.

But I agree it's not a surprise.

What is a surprise, to me, is that the modern man, is willing to quite because of stress and send his wife to the office in his place! In my world that's inexcusable - I'd say more but don't want to be flagged as unkind. I realize work is stressful; the young men doing multiple tours in warzones show us the effects of stress that is both real and extreme. I don't wish this on anyone.

As a man, I can't fathom putting my family (young children) in a risky financial situation when I have the means to provide so well (as the OP) for them. Young families face innumerable challenges to launching productive, independent adults. What happens if the wife gets M.S. and can't work while needing extremely expensive care (medicine, etc.). What happens if a child has a bike accident and suffers a brain injury with the requisite expensive care, treatment and perhaps lifetime trust for financial security. Giving up earnings at this stage of the family's development is unconscionable - to me.

But I understand the OP will do whatever he intends, probably regardless of any comments in this thread. People generally don't want advise, even when they ask for it, they just want confirmation of their plan.
Are you expressing that you’re troubled by one spouse being expected to “do all the work” (which generally includes, for a family with kids, both paid and unpaid work)? Or is it purely about paid labor? I don’t think the OP has said he won’t contribute more in other ways if he reduces his paid labor. I’m trying to understand the comment, but in my reading, it comes across as very sexist, and I don’t want to wrongly attribute that view to you.
From the wife in this situations potential POV. I was the wife who worked full time while my husband semi retired. I really liked my job. He hated his. We had a nice retirement portfolio and paid up college fund. I had the opportunity to be part time when they were younger. Now it was his turn. We could easily live on my income alone. It all looked good on paper. He did all the cooking, he was there for the kids, he brought in some income on occasion- he freelanced- when it was good it was a huge amount but it was so erratic, I learned not to count on it. So he did contribute in other ways. I still resented him at times. I liked to work. But I still felt like I had to be the responsible one. I had to work. He could do what he wanted. I wouldn't be honest if I didn't say it put a strain on our marriage. Just a warning. We survived it. The kids are grown. I still work (part time now for health care. ) and he doesn't. We made it through. But it was tough at times.

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