Note: this post started as a comment reply but outgrew the limitations of the comment box. The short version is I’m living off retirement funds until Social Security kicks in.
I’m fleshing out the thought process here in case anyone else is considering retirement. Things to know:
- I am frugal by nature and don’t require much to live and be happy.
- I like boondocking and solitude.
- I don’t have a wife or girlfriend to keep happy. I haven’t dated in 2 years and am the better for it.
- In order to hit my original retirement target I was socking away the majority of my state worker income into pre-tax accounts and paying extra on the van note.
- This left me with what Normal People might think is a meager monthly budget for food, van insurance, fuel, cell plan, entertainment, etc. Basically everything but the van note which I took out earlier. Hereafter I will refer to this spending as $X/month. I’m not trying to be coy here (it was about $1000/mo without being careful). I want to encourage readers to plug in their monthly “nut” there as they read along.
- When boondocking I found my spending plummeted to about 1/3rd X. I was cooking for myself all the time, staying in one place, not spending anything on entertainment. Hiking, reading, blogging, etc. Boondocking is my favorite thing to do — it’s not a hardship by any means. I just couldn’t do that much of it with my work schedule.
- I get my medical care through the VA, and also have a 20% service-connected disability that yields a .25X/month payment. That goes into a money market savings account as my Emergency Fund. In all the cases below the emergency fund is untapped.
- I have no debt (van was paid off in December)
Original plan: retire in 2024 on state pension –> RMD retirement funds + delayed SS
My original plan was to work another 4.5yrs and retire directly into a state pension at age 58. The pension would pay more than X, so retirement would have been a small pay raise. 🙂
At 70 I’d be forced to take required minimum distributions from retirement funds (another X), and would also file for late Social Security (yet another X).
We were working 4×10 shifts which felt like semi-retirement anyhow. I could coast to the finish line. Lots of boondocking opportunities.
Changed plan: retire in 2021 on retirement funds –> SS –> pension –> SS
I enjoyed the work and my coworkers but we lost 4×10 in a scenario that seriously outraged me and resulted in an accellerated retirement plan. The schedule was terrible and getting worse with no end in the foreseeable future. Our hours and days of work were extending and we were short staffed.
I ran the numbers again and saw that I could retire in 1.5 years (to reach pension vesting). It would look like this:
- retire at 55 in 2021
- live off retirement funds until early SS
- file for early SS at 62
- pension would start at 68; suspend SS to increase benefit
- re-start SS at 70
All the way through I’d have at least 1X, then at 70 I’d have 2X.
Frustration plan: retire now on retirement funds –> some work gigs –> early SS
I got increasingly frustrated with the work schedule and started thinking about pulling the lever on the ejection seat. What happened if I bailed now before pension vesting? In addition to my monthly pension contribution I’d paid an extra ~$12k into that fund to get to that age 58 retirement. Did I hate the work schedule enough to walk away from the extra I’d paid? It was starting to feel that way.
I figured by taking active steps to economize I could get my spending down to one-half X (boondocking on retirement funds). If needed, I could do some remote work like transcription to make it to early social security. I invested in a good keyboard and did some transcription practice.
In this mode I’d have less than 1X until SS.
Executed plan: retire now on retirement funds –> withdrawn pension funds –> SS
I really didn’t want to lose the $12k. Sunk cost, I know, but it stuck in my craw. I started sniffing around to see if it was a necessary loss.
To my delight, I found that not only was the $12k retrievable (and rollable into my retirement accounts) but the rest of my pension contributions, too. This was a game changer: I could retire now and make it to Social Security on my current assets at the full 1X budget. The more I save by boondocking the longer the money will last, and the later I can claim SS.
There are a few timelines that started at separation from work, but all cylinders will be firing by March.