Retirement at 54 (relative, friends, drugs, payments)

[M3 Mitch]

Originally Posted by MCNE

I think mine will be somewhere around $800 in SA but includes the savings per month for property taxes which isn't too bad really. The largest risk at the moment I see is the medical but I'll figure that out along with the other stuff.


1. Might need to work part-time (no bid deal just not all yr)
2. No more 3 cars garage
3. Need to sell a couple of cars
4. Too much furniture so need to donate some
5. Control spending...like going to dine-in movie theaters and other stuff but adds up
6. Stay out of the downtown Chart House!

If your cars are paid for and you can do the regular maintenance on them, I would hesitate to ditch them. If you are in a HCOLA where just owning the cars costs you a lot, I would suggest leaving that area, not selling the cars. Likewise the furniture you own is a sunk cost, it costs nothing to keep it, I would only get rid of furniture if you move to a smaller home where the furniture is just too big.

I agree you need to avoid expensive restaurant meals, but only till you get some income started. If you want to work at Starbucks and then spend much of what you earn to eat at Chart House, to paraphrase Dire Straits, "hey buddy, that's your own affair!"

Given that you have dine-in theaters and a Chart House available, you are probably in a HCOLA.

To me, one of the issues with retiring at 54 is that you need to be 59 1/2 years old to draw from 401K and IRA accounts without penalty. Me, I would have needed a "bridge" job at least for part of the just over 5 years to avoid having to use 401K money and pay the penalty.

[Ultrarunner]

Originally Posted by Listener2307

It's kind of a one-way door. You are going to retire and then find that there is no way back into the work force with a salary & working conditions that you can live with.

Military people - especially retired officers - are notorious for believing their skills are in great demand. Fact is, retired military people can be darn hard to place, and that gets impossible if they don't work for a couple of years. When I lived in San Diego, the place was crawling with retired captains looking for work. Meanwhile retired Chiefs found work - work that most senior officers would not do, like driving a truck.

All of this is not limited to retired military. I have friends who retired on an early buy-out and have now lived long enough to regret it. You're a little different in that your pension is assured, and you seem to have good spending habits. So, I'm betting you'll make it. Keep your cash close, though. Don't try to invest. And be aware that you may be passing through a one-way door.

Seem to have a lot of retired military friends... some enlisted and some officers.

All have done well after serving.

Chiefs, Commanders and Leutnant Commanders... no Captains in my circle.

Some have started businesses and others were able to parlay service to civilian.

One of the Chiefs was into electronics... took over a repair depot for commercial welders...

One of the Commanders was involved in marine salvage and had several offers.

Several of my bosses were retired officers and switched to military sales...

[MCNE]

Originally Posted by M3 Mitch

If your cars are paid for and you can do the regular maintenance on them, I would hesitate to ditch them. If you are in a HCOLA where just owning the cars costs you a lot, I would suggest leaving that area, not selling the cars. Likewise the furniture you own is a sunk cost, it costs nothing to keep it, I would only get rid of furniture if you move to a smaller home where the furniture is just too big.

I agree you need to avoid expensive restaurant meals, but only till you get some income started. If you want to work at Starbucks and then spend much of what you earn to eat at Chart House, to paraphrase Dire Straits, "hey buddy, that's your own affair!"

Given that you have dine-in theaters and a Chart House available, you are probably in a HCOLA.

To me, one of the issues with retiring at 54 is that you need to be 59 1/2 years old to draw from 401K and IRA accounts without penalty. Me, I would have needed a "bridge" job at least for part of the just over 5 years to avoid having to use 401K money and pay the penalty.

I worry about the space moving from 4000+ sf to 2300, plus I have a couple of family member that need stuff if they would come and pick it up.

Owning the cars isn't too bad but we wont need them all but they are paid for. I'll keep my Vette and two others but that's it. I don't know if San Antonio is a HCOLA but is sure is cheaper than Dallas. Seems reasonable to me.

You can access your 401k without penalty the yr you turn 55 if you retire from the organization where your funds are. That's what I will do if needed. I can't remember the IRS publication but I have the document saved on my phone. Good reading while on the plane .

[M3 Mitch]

A Corvette and a couple more "regular" cars is an OK fleet. Me, I would not know what to do without at least one pickup available, but actually one can rent a pickup for a day at U-Haul and similar, if not owning one.

I have not heard about avoiding 401K early withdrawal penalty if he is retired from the company where the 401K is/was earned. You may be right. I do know that if one takes (usually small) equal distributions either monthly or annually from a 401K, and they are sized so the money lasts to the end of your actuarial lifetime, IIRC this dodges the penalty.

You Texans like your big houses. "Downsizing" from 4000 to 2300 sq.ft. I have been living in 928 sq.ft. for the last 25 years. Several times that in garages and sheds, but the main shack is not that big. With one of Texas's only big tax bites being property tax, any downsize you can pull off will probably reward you well.

San Antone is IMHO a decent place to live, weather is tolerable, no state income tax, gun-friendly state. You just have to steel yourself to stay away from Chart House and etc. if you need to keep your budget down. I mean occasionally why not, but you can't be eating there a few times a week and stay within a reasonable budget. When I lived in Brenham, we had a really excellent butcher shop, run by German guys who probably trace roots back to the Alamo. Go to a place like this and get a steak, cook it yourself, and you have a meal that would cost $50 anyway in a steak house for about $10.

[MCNE]

Yeah without that rule I wouldn't even be in a place to consider making a run at retirement early. Even with it there is a lot to consider as you can see from this thread. I pulled this below because I can't find the darn document.

https://www.irs.gov/retirement-plans...ribution-rules

Tax on early distributions. If a distribution is made to you under the plan before you reach age 59½, you may have to pay a 10% additional tax on the distribution. This tax applies to the amount received that you must include in income.

Exceptions.

The 10% tax will not apply if distributions before age 59 ½ are made in any of the following circumstances:
- Made to a beneficiary (or to the estate of the participant) on or after the death of the participant,
- Made because the participant has a qualifying disability,
- Made as part of a series of substantially equal periodic payments beginning after separation from service and made at least annually for the life or life expectancy of the participant or the joint lives or life expectancies of the participant and his or her designated beneficiary. (The payments under this exception, except in the case of death or disability, must continue for at least 5 years or until the employee reaches age 59½, whichever is the longer period.),
- Made to a participant after separation from service if the separation occurred during or after the calendar year in which the participant reached age 55,
- Made to an alternate payee under a qualified domestic relations order (QDRO),
- Made to a participant for medical care up to the amount allowable as a medical expense deduction (determined without regard to whether the participant itemizes deductions),
- Timely made to reduce excess contributions,
- Timely made to reduce excess employee or matching employer contributions,
- Timely made to reduce excess elective deferrals, or
- Made because of an IRS levy on the plan.
- Made on account of certain disasters for which IRS relief has been granted.

[StealthRabbit]

Originally Posted by M3 Mitch

A Corvette and a couple more "regular" cars is an OK fleet. Me, I would not know what to do without at least one pickup available, ...LUV my 'used' Snowbear (Costco 2100GVW, not Home Depot 1600 GVW) found one in SA for $400, hauls 12 ft supported. (reverse tailgates) Snowbear will soon have a 'slide-in-Teardrop camper to fit behind my 50 MPG wagon.
https://www.youtube.com/watch?v=Qo2Yx-xjkzw I always have my Mack, or Cummins dually 4x4 flatbed w/ triple axle trailer, or bulldozer if I need to move or carry something HEAVY, (Cost me $2k to ship truck and dozer from WA to TX, cheaper than doing it myself).

You Texans like your big houses. ... My Hill Country home is actually an 1930's cabin, I rent out the main house for 3x mortgage. I kept 2 of the 3 shops (35x70 each)...
With one of Texas's only big tax bites being property tax, ($1800/yr in TX, $14,400 / yr in WA)

San Antone is IMHO a decent place to live, weather is tolerable, no state income tax, gun-friendly state. ... get a steak, cook it yourself, and you have a meal that would cost $50 anyway in a steak house for about $10.

Nice thing about SWA... (2x50#)coolers of Salmon fly free PNW to TX, and brisket flys free back to WA Cooking your own brisket is essential! or $12+ / lb

Originally Posted by MCNE

Yeah without that rule I wouldn't even be in a place to consider making a run at retirement early. ...
https://www.irs.gov/retirement-plans...ribution-rules...

I so hoped to take the age 55 - 401k plan, but.... had the opportunity to bail at age 49 (w/ 32 yrs service), and it included FREE 2 yr college, UI, HC, & 2 yrs wages (taxed at 40%, thus I did a sect 179 and bought the dozer) so.... poof, I was gone

I figured I could take a 72t if needed, but, it was not needed... NOW to live long enough to get a National Parks "Golden Eagle" !!! few more yrs Then I will take another 1 yr road trip in the 22 mpg MH. (Hopefully running on free WVO by then).

BEST 'financial' thing was creating a IRA LLC (from 1 of my rollover IRAs) that owns some very good cash flowing Hill Country TX view rentals (TX rents are CRAZY high (energy state) values still very affordable). Since there is no mortgage on the IRA RE, it just grows at thousands / month . I will just take occasional distribution between age 59.5 and SS age TBD) If I get sick of managing the RE, the LLC will sell it on contract to tenants (who are excellent and very grateful to have a country home with a nice view). I trust the rates will be such that I can get 6+% on a 30% down owner contract. Meanwhile the renters are building my cash reserves, as well as maintaining beautifully, and growing my equity. I bought from retirees heading to a retirement center. It was pristine with new appliances, 3 car garage, storage building, AND an extra view lot 1 acre (where I will build a small energy free retirement home). (all for less than appraised value) very quick CASH closing (10 days) (using my IRA).

[MCNE]

Income from Real Estate is not something I've considered in SA with the little cash I have. Might be an option for some cash flow during retirement, Hum...

[shamrockfisher]

Not enough of a nest egg for your stated income need at that age and life expectancy. Many things can and will change over this long of a period. Health will change, income need may change and inflation including health care inflation will effect you greatly over this time period. Tax laws will change for better or worse.

You are cutting it thin. Better to work another 8 years.

[Blondy]

Originally Posted by MCNE

I worry about the space moving from 4000+ sf to 2300, plus I have a couple of family member that need stuff if they would come and pick it up.

Owning the cars isn't too bad but we wont need them all but they are paid for. I'll keep my Vette and two others but that's it. I don't know if San Antonio is a HCOLA but is sure is cheaper than Dallas. Seems reasonable to me.

You can access your 401k without penalty the yr you turn 55 if you retire from the organization where your funds are. That's what I will do if needed. I can't remember the IRS publication but I have the document saved on my phone. Good reading while on the plane .

Well, I'm sure its different for everyone, but one of the things I think most retirees realize is that less is more.

There is a very zen feeling to getting rid of all the "stuff" that you don't need. And, as well, once you are retired, the desire to collect more "stuff" may decrease significantly.

For example, we bought our retirement home a year before we retired. I was fortunate to have my mom and sister who both like to shop in the area. So, they furnished with my direction/approval from long distance our retirement home with the basics so we or our kids could use it on vacation until we retired.

I absolutely loved having a home furnished with the bare minimum of all necessities. And, I cant tell you how p*ssed I was once we moved in when they started showing up every time they visited with "things" I could use. Get that out of my house lol!@!

For what its worth, 2300 is an average size house and way more than enough for 2 people.

Get rid of all that junk. I cant stress to you enough how much you will not care about it once you retire.

[StealthRabbit]

Originally Posted by MCNE

Income from Real Estate is not something I've considered in SA with the little cash I have. Might be an option for some cash flow during retirement, Hum...

I am able to get $1000 / mo on a place I buy for under $100k

option one: $30k all that is required); I have bought 'owner finance' from elderly persons going into care. Usually 30 - 40% down and 6%. I auto-pay so they never have to ask / guess on expected deposits, and give them a 120 day 'cash-out' clause.


Option 2: I use my HELOC (on primary home) to buy a rental; Zero cash required. Floating rate (currently 3.25% with CU) I have a Plan B just in case, But ONLY interest is required to be paid each month, so...this is a very nice option to bridge short term cash flow needs (till SS,?) <$300/ month payment and $1000/ month income.

Option 3: I have done the same with margin accts. (tad more risky, so have a plan B (Heloc is a nice Plan B))

Option 4: IRA money buys the investment RE, (rules apply) Zero cash required. but... withdrawals need to wait till you are 59.5