I have no idea what I would do if I retired early

Regular readers know that I am not as happy with my job as I used to be and I really want to leave this state.  DH’s job is flexible geographically, but it’s at a start-up and could either go big or go out of business in the next couple of years and there are only 3 cities in the US where it would be fairly easy to find a new job in his specializations.

Our married and adult life we’ve followed my job.  If we changed to follow DH’s I might have to leave academia entirely and I’m not entirely sure if I would be able to or even want to make a transition to industry.  (It would be very easy to transition to government but I SO do not want to be a government policy analyst.)

We could have me do the RE part of FIRE.  DH’s job isn’t as stable as mine, but we could probably handle the time it takes to find a new position, and it would be faster to find a new position in more expensive cities.

Recently Revanche asked what I would do if I retired early.  And had I given thought to what I would do if I retired at a normal age for retirement.

Honestly, no.

I don’t want to craft.  I’m allergic to most green things, so gardening is out.  I would probably end up taking a leadership position in activism and that would make me so unhappy all the time.  I do so much more good so much less unpleasantly by getting rid of my students’ math phobia.  (And I could teach K-12 but that also sounds pretty unpleasant.  And yes, I have done volunteer tutoring before… there’s a lot of sitting around waiting for someone to show up.  Teaching Montessori sounds up my alley, but it would pay so little and I would be so sick at first.)  I don’t want to write novels.  I do like reading them.  But…

I mean, I could retire and read novels and catch up on all the movies I haven’t watched since my kids were born.  I would make elaborate dinners.  And organize things around the house.  And gradually get lonely and depressed.  I would probably set myself strict schedules to make my days go by more quickly.  I might look into fixing up my health, but also I might not.  Whether or not I got out and spent time with other not employed people would entirely depend on where we were living– I do not at all like the SAHM around here.  I picked up books at the library the other weekday when story time was starting and it was a terrifying parade without a single mask.

I could also play video games which are really engrossing but make me incredibly depressed when I stop, unfed and unwashed with bleary and dry eyes, having spent the day and much of the night playing.  (I cannot have access to video games or that is all I will do.  I don’t even take restroom breaks until I really have to.)

I would probably try training service puppies.  I have the kind of forceful personality that dogs tend to respect.  And I LOVE puppies.  Dogs, not so much.  I mean, if it were my own dog, that would be different, but I’m really a cat person at heart.  So I do think I could train puppies and then give them back.  I mean, I trained my sister’s dog and then left.  Fostering kittens sounds like a lot of heartbreak (longtime readers may remember when #2 fostered).

But yeah, I would probably end up finding a cause and try to fix it and be unhappy and stressed.  That’s what I DO when I have too much time on my hands.  Having a career is a way of keeping me safe from that.  Also keeps me from being too controlling over my kids.

In terms of what about normal retirement?  I have not actually thought about it because it depends on so much.  Do my kids have kids?  How is our health? How much money do we have?  Are we both still alive?  So many things can change and it’s decades from now so, no haven’t done planning.

So… I think even if things are terrible I’m unlikely to quit my *career* if I can help it, though I might quit my job.  I’m hoping to have something lined up, preferably in one of those three aforementioned cities.  I’ve been thinking that a SLAC might be nice, so long as the teaching load isn’t too onerous.  (I don’t want to go above 2/2.)  I don’t know.

What would you do if retired early or on time (but were not super wealthy, like if you’re partnered your partner still had to work)?

I am not ok

I have not dreaded a school year starting this much since grad school.  Or maybe even middle school.

My state government wants to kill my family and me and everyone else too in some kind of political power move.  It is unpleasant knowing that super villains are both real and in charge.  And most of the parents I know are too burned out to fight anymore.  (The irritating “liberal” White Doods, though, are still happy to tell us that everything is pointless and also anything we do is wrong.)

Last year’s thing with the associate dean really killed my desire to get up in front of a required core class, especially one where I have all the people who signed up late because it’s an 8am class and the later sections are full.  The previous year’s cheating scandal also still lingers.  And the year before the insane and potentially dangerous student who started threatening me because on the first day of class I asked him to move up a few rows (and my chair just sat there after forcing a meeting with him and listened to him accuse me of things until I left)– he did get moved to the online version of the class and went on to threaten other female faculty members and students in his other classes… nothing was done about him.

I don’t want to go into the office, and one of the reasons is because the anti-masker pro-gun faculty member who encouraged last year’s student to go to the associate dean now has an office directly next to mine.  And of course he goes in every day.  I assume he’s gotten vaccinated, but if he keeps up what he’s been doing (meeting with crazy right-wing students unmasked in his office and classroom) eventually he’ll probably get a breakthrough infection.  Who knows.  Maybe he’ll take horse dewormer and get super sick.  One can always hope.

I worry that I can’t protect my kids.  DC2 is homeschooling but DC1 or I could easily bring the virus home.  And probably zie would be ok.  But there’s also a chance zie wouldn’t. Or that there would be long-term consequences that affect hir entire life.  I will do a lot to protect my kids that I will not do to protect myself because they don’t have the power to make these decisions yet.

One of my colleagues quit this summer without another job lined up because he and his wife couldn’t stand living here anymore.  Last night I dreamed he got a last minute position at Delagar’s school where masks are required.

I wish I were taking this semester off as unpaid leave.  And indeed, if I get called into the associate dean’s office again this year, that’s what I’m going to do.  Take leave without pay for the rest of the semester.  The students can have the monotone adjunct for the rest of the semester while I do more job applications.

Maybe it won’t be as bad as I’m worrying.  But now that I think on it, this class has been wildly problematic for the last 3 years.  And this year I have nothing to protect me from the rabid Trump loving anti-masking anti-vaxxers like I did last year.  It’s not irrational to be dreading this semester.

But I do have an escape plan.  I can leave.  Heck, I could even quit my career at this point and Barista FI (though being an actual Barista sounds pretty awful).

Ask the grumpies: Roth IRA contribution max the gross or take-home income?

First Gen American asks:

Your child can open a Roth IRA if they have earned income. I am still unclear if the max contribution for that calendar year is equal to the gross or take home income.

According to the IRS, it is “your taxable compensation,” so that is going to be neither gross nor take-home, but taxable… it’s probably easiest to see this on the pay stubs themselves.  There should be a line on there.  (For me, it’s absent my pre-tax health insurance and other accounts, but not absent taxes!)

(Standard disclaimer:  We are not professionals, please consult with an actual professional or do your own research before making any life-changing decisions.)

Adventures in rolling over a previous employer’s 401k plan

For the first time, DH has left a company (it went out of business) and the 401K provider won’t let him keep his IRA with them.  (He still has a 403b with Fidelity at the university from when he was an assistant professor.)  All of the money is in a traditional 401K, not a Roth.

When you’re in that situation, you have four options.

  1.  Take the cash and pay a penalty
  2.  Roll the 401K into your current employer’s plan
  3.  Roll the 401K into an IRA
  4.  Roll the 401K into a self-employment retirement plan

Taking the cash and paying a penalty is a bad idea for most people, unless it is a very small amount of money and you need it. If it’s a large amount of money you probably want to keep it in retirement because if you declare bankruptcy it will be protected.  This is the kind of thing you’d want to do some serious research on before doing (as opposed to letting it just happen like #2 did once because it’s the default).

Unfortunately, DH’s current company hasn’t listened to DH’s friend and coworker yet who got DH’s last company to switch over to Fidelity (with DH’s help and my urging) so the fees on the plan are ridiculous.  We don’t want to roll over to them.  (It seems to be a very popular retirement company for start-ups– they suspect it’s super cheap for the companies and puts all the cost on the employees.)

Ideally we would roll over into an IRA.  IRAs are great because you have control and you can use any firm you want, like Vanguard!

There’s another wrinkle though– since we want to be doing Backdoor Roths every year, all that IRA money needs to be Roth money, not Traditional.  Unfortunately, DH’s 401k is all traditional (probably because the expensive original firm didn’t do Roths and then I was protesting Trump by switching everything from Roth to traditional).  So that means that on top of the IRA rollover, we also need to move everything from traditional to Roth and pay taxes on it.  If we don’t, then doing a backdoor Roth will be complicated.  Basically we would end up pre-paying some amount of the taxes owed on the traditional IRA each time we did a backdoor Roth (this is called the pro rata rule).  In theory, the taxes on the principal would come out the same in the end, but having to figure out what to pay each year sounds unpleasant.  It could also increase our tax bracket for the year and we’d eventually be paying taxes on earnings too.

How much money are we talking about?  $232,000.  That is not chump change, and from what I read, that entire amount would be added to our income for the year if we did a Roth conversion, much of that in higher tax brackets than we usually face (even with DH’s unemployment this year).

So… for a while it seemed like the best option was 2, and we would just eat the additional 0.7% fee they add on to everything until DH and his friend can convince the company to move to Fidelity.

But then DH did some more digging into that option 4– and decided it was worth trying out.

DH looked into the solo 401k, because he had self-employment income as a sole proprietor this year.

There was a concern that 401k plans that do not get contributions can become dormant, and may even be considered non-qualified by the IRS. However, according to this page:

The IRS considers a sole proprietorship once established to continue until the death of the sole proprietor. Section 401 explicitly considers an individual with earned income from self-employment in any prior year, even if there is no earned income in the intervening years, a self-employed individual eligible for a 401k. Only the termination of a business entity that is the sponsor of the 401k requires the termination of the 401k plan.

This is the difficult official language about Discontinuance of Contributions:

Consider all of a case’s relevant facts and circumstances; but generally, in a profit-sharing or stock bonus plan, consider the issue of discontinuance of contributions if the plan sponsor has failed to make substantial contributions in three out of five years.

Vanguard didn’t used to accept rollovers from other plans into their Vanguard Solo 401k, but they do now.  So we went with them.

So after all of this research to make sure that DH could create a Solo 401K and didn’t need to contribute to it every year and could rollover, the hardest part was being on hold with Vanguard waiting to talk to a representative.

Once DH got off hold, the representative answered his questions double checking that he could do a rollover and could open the 401K and didn’t need to make additional contributions or anything like that.  DH answered some basic questions like he’s the plan administrator, that I was the beneficiary rather than whoever he happens to be married to at the time of death (thanks, DH! but let’s not get divorced), and a fund to start with (he can decide on other funds later, which he will do later once it’s made).  There’s a fee per fund, but it’s waived because we have lots of money with Vanguard already.  The guy said it would take a few days to get the account (technically a plan for the company and an account for DH, the sole employee) created after DH requested the account and signed some forms online and we should get an email from Vanguard when it is ready.

After the account is done, he should be able to contact his old plan, Fidelity, to tell them that he’s rolling over to this new Vanguard account.  We’re hoping this will go smoothly and there will be no mailing of checks involved.

The Form 5500 will have to be filed annually once the plan is $250+k.

We will update if anything goes wrong!

DH notes that when you get the notice about plan termination, you may only get a month to figure out how you’re going to transfer and to get the transferring done, which is plenty of time if everything goes smoothly, but isn’t plenty of time if it doesn’t.  So don’t sleep on it!

Have you ever rolled over a previous employer’s retirement account?  What options did you pick?

Retirement ideas from reading Bogleheads Guide to Investing

I figured with our current money situation, I could do with a refresh on retirement planning ideas.  You know, things that I used to ignore because we weren’t there yet like what to do with long-term money outside of retirement accounts or how to get more diversification once you have room to play with things that aren’t just the basics.

So I checked out Bogleheads Guide to Investing (all amazon links are affiliate).  (I actually own Bogleheads Guide to Retirement, but it is more scattered and not as useful.)  I skipped several chapters because like… I know low fees are important, I understand the basics of diversified portfolios using a small number of low-cost indexes etc.  Those are important, and they’re really all most people need to know– once you have that down and have enough money to put it into action, you’re likely going to have a nice retirement.

But right now we’re at a point in which adding to a Target-date fund doesn’t make sense– we have enough money set up for safety.  (I’m not saying that we could stop contributing to retirement, but we are at the point where if we keep doing what we’re doing we will be fine.)  And we have possibly too high of a percentage in the US Vanguard Total Stock Index because in some of our retirement accounts that was the cheapest broad-based fund in a sea of expensive alternate options.  (It’s also a really great choice on its own!  But a little more diversification at this point would not go amiss.)

What happened to cause this decision to go back to basics?  We had some extra money in savings that we hadn’t spent down when DH got re-employed, so I figured we should put it in taxable stocks since there wasn’t really anywhere else to put it.  I was like, maybe I should get more Nasdaq because historically I’ve tried to balance riskier stock indexes/ETFs with safer ones like the Dow or just the S&P 500.  (Back in the day!)  But then I had a hard time finding a cheap index and didn’t feel like dealing with the ETF aspects of QQQ (which is really just simple math– this is me not at all being logical).  And then I was like, if I’m going to have to think about this at all I might as well do a little more thinking.  So I thought… hey, this is a taxable fund, why don’t I buy some tax-advantaged Muni Bonds.  Which is adding LESS risk to the portfolio instead of more!  But also, I didn’t have any tax-advantaged bonds in taxable accounts, and it seemed reasonable to get some at this point since we have a sensible retirement plan locked up in our retirement accounts.  So I bought a Vanguard municipal bond fund.

At that point, I thought… I should get some rhyme and reason to these additions.  I shouldn’t be in a situation in which I go in to buy Nasdaq and end up buying municipal bonds instead.  That makes no logical sense.

So while I am really not wanting to go through all of our different accounts to figure out what’s small cap vs. large cap and so on, I really ought to at least figure out what we have in domestic vs. international, what we have in emerging markets, how much we have in bond funds and what kind of bond funds etc.

And it’s time to start thinking about increased diversification through funds that don’t just track the US stock or bond market and about increased tax advantaging via asset allocation.  Bogleheads makes it clear that these things are *OPTIONAL*.  If you’re not yet maxing out your retirement accounts, just stick to a Target-date fund or a mix of a total stock index and a total bond index based on your predicted retirement date and preferred asset allocations.

So things to think about:

munis (We now have some!  Bogleheads doesn’t seem to limit the amount but they do say that only people who have maxed out tax advantaged retirement should even consider these.)
REITs (They suggest no more than 10% of a portfolio should be this– currently our house is more than 10% of our total savings, so maybe we’re not ready for these yet.)
TIPS (we will probably never do this, but they recommend up to 40% based on where you are in retirement)
International funds (I have dipped into this, but I can’t remember where or how much.  Bogle says no more than 20%, but the book authors say 20-40%.)
Tax loss harvesting– I’m never going to do this myself because I will stick with broad-based indexes, but it is magical when it happens.  Still, it might be worthwhile looking into tax-advantaged funds to put in my taxable accounts.

I’m still not sure if it is better to have low yield/safer bond funds in taxable or tax-protected accounts.  The argument Bogleheads makes is that taxes on stocks that have been held a long time are currently capped at 15%, but they’re not capped for bonds.  The counter-argument is that the earnings on stocks are going to be a lot larger than the earnings on bonds, so it will be 15% of a larger number vs. whatever your tax rate is on bonds of a smaller number.  (And one’s tax rate in retirement could be 15%!  It’s hard to predict the future!)  Buying munis and putting those in taxable means that you’re not paying federal taxes so that kind of allocation is pretty obvious.

Several sections of the book have slightly different charts with most tax efficient vs. least tax efficient investments.  High yield bond funds (like junk bonds) should definitely only go in tax-advantaged (I think it is unlikely we will ever buy junk bonds since I prefer bonds to decrease, not increase, risk).  Then they say REITs should go in tax-advantaged, so that’s something I would eventually want to think about in terms of what Fidelity has to offer since that’s my work account.  Then balanced funds.  Then active stock funds (presumably because managers can realize losses?).  Then all the various stocks you can think of become more tax efficient, and finally low yield cash or cash equivalents.

Did you know that IRAs don’t get a step-up in cost-basis at death like taxable stocks do?  I did not!

Anyhow, this is just initial thinking– I do not have any recommendations for anybody yet including myself.  I do think that I need to come up with a plan though, otherwise cash will just sit in my saving account accumulating no interest until next summer.  I don’t get paid until October so I have a while to set out a strategy and I should do that before school starts up again while I have the mental space for it.

Next steps:
1. Update my asset allocation numbers (I have a spreadsheet, but I only tend to update when I log into the respective website, so I don’t have a snapshot of everything at any one point in time), especially the stocks vs. bonds percentages and the domestic vs. international percentages.
2. Think about how often I want to put money into taxable. Do I want every other month no matter what is in there? Do I want a benchmark of 10K or 30K over what I need for summer savings? I will also need to make sure we have enough for our backdoor Roths come January since those are tax-advantaged.
3. Related: I should figure out how much to put in the dependent daycare account for DC2. What will zie be doing next summer? I have no idea! Daycamp options in town aren’t the best for middle schoolers.  [Update:  decided just to go with the after school care costs and if daycamp happens we just won’t get tax credit for it.]
4. Figure out an investment strategy going forward based on diversification and what to put in taxable Vanguard vs. tax-advantaged Fidelity. (DH’s retirement option sucks so it’s all in their lowest cost S&P 500 and then my 457 is in its own weird thing we don’t have any choice over.)

How do you figure out your asset allocation?

Ask the grumpies: Time to retire?

CG asks:

How will you decide when it’s time to retire?

#1:  I am always ready to retire.  For me this will come down to money.  I will need enough money to keep myself in books and housing and food.

#2:  I don’t think I will…?  It will probably end up being a combination of life circumstances (like health) and job stuff.   I dunno.  I’m still in the taking it a week at a time mode.

Grumpy Nation:  How will you decide it’s time to retire?

Ask the grumpies: What do you want to do when you retire?

CG asks:

What do you want to do when you retire? My motivation for asking is I’m always interested in these people who retire at 40 or 50–they have a lot of time left if things go well and what kinds of things do they want to do or accomplish with their second act? This applies to people who plan to retire at a more traditional age as well.

#1 doesn’t really plan on retiring.  I don’t know what I would do.  I’m honestly not very good at being unproductive 100% of the time (I am very good at being unproductive on weekends) and I’m sure I would feel huge amounts of guilt if I weren’t doing something to make the world a better place.  Depending on the trajectory that the US ends up in, I would probably end up miserable trying to herd volunteer cats to fight the power.  The life of a professor in which I gently nudge students to think critically about their goals and how to achieve them while also removing their math phobia seems a lot better than that.  If the world was in a good place, I don’t know, probably go places to try eating new things, read more challenging novels than I do now, and watch youtube videos.  I’d probably also exercise more.  I would hopefully not waste too much time arguing with people who are wrong on the internet, but who knows.

#2 loves the idea of retirement and would read books, foster kittens, and travel to Italy to eat.  Also all the naps.

What should you do when your employer stops its retirement match?

Disclaimer:  We are not financial professionals.  Please do your own research and/or consult a professional before making important financial decisions.

Universities all over the country are temporarily suspending generous retirement fund matches.  Recently, the Fortune 500 company my sister works for decided to follow suit, which is ridiculous given that they’re not in dire straits and have been through worse.  (It makes sense when DH’s tiny company temporarily cuts the match, but a Fortune 500 company that’s built on keeping top talent with firm specific human capital AND wants to be able to gently let older workers go in a world without mandatory retirement… it’s ridiculous and very short-sighted.  I mean, maybe it’s helping them delay lay-offs… I would be more confident in their decision making if they hadn’t tried to make everybody come back into work in person after the initial quarantine was lifted even if they were productive at home or were in Covid danger categories.  But I digress.)

So what should you do if you are in this situation?

Part of the answer depends on how secure your job is.  If you’ve got tenure and you don’t think your uni is going to go completely out of business, or if you’re not in danger of being laid off from a large firm, then you need to make up the difference and contribute more to your retirement account.  If you’re worried about losing your job and being unemployed for a while and don’t already have a good emergency fund, then you might want to contribute the same or less to your retirement account (though if you are in this situation, you should see where you can cut spending and do a financial fire drill before you sign anything that decreases your retirement contributions– you need to take care of yourself in the future too).

How do you contribute more?  The first way is easy:  if you haven’t been maxing out your 401K/403B ($19500 in 2020), then up that to the amount that you used to be matched.  So if your uni gave you 5K if you put in 3K, then up your contribution to 8K (or as close as you can get).  If you had a 100% contribution, then double what you’re currently putting in.  If you put in 10K and your company put in 5K, then contribute another 5K.  (And if the match comes back, you can still contribute the full 15K– your company is allowed to contribute something like $37,500 on top of your own contributions.)

If you’re already putting in $19,500 each year and have lost the match the first place to look to put in more money is into an IRA, up to $6,000 additional.  If you’re able to put in $19,500 to a 401K/403b plan, chances are you are only able to contribute to a backdoor converted Roth IRA because you’re making a lot of money.  But if you do make less than the income limits , you can contribute to a regular IRA Roth or Traditional IRA without having do a backdoor conversion.

If you have already maxed out your IRA space, check to see if your company allows Backdoor Roths with their 401K (these are less likely with 403b, since they are a way for high income people to hide said income from taxes, but who knows, maybe the fed has them).  If so, you can contribute up to $37,500 tax advantaged in one.

If you don’t have any of these options but you want to protect your future self, think about other places that you can put the money you are losing out from losing the match.  Do you have debt (including mortgage) you could pay down?  Do you have a high deductible health insurance plan with a health savings account?– That money is tax advantaged twice!   If you are planning on paying for your kids’ college– maybe the 529 could use a boost?

The truth is, if you are getting your retirement match cut, you are getting a pay-cut and you need to adjust your spending/savings if you can.  If you are in a precarious situation, then you need more money in short term savings even if it means a spending cut.  If your situation is more stable, then you need to make up for the future loss from lost retirement savings, preferably in a way that is tax-advantaged.

Have your benefits been cut this year?  If so, what are you planning on doing as a response?

Ask the grumpies: Can I Retire Early?

Middle class revolution asks

By the time you post this, I may already be out of a job. However, i can always use your money wisdom and that of your readers. I may also ask Frugalwoods but they want so many details.

Here is some background info about me and my family:

– Family = me (50), my husband (poor health), 2 young kids – one with special health issues and low functioning autism. We don’t plan to pay for college but want to support spec needs kid with a trust (from home sale?).
– My parents live nearby and currently offer babysitting help.
– We own a single family home in a high cost west coast state. It is safe, blue collar, ethnic neighborhood with so-so schools. Valued at $500,000 to 600,000. We are 2 years away from paying off mortgage. May do this sooner if possible.
–  I have a 401k, rollover IRA, Roth IRA totaling . My husband has no retirement savings. Total value of approx. $470,000 depending on stock market.
– I will get social security but don’t know amount.
– Husband earns approx $5k per month from state as our kid’s caregiver. I will take over this role. He can get health insurance thru this job but I don’t know how good it is.
– My income was $3k per month after taxes, 401k contributions and health care premiums.
– Currently spend about $4k per month. Want to reduce this.
– We own 2 cars and will sell one.
– We have no debts.
– We don’t have a will or life insurance (very bad, I know)
– Both sets of our parents are financially fine. His parents already gifted us to help buy our house. No inheritance expected.

I am resigning due to a bad work situation (horrible boss). I do not expect to find a similar job since I won’t have my boss as reference and I’m 50.

Did I make a horrible mistake? Will I end up eating cat food or worse?

Please advise!

With a low functioning disabled child, you need to get a will AND life insurance NOW.  This will probably be pricey if you’re thinking about a trust.  Along with the thinking about a trust, the law office will likely be able to recommend someone to think about the financial aspects of your plan for your child.  How much will they need after you are gone?

I always think that the FrugalWoods are overly optimistic about retiring.  I mean, I guess that’s their brand but also they haven’t lived it (since Mr. FW has never stopped working for an employer and Mrs. FW has her own business), so…

Looking at your numbers, with half your wealth locked up in your house and a low functioning child and spouse with health issues… I would not personally retire early.  If my job were terrible, I might leave that job, but I would definitely keep looking for another opportunity or get more education to switch fields or *something*.  I don’t think you have enough to safely retire because your life right now is highly dependent on the whims of a state government.  And we just can’t count on governments.

You should figure out social security amounts for you and your DH.  We used to get printouts from social security on a regular basis, but I think they’ve stopped doing that (possibly because they know the social security trust fund will be running out sooner than it should).  They have a retirement estimator on their webpage but the interface is not great.  I think you may be able to get it to do what you want by choosing “add a new estimate” after it gives you the stupid initial estimate that assumes you will work until 62/6?/70 and then telling it you want to work 0 at your current age.  I ran through it that way and if I stop working today (or age age 50), I will get about $900 less per month than if I keep working until 62, and 1900 less than if I keep working until age 67 (I’m guessing my big salary years are still replacing low income years in my work history).  Keep in mind that you will need more future dollars than you do now because of inflation.  (Low estimate:  2%, high estimate: 7%… any more than that and Social Security will have worse worries than keeping up with inflation because we’ve turned into a Banana Republic and nothing is safe.)

A big worry is that $5K/month won’t last.  That is extremely generous and it is likely that when your state hits financial difficulties in the future or gets a Conservative governor that this program will get trimmed if not cut entirely.  Even if it doesn’t get trimmed it could not keep up with inflation.  You cannot count on it as safe income.  Also, looking up the program, the amount you get depends on where you live, so it will be dangerous to tap into your house or to move someplace less expensive.

You’ll need to find out the costs of health insurance and what it doesn’t cover and what the copays are and so on and if the people your husband and child have been seeing take it.  Along with property taxes, that’s a big necessary expense.

I like this Nerd Wallet calculator.  Be sure to click on the “optional” so you can put in spending and retirement age and so on.  It’s not going to be perfect because social security will be hard to figure in there.

Yes, age discrimination exists.  Fortunately although it happens sooner for women than for men, there’s also a bump up in hiring for women at older ages, so you shouldn’t give up on finding a new job.  I don’t know if resigning your current job without a new one lined up is a mistake– if it’s affecting your health etc. sometimes just quitting is the best thing you can do.  But if you haven’t quit yet, I would like to encourage you to sweeten up your boss so you can get a good reference, explore other options within the company if possible (can you cut to part time?  are there other units within the company?), and so on.  Think strategically– knowing that you will likely quit, how can you put yourself in the best position possible for finding new work (possibly after the pandemic is over).  When you quit or get fired with cause you don’t get unemployment insurance unless the government steps in because it’s an emergency.  It might make sense to wait until the Heroes act has been passed (and call your senator to get it passed) to see if it covers unemployment for your situation.

Or you can hope to get laid off or negotiate a voluntary separation package with your company, since it’s difficult to fire people from middle-class jobs in those west coast states.  It might be worth talking to your management about this possibility.  Be strategic.  Or if they don’t actually want to lose you, they might be willing to fix some of the problems you’ve been having with your immediate boss.  Who knows!

So… bottom line, no I don’t think you can retire early in this situation.  If everything goes well, then you might be able to do it… a 60K/year income with a paid off house and health insurance might be fine even in an expensive city given savings and Social Security kicking in in 12-20 years.  But you can’t really count on the income increasing with inflation or not being cut, you can’t necessarily count on your property taxes staying put (and you need to stay where you are for the benefits), you can’t count on health insurance not bankrupting you, you can’t count on getting more than 70% of your anticipated Social Security claim, etc.  And your responsibilities (husband with health problems, low functioning child who will need lifetime help) are much too high to allow for you to cut expenses to the bone should things go wrong.

Update from Middleclassrevolution:

Family

– Me Middle Class: 50, good health, the one quitting her job ASAP.
– Husband: 60, declining health, home caregiver
– Kid 1: 10 years
– Kid 2:  9 yrs, Special health issues and low functioning autism.
– My parents: 80s, fairly good health but I am not counting on their babysitting help for much longer.

Assets (conservative estimate)

– Single family home valued at $500,000 to 600,000.
– $470,000 in various retirement accounts.
– $30k emergency fund
– Two cars (both owned 100%)

Income

– Me: $60k per year. Much of it goes toward insurance premiums and 401k contributions. Take home pay is closer to $2k per month.
– Husband: $4.5k per month income from state as caregiver. Income is not taxed.

Future Income

– Social Security: amounts unknown.
– No inheritance expected.

Liabilities

– Mortgage : We are 2 years away from paying this off but may do this sooner if possible.
– No debt
– No will, no will, no life insurance. (Bad I know!)
– Both sets of parents are financially sound and will not need our help.

Health insurance

– Three of us are covered by my employer’s high deductible plan.
– Special needs kid is covered by state programs due to health issues.

Career

– I plan to quit and take over the Caregiver role. This job does offer health insurance but I don’t know copays or premiums.
– Unlikely to find another job due to ageism and inability to get a reference from current boss

Spending

– Currently spend about $4k per month. Want to reduce this.
– We plan to sell one of the cars ASAP.

Other factors

– My husband is very impatient with special needs kid. He is good at stepping in when needed to get kid to change clothes, brush teeth, etc.. However on a daily basis, he tends to ignore him, [ed. deleted by request]. I never understood why my mom felt the need to help every other day (alternating with part time nanny). I thought my husband was capable of being sole caregiver. Now that I WFH, I am not so sure he can manage much longer.
– Without school for months and re-opening unlikely, special needs kid will continue to regress.

So… some of the numbers are different compared to when we gave our first advice and the husband [doesn’t sound as good].  If you really do need to stay at home with your child during the pandemic (a common story for many women, and not indicative of their underlying quality of workers), then maybe paint the leaving your job narrative that way and make sure that everyone else is on board with that narrative at the company because it is likely when you do try to return to the labor force (and you will likely have to) your former boss will likely be elsewhere and somebody else at the company will be providing a reference for you.  Hopefully your DH has some redeeming qualities or will be bringing home Social Security in a couple of years, [ed. deleted].  Though since he is close to 62, if he has Social Security benefits, it is unlikely that those will drop (though they may not keep up with inflation) and you may be able to transition to retirement with them, so figure out what they are.  He’s got to be useful for something once he’s no longer being paid to ignore your kid.

Also given your husband’s age and health, it’s probably not cost-effective to get life insurance for him, even term, so just get it for you.  But you can still look into costs.  You do need it for you.

Update:

No honestly he has good points too. He does most of the cooking and a lot around the house and yard. I am often impatient with my special needs kids too. The situation has taken a toll on us. I cannot manage both kids alone.

I realized that I changed 5k to 4.5k…I am not sure of exact amount so I lowered it. I guess that 500/mo makes a difference..

$6000/year when you’re not bringing in a lot does matter (as does knowing if your current take-home pay is 24K/year or 36K/year).  But more importantly, before you make your next move at work, you need to figure out the values of all of these numbers (including Social Security) so that you can make an informed decision.  30K in cash emergency fund does buy you some time, but will schools be reopened in 7.5 months?  It does sound very likely that you will quit this job, but before you do, get all of your ducks in a row.  It might be worthwhile getting all those numbers that the FrugalWoods want even if you don’t actually email them for advice.

Update:

I checked my husband’s monthly income and it is 5k , not 4.5k if that makes a difference.

Finally my son is already stronger than my me, my mom, and nanny. When he gets angry, he hits hard, scratches, twists our fingers and sometimes bites. It is probably when not if he will do more serious harm. Yes we are looking unto meds. Bottom line: I can’t physically manage him without my husband. I would like to keep my son home with us as long as possible.

Grumpy Nation:  Would you retire early in MCR’s situation?  What things should she be thinking about?  What questions would you ask?  Do you have any suggestions for how to best separate from a bad job when you’re in your 50s (especially a state with employer protections)?  Any other advice?

Don’t forget to increase your 401k/403b/457 withholding for 2020 (if that’s something that works with your financial situation)

The annual limit for your standard 401k/403b/457 goes from $19,000 to $19,500 from 2019 to 2020.  That means you have an additional $500 (or $1000 if you’re working for a state institution that has both 403b and 457) that you can put away for retirement in a tax-advantaged fashion.

I went on the awful university internal site and figured out how to futz with my 403b withholding (it took about 20 min and a ton of googling to figure out– this is still better than the paper way we had to do it before which always took at least an hour, including finding the forms and the addresses the forms needed to be sent to), from 2111.11 to 2166.66 given my 9 month salary.  Then I went to the easy and painless 457 site and futzed with that withholding (5 min, most of that digging out my password).  Then we determined that DH had to email their admin person in order to futz with his 401k, so he did that (20 min, mostly determining he couldn’t do it himself online).

So now we have an additional $1,500 going towards tax-advantaged accounts for 2020!

When was the last time you changed your retirement contributions?