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?
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:
– 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%)
– 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.
– Social Security: amounts unknown.
– No inheritance expected.
– 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.
– Three of us are covered by my employer’s high deductible plan.
– Special needs kid is covered by state programs due to health issues.
– 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
– Currently spend about $4k per month. Want to reduce this.
– We plan to sell one of the cars ASAP.
– 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.
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.
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?