fi59andahalf.com Blog

Financial Independence and retirement at age 59 and a half?

As a child I dreamt of being rich and retiring early.

Even as a very young child, I was cognizant of money.  I understood you exchanged money to “buy” things you needed or wanted.  I was also aware of socio-economic differences, but I could not have described it to you in those terms.  I also knew I wanted to have money because I equated money with a sense of “safety, security and freedom” and thus my desire to attain this goal sooner rather than later.

Childhood Perception Rich = $1 million

When I was very young, I wanted to have $1 million by the time I was the age of 30.  I knew that $1 million was a large sum of money.  I knew the term “millionaire” had a connotation of being rich.  I also believed if you just had a million dollars you would never have to worry about money ever again. 

• The interesting thing is that when this thought occurred in my very young brain, my father probably earned slightly less than $15,000 a year and this was the income for our entire family of four.
  • It was long into adulthood, when I discovered very old tax returns that I realized how much, or perhaps more accurately, how little my father made.
• My mother was a stay-at-home mom, as was the case with almost every mom in my neighborhood growing up. 
• What is crazy is that $1 million in the bank would have been over 66 times my father’s annual income so he could have retired right then and there if you use Bill Bengen’s 4-percent rule.  Of course, Bill Bengen’s 4-percent rule was determined long after this youthful thought entered my head. 
• It took my father a long time to reach “millionaire” status if you added up all my parents’ assets.  Even though my parents’ household income was never high, they did reach millionaire status.

Goal to Retire at 30 but Still “Work”

When I was very young, part of me wanted to “retire” at age 30, assuming I was a “rich millionaire.”  Part of the reason I picked age 30 was because it seemed so darn “old” back when I was very young.  Of course, I had no concept that just because you had “$1 million in the bank” it did not necessarily mean it could cover your annual expenses.  Even though I was very young, I knew my family was not rich, but I also had driven past enough neighborhoods in the city to know we were doing much better than a lot of people.  I did not understand what “middle class” was at that age, but I knew at least one aunt and uncle were doing much better than my family and another aunt and uncle were doing worse than or equal to my family.

• Even at this young age, I knew that if I “retired” at age 30, I would still likely “work” in some capacity.  My grandfather had recently retired, and it still seemed like he was always working.  I knew that my grandfather was way older than age 30.
• When my grandfather was not over at our house fixing things and involved in projects, he was involved in projects over at their place, their church, or with my grandmother.  From my vantage point “retirement” still meant “work” but it was a different type of “work” – like stripping off 17 coats of paint on a baby grand piano and re-staining it to its natural wood or helping my dad build out our semi-inground pool. 
• My grandfather officially retired at age 65 but he ended up going in to do some part-time “consulting” on some major projects since he knew how to run and repair all the machinery.  For a guy with a sixth-grade education, he was a lot smarter than anyone would have given him credit for, and he was devoted to my grandmother.  I think technically, my grandfather ended all his paid employment at age 67.
• My father also did not “retire” from “paid employment” until age 71 and still maintained his lab until he was nearly age 80; though he would have liked to go into the lab every day, my mother’s health needs, and eventually his own, prevented him from doing so.

So why would I want to retire at age 59.5 or 59 and half years old? 

I have a sense that my spouse and I will be able to “retire” in terms of the financial aspect.  Assuming the math is correct and there are no financial calamities, we are “on track” to hit certain financial milestones.

 Identity and Value Being Tied to Work

• I have a unique job relatively speaking but I am replaceable.  I have seen it happen time and time again where people at my employer or in my field state “that person is at the top of their game” or “it will be a big loss when we lose” insert individual’s name.  The reality is that a few months later that person is only mentioned in passing.
• For the most part, I really enjoy my work.  I know retiring will be more about my ability to “let go” versus my employer “letting go of me.” 

Concerns about Health Care Coverage

• I consider myself a healthy person, but my spouse and I have had some health-related issues that would place us in categories where we are “at-risk” for certain things.  I’m not going to lie, the desire for quality health care coverage cannot be understated.  I also know that I may reach age 59.5 or 59 and half and change my mind—largely because of the health care “risks”. 
• I’m putting this out there as a way to hold myself accountable.  Let’s be honest, at some point, I will no longer be on this Earth.  While it may seem ridiculous to state that I would seek to remain an employee because of the health care coverage, this is the piece that I know holds many people back from officially retiring. 
• Many of the people I know that have “retired early” as in age 55 or older, worked in government related jobs.  These individuals who worked as teachers, police officers, firefighters, or other government types may have sacrificed overall take-home pay compared to their peers, but the ability to, for example, convert sick time into health care coverage until Medicare “kicks in” has been a priceless benefit.
  • Ironically, many of the government employees able to “retire early” end up coming back to the workforce in part-time jobs or out of sheer boredom.  Some have needed two months to a few years to go travel or do other things—a so called “mini-retirement” and then want to go back to a service style position.
  • Others are very happy to be officially retired and/or pursue “unpaid” work that they love.

When I was in my twenties and seemingly the picture of “outstanding health” I probably would have had a more carefree attitude about health care coverage.  In fact, I did have a an almost negligent attitude as I hardly thought twice about the “risks” of doing certain things.  At my first “real” employer after college my health care coverage was free and family coverage was about $30 per month.  Then I left my employer and went to the other “real world” where I was not eligible for health care coverage.  Instead, I went on COBRA which was about $1,200—a mere 3,900% increase.  You read that correctly, my health care expenses increased by 3,900%.  Needless to say, this experience early in life, for which I went from a “gold standard” plan to a catastrophic health care plan definitely had an impact on my thinking.  It is true, that this experience happened pre-Affordable Care Act (ACA or also known as Obama Care).  I know some people, including early retirees rave about the ACA, but given our current incomes, we would not qualify for any of the health care subsidies or health-care tax credits. 

I have also had conversations with small business owners or self-employed persons that indicate that it is the cost of health care that is the biggest and most unpredictable expense that they have for themselves and/or their teams, outside of straight salary, of course.

               On the flip side, when I was in my twenties, I could not imagine an employer “downsizing” you.

               At this point, I’m not interested in working for myself.  I do like my job. 

100 Months

For me, there seems to be this inter-section between having “enough” money to retire “comfortably” and not “retiring too early.”  All of this will play out over the next 100 Months.

Hitting our Financial Independence (FI) Goal

• In the next 100 months we should hit our FI Goal.  Again, I’m using this blog to hold myself accountable to the Retire Early (RE) portion of 59.5 and beyond.
• I hope to learn from others who are ahead of us in this journey and those that are on the pathway to FI at the same rate or even earlier.
• I have been a goal-oriented person throughout my life.  Many would tell you I am incredibly competitive.  So if my spouse and I hit the goal earlier what does winning look like?