I am hoping for some unbiased (and maybe biased) feedback about retirement. I may have an opportunity and be offered the chance to take early retirement. My original plan was to retire in 5 1/2 years when I am eligible. Financial goals after that time (whenever I feel like it) include working part-time to earn enough quarters for Social Security. I am a local government worker bee. Here's the potential offer:
Enough years and time to be artifically considered 55 years of age with 30 years of service (no penalty retirement). I would receive about 66% of the highest 12 months of service. Historical retiree COLA adjustments have been 3%. DH and I paid off our mortgage 7 years ago, so that debt is not there.
Pros to go:
Yippee -- don't have to go to work!
No commuting costs - save on gas.
I wear jeans to work, so no clothing changes.
Less stress.
Time to be home more with my DD, who will be starting middle school in the fall - that alone is priceless.
More time with DH.
Possible lower tax bracket.
Currently utilizing DH's medical/dental insurance plans, but with 25+ years I have medical insurance earned and plan to be double covered for no cost out of pocket (current plans - could change in the future for retirees).
Cons of retirement:
34% paycut
"Loss" of about $150K to invest, etc. in the 5 years time frame difference. Will not have the ability to invest in my 457b. If not working part-time, I believe my only option is a spousal IRA of a sort.
Possible lost opportunity for one more promotion - this hinges on my supervisor taking the early retirement or retiring before 5 years. The promotion would be substantial which would make later retirement more lucrative. Odds of this are slim to middling.
NOTE: If option is offered, and I decline, my contribution to the pension fund will increase by 5% - so a 5% paycut if I stay.
I do plan to crunch the numbers and consult advisors in our retirement system once I see an offer in writing. There should be something concrete by the end of the fiscal year.
Anyone think of any considerations that I am overlooking? Any input would be appreciated, especially from those who are retired. Has retirement been great or not so great - from both financial and other perspectives?
DH's saying is this: He feels that I would regret NOT taking early retirement more than taking advantage of it. Of course, he plans to eliminate the gardener (saving bucks) and "hire" me instead! 
Thinking About Retirement
April 21st, 2009 at 10:15 pm
April 22nd, 2009 at 08:50 am
I recently calculated that my gross retirement income is ~49% of my pre-retirement income but my retirement net income is 101% of what it used to be. The difference is I am no longer paying into my 457 and my 403b, paying dues, etc. If you look at net pay vs. gross pay, you'll see that 66% is not bad, and you will likely still be able to save every month.
If money is tight, you can always take on a part-time job. I did but it wasn't because of the money, it was to give me something interesting to do, about one day a week, until my dh retires.
I also dealt with the issue of waiting a few years and getting a substantially higher pension, but in the end, I decided I had enough money saved to be OK plus my employer also paid health benefits for life, resulting in a savings of over $1,000 a month if I had to pay the premium. As things are now, I don't plan to use my tax-sheltered funds until I have to (age 70 1/2).
Good luck in making your decision.
April 22nd, 2009 at 09:14 pm
A part-time job is definitely planned - but purely for the quarters for Medicare when I am 65. If I do not have enough quarters, I will have to pay a quarterly premium. The Social Security benefit is negligible because of the offset due to gov't employment. I also receive a small Calpers pension (thanks to my first husband). I anticipate also receiving another small county pension via ex-DH in a few years. Those are just icing on the cake.
The biggest benefit is my daughter - I can be a more involved Mom. No debating here about mothers working outside the home or not. But I did not have the opportunity to spend as much time with DS and I do regret that. Unfortunately, I had to scramble with a divorce and supporting my little boy (now an adult).
Regrets -- I will miss all my friends in the workplace. Some have been so dear. It will take a little more effort to keep in touch. But other than that, I like your bottom line of no regrets!
Thanks again!