This is a brief early retirement diary beginning with the year we started our early retirement. December 1, 2011 was the official stop work date for me.
This is the year I turn 55, and we just paid off our mortgage. Having our house paid off is the milestone I've been waiting for since age 45. It isn't a fancy house, but it can sleep as many as 16 people if we use a couple of air mattresses, so it serves our family well. Since both of our children live out of town, they usually come for overnight visits and stay in their childhood bedrooms which are now guest rooms.
We discussed whether to relocate to be near our daughter and her family and we brainstormed on other places we might want to live. Scotland, France, Mexico, and Chicago were places we considered. Each time we couldn't imagine finding a home as well suited to our needs, so for now, our current house is fine for our situation. Debt free and ready for freedom!
Also we have plenty of room for our hobbies, a row boat, and lawn mowers, and 2 acres of land to keep us busy.
I'm sure I ran the numbers for how much we spend and how much we have saved at least 30 times, and maybe more, to make sure the budget we have in mind is solid. We also established long term care insurance coverage.
Instead of spending my bonus and our tax refund on splurges like a new car or big vacation, we put the money in a savings account. This will be our emergency money in retirement, and we plan to keep around $30-40K in this cash-on-hand account.
We haven't had good luck with picking individual stocks either, so we decided against adding to our after-tax stock purchases.
At my job, I was technical lead for a small team of 3, not including our manager. At the first of April he surprised us by resigning to take a sabbatical. He didn't like to say he was retiring, but he planned to take time off indefinitely to focus on better health at age 50.
Since losing any member of our small team caused serious disruptions and challenges, there was no way I could leave my job so soon after this. My conscience and professional ethics dictated that I wait for things to settle down again, for the good of my coworker friends.
Up until now, I tended to "spoil" my adult kids a little bit by picking up expenses when we did things together. For example, if my daughter and I went shopping together I would sometimes throw her purchases in with mine at the checkout because I know how expensive things are when you have a small child in daycare. With our son, we would pick up the check a little more often.
I decided I needed to let everyone know that once we retire, we won't be as free with our money as we had been before retirement. Hopefully the adjustment will be easy for everyone. Time will tell.
So, in conversations about our plans to retire, I made sure the topic of money was mentioned.
Our son invited us and his sister's family to visit for a family summer vacation at his home in Chicago.
This vacation is different from our usual Chicago visits because we have a 3 year old with us. This means we have to plan regular meals and nap time to keep everyone feeling fine. (Also, it suits me fine because it will be less expensive than previous visits. Yay!)
We walked all around the neighborhood, to the beach, the grocery and health food store, and the pub and restaurants.
For the 3 year old, we made sure to try all kinds of transportation including the train from Loyola station to downtown, the trolley to Navy Pier, and then the water taxi to the aquarium. Of course, he had already experienced his first ride in an airplane on the way to Chicago.
We love Chicago!
I thought it would be a helpful exercise to test our retirement budget, so I created a spreadsheet with all the categories in the budget. I tracked all of our expenses and spending for the entire month to see how close we are to the plan.
Success! The budget is good so far. I expect that it will need to be tweaked a bit as we get settled in our retirement lifestyle.
Due to the status of the team's largest project and the persistent shortage of staff, I wasn't comfortable with leaving in early October. I needed the project to be just a little further along.
Finally, in early November I simply couldn't stand to wait any longer, and I gave notice to my manager, and set a last day of work for November 30. Yippee!
Now I'm both happy and nervous about leaving the rat race and my very valuable career. What if I underestimated our expenses? Will we get on each other's nerves if we have so much time together?
Even though we have health coverage under my husband's plan, it is still scary to know my employee benefits will end on my last day of work.
I scheduled an appointment with a financial advisor to discuss setting up 401k withdrawals. This is another scary thing: to think of switching from contributions to distributions, but that's the plan.
It seemed like there was so much to do (mostly at work) and so little time before the end of the month.
We slept late for the first time in a long time, then spent hours over coffee, and before we knew it, it was late afternoon. Where did the day go?
I was disappointed that the wonderful warm weather we had in November seemed to have disappeared. Even so, I was able to spend some time outside in sunshine in the afternoon. This was one of the things I had been looking forward to enjoying!
I knew there would be an adjustment period, so I deliberately kept our calendars empty. That idea lasted just 2 days, then we were recruited to cover for one of our daughter's business trips and our next week was consumed by a very energetic and stubbornly independent 3 year old. We had done this before, but I was always running back and forth between my home office and the great room between meetings. This time I was free to fully enjoy our grandson. Another delightful benefit!
I decided to validate our budget plan by taking detailed notes and tracking our bills and spending.
One evening while TV/Netflix surfing, we found the TLC show "Extreme Couponing" and we decided to try a little couponing for fun. On our first shopping trip with coupons I was able to cut the bill in half, and got over $200 of groceries for $111. We'll be doing this again as long as we get results like that!
If you want to try it too, I suggest you do an internet search for "coupon mom." This was the best site I found for learning the ropes, and they have a great database showing the bargains you can expect at each store each week.
I spent about 2 hours on a phone meeting with a financial advisor who is helping me make arrangements for distributions from my retirement accounts. I had to set him straight on the topic of 401k early retirement, since he was not aware of the penalty exception for people who retire at (or after) age 55. Good to know that doing my own research was worth it! After he researched further, he admitted that I was right and could indeed take withdrawals from my 401k without penalties.
He also estimated that we would not have everything setup for an income stream until sometime around February 2012. The process he is following involves getting to know our risk tolerance and financial goals, as well as providing analysis of our plans to make sure everyone understands and agrees on the investment and withdrawal choices. Because of our emergency cash fund, taking this extra time is not a big deal for us.
The initial financial advice report arrived by mail. Everything looks good. After adjusting our funds to the proper risk/return investments, our targeted income goals have a better than 90% chance of success.
Another delightful retirement benefit: extended time off for holidays with family.