Fueling the Fire

Kristine Hayes

I’VE BEEN EMPLOYED on at least a part-time basis since I was 17 years old. For almost three decades now, I’ve been working fulltime. It’s probably not surprising that, at almost 51 years old, I’ve reached the point where I spend considerable energy contemplating a life beyond work.

The idea of achieving financial independence and retiring early—captured by the acronym FIRE, short for financial independence/retire early—is never far from my thoughts. As a born planner, I’m all about drawing up a strategy and putting it into action. But even for me, figuring out exactly what it will take to leave my fulltime job often seems overwhelming. Faced with so many variables and unknowns, I’ve tried to solve my retirement equation the only way I know how: by breaking the plan down into smaller, more manageable chunks.

I started by thinking about how to move from fulltime employment to fulltime retirement. Since I didn’t get serious about saving and investing until I was well into my 40s, I’m assuming I’ll need to work part-time for at least a few years before I leave the workforce entirely. Part-time employment will be beneficial in a couple of ways. It will allow me to have more “me time” to do the things I enjoy, while letting my investment accounts grow for a few more years before I start taking substantial withdrawals.

Next, I started thinking about actual numbers. How much money would I need to save before I felt comfortable bidding farewell to a 40-hour work week? There’s certainly no shortage of advice on the subject. I settled on a goal of $500,000. It was an amount I felt I could realistically achieve through aggressive saving and frugal living. When combined with my pension and Social Security, that $500,000 should allow me to maintain a reasonably comfortable lifestyle.

Of course, estimating how much I need to save is determined, in large part, by how much I spend to maintain my lifestyle. Over the past four years, I’ve drastically trimmed expenses and now live on roughly half my gross income. When it comes time to transition to part-time employment, living modestly means I should be free to choose what I want to do, with little regard to how much it pays.

The next item on my agenda was determining when I could access my various retirement investments. The accounts I have with my current employer contain the bulk of my nest egg. I can take withdrawals from them as early as age 55, provided I leave my job. My Roth IRA contributions, as well as my taxable mutual funds, can be accessed at any age. I can begin drawing money out of my pension as early as age 58 and as late as age 70, and I’ll be eligible for full Social Security benefits when I turn 67. Knowing the ages at which I can access these various funds has guided me as I wrestle with how long to continue with either fulltime or part-time work.

Health care coverage is a major concern for anyone contemplating early retirement. Fortunately, I have access to generous benefits through my current employer—and it’s a major reason I can even contemplate leaving my job before full retirement age. Once I reach age 55, I can continue to receive the same health care coverage I currently have, even if I leave my job. And at age 65, I’ll receive a monthly stipend to help offset the cost of any Medicare supplement plans I choose to purchase.

Kristine Hayes is a departmental manager at a small, liberal arts college in Portland, Oregon. Her previous blogs include Long Story, Independence Day and Case Closed.

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