The very simple answer to this question is yes. It will become clear why as you read this post.

The real question is “Can We Live the Same Life if My Retires?” There are a couple of questions that go along with this, but we’ll get to those later.

When I started this blog in 2006 it was with the idea that I’d explore ideas on how I could retire early. My main motivation was that my wife would be eligible for her military pension at age 43. I didn’t want to have to work another 22 years after her.

Life takes a lot of turns in 15 years. I switched over to self-employment a dozen years ago. Our entire financial dynamic has changed greatly, we were only dating back when I started this blog. We’re now at the natural finish line of that original goal, but added liabilities, otherwise known as kids, have required some changes along the way. I like my side hustles enough that I don’t want to retire from them. My wife is eligible for her pension.

So it’s time to ask…

Can My Wife Retire?

The biggest indicator of being able to retire early in my opinion is cashflow. It’s true you could have a big nest egg (and you may need it), but hate having a “burn rate.” When I started my career as a software engineer around 2000, that term was used to describe a lot of internet companies. It didn’t end well for almost all of them (RIP: Pets.com sock puppet).

We have a big nest egg, but unfortunately, it’s mostly locked-in retirement accounts that we can’t easily access for another 15 years when we are 59.5. There are some ways we can get at the money, which is worth exploring, but for now, we’d like to put a pin in that idea and come back to it later.

Ideally, we’d have more income than expenses. If that works out then we can mostly say “My Wife Can Retire! (and we can live the same life!)” It’s almost impossible to guarantee either income or expenses, so we’ll have to go with what appears to be the most likely scenario. We can overestimate expenses and underestimate income to create a margin of safety.

Expenses

Last week I explored our expenses for the next five years and teased that it was going to be part of a bigger article. Surprise!

Our expenses look like:

These expenses are averages, but fortunately, they are fairly consistent. After around 6-7 years, the expenses change completely. Our mortgage would be paid off and our school costs would drop to zero if our kids go to public high school.* (We also will have a boost to our income around this time, but that’s for another section.)

School Expenses

When my wife retires, we will not get the military discount for the kids’ school. The cost of tuition would double to $50,000 per year for both kids. That’s crazy!

However, we would be eligible for tuition assistance. The problem is that we have no way to plan ahead for it. The calculation is a secret algorithm by a third party company. We can’t get a sample of the results or even an estimate without uploading all our financial information. Even then, the results are sent directly to the school and not through us first. I’m not very comfortable sending our financial information to the school just to get an estimate for financial planning.

The fact that the school isn’t an easy decision should indicate how much we love the school and value our kids’ education.

I was hoping this wouldn’t be a big unknown, but here we are. The enrollment coordinator said that the financial aid is all over the map. Some people get more of a discount than we are getting now. That’s possible with the drop of income and having two kids at the school. This means that our expenses could drop $25,000 (if we opt for public school), stay the same (similar financial aid), or expand $25,000 (no aid). I don’t think the last option of spending $50,000 is feasible… if we have that kind of money, I’d rather invest it.

For lack of a better alternative, I’ll continue to go with the middle option of where we are now. It’s probably the most accurate of the three as it represents some financial aid.

Transportation Expenses

The transportation number above includes only maintenance, insurance, gas for our already paid-off cars. That’s good for 6-7 years, which is my goal here.

For completeness, I thought it is worth addressing the need new cars. We spent around $23,000 on a Subaru Forester (beach/dog/kid car for me) and $44,000 on an Acura MDX (luxury car for the wife). That’s a combined $67,000, which will last us for 13 years or more. On average that comes out to about $5,000 a year for our physical car expense. Thus we should reasonably budget $8,000 a year in retirement going forward.

While this expense does go up in the future, I’m going to keep it at the same $3,000 number for this exercise. Our housing expense drops a huge amount when the mortgage is paid off. I’ll happily trade $35,000 in mortgage payments a year for $5,000 in car payments on average.

Income

Just like our expenses drop a lot in 6-7 years, our income has a jump at about the same time. Two of our investment properties will have their mortgages paid off, which means we can likely expect another $25,000 of income. As great as that is, we have to get there first.

Because of the drastic drop in expenses and the increase in income, it feels like there’s a definitive finish line – just get to year 6.

Here’s what our income looks like:

Income from my Work

I have this blog, dog sitting, some regular freelance work, and equity ownership in a small company that pays out monthly profit-sharing checks. The combination of these is about $65,000 a year.

However, the blogging income has been trending down. The dog sitting income hasn’t been a lot less due to COVID. The other two parts are consistent, but the income isn’t guaranteed either. On one hand, there’s a lot of uncertainly that I’ll continue to make $65,000 from these sources. On the other hand, it’s unlikely that they all go away. I feel there’s a high likelihood that I’ll make at least $40,000 through a combination of them.

Income from my Wife

Pension: $62,000. It’s a fairly straightforward calculation of a military pension given her rank and years of service. This may be a little on the high side because the pension is the average of your highest 3 years. It’s a very, very good estimate though, especially in comparison to my hodgepodge of income.

My wife could do other things to make an income. I think the first year it might be limited to selling our excess stuff on Ebay. I’d be very, very happy with that because we have a lot to sell or get rid of. I’ll go into more income ideas later on. The goal of this exercise is to explore if a scenario where she brings in no income.

Combined my wife and I would make $127,000 a year. With the uncertainty of my income, it could reasonably be as low as $100,000 a year.

Final Cashflow Analysis

My wife can retire and we’d have $2000 left-over each year. Of course, we wouldn’t really have $2000 left-over because I did a lot of rounding and estimating. However, for a rough analysis, it is extremely encouraging.

To be honest, I was completely shocked that it was close. I was expecting a big shortfall.

If the financial aid calculation for the kids’ school doesn’t go well, we may have a bigger shortfall. Alternatively, we could go to public school and live a more lush retirement while cruising towards the glory of no mortgages and rental income.

The Big Nest Egg

At the beginning of this article, I mentioned that ideally our income would cover our expenses and we could stay cashflow even.

That ideal scenario is close and encouraging, but we’ll still need a big nest egg. The goal is to have $100,000 in spare cash as an emergency fund. It’s an aggressive savings goal considering that we’ve put so much into maxing out our retirement accounts for years. The best way to reach that is to stop our retirement contributions, except for maybe our Roth IRAs if we can swing it.

I would like to have some of that nest egg invested safely, such as in Vanguard’s LifeStrategy Income Fund (VASIX). It’s been a fairly stable fund that returns about 5% on average. It even did well during the collapse in March of 2020. (“Well”, in this case, equates to not losing much value). This could provide us with an extra $5,000 of income to fill a gap or two.

If we need to draw down on that nest egg, we could borrow $20,000 a year for five years, which is a nice cushion.

Other Emergency Options

If cash flow and a big nest egg don’t work out for us, we have a few other options.

We have a lot of money in retirement accounts. They aren’t easy to access before age 59.5, but it’s possible. We could probably get $100,000 in our Roth IRA contributions out tax-free.

We could also refinance the house and/or investment properties over a longer time span. This would reduce our payments and help our cash flow. We’d much prefer to retire all the debt and those mortgage payments forever.

We could cut out the private school, giving us another $25,000 a year of flexibility.

Another obvious solution is that I could go to full-time work with my wife’s time free to do the kid and house management tasks.

There’s a lot to work with and I’m just scratching the surface here.

Challenges of My Wife Retiring Early

What Will My Wife Choose to Do?

For the first year, she wants to have no plans. That makes sense. She’s been working in some capacity since helping her parents clean the windows of the apartment building they managed at age 9.

I don’t think having “no plans” is going to be a long-term fit knowing her personality. I could be wrong, but I think she likes to be busy. I believe that having a purpose in life is important for one’s well-being, so maybe the first year will be able to about exploring that.

As a pharmacist, there’s an option to do that kind of work, but she hates working retail. Also, retail doesn’t usually have part-time hours. She’s thought about giving talks, which is something she does now for her work. She’s also been approached by a couple of universities to teach. She seems interested in that.

She mentioned that she could go work for CVS’ corporate office (based in our Rhode Island area) and bring in a salary of 6-figures that starts with a crooked number. That would be outstanding and I hope she gives it a try for a year to see if it is a good fit.

I’ve suggested working at a wine tasting room or organizing some kind of city scavenger hunt. I think she’d love a second act that is interacting with people in a fun way. Her dream of managing a boy band is still alive as our 7 and 8-year-old are getting more and more musically inclined.

Will I Go Crazy With Her Around All the Time?

Yes, I most certainly will. The only way I’ll get through any of this is if you comment on all my articles. So there you go; you have a role in all this too! You can start with this post.

* Some of the private high schools are ridiculously expensive – $45,000 a year, per kid. We’d need some great grants to make it work and that’s a project for another day – if at all possible. I think a much better financial option would be to work with our high school and a local community college.

The plan for my wife to retire was actually set in place long ago. When we met she told me that with the military, she’d be eligible for a pension and able to retire at age 43. That’s one of the main reasons why I started this blog. I didn’t want to work another 22 years after her and start living life at age 65.

That was 2006. We’ve had a great 14 years of financial planning. We’ve seen our net worth growth 4x or 5x. We should be in a great place to begin retirement.

In a lot of ways we are. I have some freelance work, dog sitting, and this blog business that brings in some money. We have some rental properties (from being an accidental landlord) that are losing money but have equity. The mortgages are done in 7 years and should bring in a good income of around $30,000/year after that.

…and yet I’m still very nervous about how to make retirement “happen.”

Now this isn’t a situation where the stay-at-home person, me, is trying to be selfish… or I don’t think I am. To understand why I think I have to explain the unique situation and obstacles.

Obstacle #1: Kids’ Private School

My wife and I treasure the education that the kids get at their private school. It may not be the very best in the country, but it would be above the 90 percentile, maybe even above 95 percentile. We wouldn’t ordinarily consider the expense of sending our kids to this school, but her military discount is exceptional and makes the math work.

However, if she retires, we expect that military discount to go away. Our expenses would go up about 35% at the same time our income drops 40%. That’s not usually a good plan to a successful retirement.

While the school is certainly something that we can eliminate, I think my wife is less willing to do that than I am. They’re in a K-8 school now, and my wife is thinking about private high school (even more expensive), while I’m thinking a combination of public high school and community college.

Do we have to cut a deal with the school? Could we cut a deal with the school? Could we look into another particular (cheaper) school that we’ve some other kids switch to?

These are all on the table. However, approaching the school with these questions takes some tact and timing. I’m often afraid of asking questions when I suspect that I’m going to get an answer that I’m not going like. We don’t know how much of a “what if” this situation even is.

Obstacle #2: Lack of Savings

I’ve always tried to make the smartest financial decision. That’s why I have this blog. In most cases it is to use index funds and retirement accounts to plan for the future. We’ve got a very good nest egg saved up… in retirement accounts that we can’t easily touch.

Many financial bloggers will use Roth IRA Conversion Ladder to get access to retirement money with limited tax consequences. It doesn’t work out as well if you have a pension and if my side hustles are performing.

One answer here may be to take out our Roth IRA contributions over the years. That would give us some savings. Obviously that comes at the risk of retirement growth, but for all the reasons I mentioned at the beginning, we look to be in very good shape down the line.

There are more obstacles, but the previous two are the big and obvious ones that I can see.

My Wife Makes the Call

My wife came up with an idea recently that makes a lot of sense. She wants to have a year of income saved up in cash. That would help cover obstacle #2.

The only problem? It’s been hard for us to save money. Between saving in retirement accounts, paying our house on a 15-year mortgage, private school, travel, restaurants, and the annual surprises, we don’t save a lot of extra cash. We’ve found that in COVID-19 world the lack of travel and restaurants allowed us to save more. My freelance work has also helped. While I still haven’t settled out the month’s bills, I think we’ll be at a quarter of a year’s income saved up.

More Plans to Be Made

On my plate is to do a more comprehensive review of our expenses. I’ve been estimating our necessary expenses for a long time. However, it’s been a while since I even ran one of those estimates. I want to be able to provide an analysis of expected income and expenses, with and without the school. In the end, I expect that will only be a guide… my income numbers fluctuate and our expenses fluctuate as well.

Sabatical or Retirement

My wife isn’t likely to go into permanent retirement. She wants to start her own consulting company using her Pharm. D. and pharmaceutical policy MBA. I don’t know anything about this field. She doesn’t know anything about the private sector. There’s a lot of potential research to be done there. It’s possible she pivots to be an even higher earner than she is now. It’s also possible that she tries to start a boy band with our kids and few of their friends.

It’s great to have those kinds of options, but it’s more uncertainty. Obviously with all this uncertainly, it’s best to plan for the worst-case scenario. There are two problems with planning for the worst-case scenario:

1. Planning for the worst case of all the above scenarios could mean that there’s no retirement in sight in the short term.
2. If 2020 has taught us anything, you can plan for one worst-case scenario… but there can always be another one right it.

Final Thoughts

While it seems like we’ve already taken ten thousand steps towards retirement, this feels like the first real step. It’s one thing to increase your options for the future. It’s another to try to formalize the steps and move forward with them.