Over the past few days, I’ve about made up my mind that if I get laid off after the Board of Regents meets in December, I will not try to get another full-time job at all. Nor will I take regular draw-downs from my much-stressed retirement savings.
No.
Yes. I think I can live on a combination of Social Security and freelance editing, if I can earn a minimum of $1,000 a month. This would allow me to do the following things:
1. Quit. Yes!!!! Quit, quit, quit!
2. Leave the planned 4 percent retirement drawdown invested until the market turns around.
3. When I reach 66, return the money I’ve drawn from Social Security to the government and reset my payments to the “full retirement” level, substantially increasing my monthly income and collecting a chunk of tax refunds for the Social Security grab I paid at ages 63, 64, and 65.
Life would be very pinched for the next 2 1/2 years, until I reach 66. However, at 66, the increased Social Security payments would put me back in the middle class, and, with any luck at all, my savings will have recovered enough that I can safely draw down 4 percent. These two factors would make the rest of my life tolerable. When M’hijito and I sell or rent the Renovation House, I would then have enough income that I wouldn’t have to do any paid work at all to maintain a reasonable lifestyle.
Here’s how I see this:
Health Insurance: I will be eligible for Medicare in 18 months. COBRA lasts 18 months. The cost is $475 a month, but most of that will be covered by the amount GDU will owe me for accrued vacation pay. Thus that amount will not have to come out of month-to-month cash flow.
Renovation Loan: I will pay that off, using the money I have earned and squirreled away for the purpose. This will save the $170 payment and the $204 a month I pay toward principal, cutting my monthly expenses by $374. The amount of the loan, it is to be hoped, will be returned in a few years, after M’hijito and I sell the Investment House, on which I spent the funds.
Emergency and unexpected expenses: The amount I can generate from freelancing and Social Security will cover only routine costs. It will not cover a plumber’s bill, a car repair, a veterinary visit. However, I have about $18,000 saved up to buy my next car; this amount doubles as an emergency fund. I can use some of that to cover surprise expenses, or make an occasional drawdown from the big IRA.
Routine savings: The $200 a month I normally set aside to buy such things as clothes and other little indulgences will go away. The only way I can survive on freelance income plus Social Security is to dispense with regular savings. I am, however, allowed to earn as much as $1,125 a month without having Social Security taken away from me (isn’t THAT generous?). My plan assumes a regular freelance income of $1,000. Any amount more than that can go into a savings account. I hope.
Budgeting: In addition to foregoing the routine $200/month savings deposit, I will have to cut $300 a month off my living expenses budget. That means, basically, that $300 will have to come out of the grocery budget. Since there’s a little play in that budget anyway, this probably can be done simply by changing the way I eat and by purchasing nonfood goods second-hand at thrift shops and yard sales, rather than buying everything new.
If I do these things and they work (second part of that is the big IF), I will be OK in the winter months when utility bills are low. During the summer, when temperatures exceed 110 degrees day after day, staying out of the red will be difficult, but I think it can be done. I will start with a cushion of about $900, back-up money that’s already sitting in the credit union. That will rise to around $1085 by the end of June, as budget underruns stack up. As utility bills bloat, my cushion will drop to a low of about $815 in October. In November, though, it will begin to grow.
Should I sell my house and move to Sun City, where real estate and living expenses allegedly are cheaper?
Hell, no! First, after the foreclosure across the street, my paid-off house is now worth less than I paid for it BEFORE the bubble. My house is very pleasant, it’s centrally located, and it’s paid off. I did a little math and discovered that it costs me about $93 a month more to live here than it would to live in Sun City, assuming I do not engage in full Scrooge McDuck lifestyle. I believe that after commissions and closing costs, I could net—if I’m lucky—about $258,000 on the sale of my present house. In Sun City, I could buy a house for around $200,000.
Such a place would need about $10,000 worth of upgrades and renovation to bring it more or less up to date and make it into something I’d want to live in. Consider: My house is pretty nice, with a big lot, a beautiful pool, wonderful bearing citrus trees, a private front courtyard, skylights in three rooms (real skylights, not aluminum tubes), a new roof, expensive tiling throughout, an updated kitchen, and a spiffy gas stove. For $200,000, what you get in Sun City is a 30- to 40-year-old tract house whose quality and style come under the heading of “better than living in a trailer…just.” Cabinetry and trim are veneered in plastic; there’s no gas service, so you have to use an electric stove; landscaping is gray, green, or (worse!) white pebbles; and the general atmosphere is Early Mausoleum. Spare me, God!
Well, my friends, I think She will. Spare me Sun City, that is. I really do believe I can hop off the treadmill, delay drawing down savings until the market turns around, and live on Social Security and freelance earnings for the next three years.
Now. All we need is for President Raven to croak “Nevermore” come the first part of December: declare a state of financial emergency at GDU and lay me off. Ohhh please, Mr. Raven: d-o-o-o-o-n’t throw me in the briar patch!
😉