That very enticing “one-and-a-half-years to go” milestone is coming up at the end of this month. I’m practically giddy. Time has flown by since I set this goal back in the fall of 2014, during one of the deepest funks of my career. It’s time to prepare for early retirement.
The way I look at it, 18 months is about the right amount of runway to start this whole process. Considering I’ve been a corporate worker for 23 years now, I could probably use a healthy year and a half to get myself “sorted out.”
Bigger life transitions demand a little preparation. You take time to plan a wedding and ready yourself for marriage. You get 9 months to plan and prepare for having a child. With retirement, there are some key things to consider.
Heck, in the old days (up until the 1980s or so), men would retire without a clue what to do with themselves, and wound up dead of a heart attack within just a few short years of retiring. No wonder pensions were so generous back then!!!
Just like we got married without a wedding planner, I’m going to do this “early retirement planning thing” solo as well. Specifically, my brain is focused on these 3 objectives:
- Knocking off Big Expenses (before retiring)
- Accounting for Health Insurance
- Avoiding Boredom
These are the ones that surprise you sometimes. And when I say “Big”, I mean over $2,000 BIG. Examples include a new roof on your house, needing to replace a furnace, or needing a new used car.
Just this weekend, I was swimming in a financial shit stew. I woke up Saturday to a text from one of our tenants that the heat had gone out. They are tough cookies, and were sitting through 52 degrees on a -10F sunny day waiting for me to get back to them. Should’ve left my ringer on…
I knew that the furnace at rental C (the one with the amazing backsplash) was probably going to the be first among our properties needing replacement. I just hadn’t planned on it THIS YEAR.
So I get over there, toting along a couple of space heaters and a few tools. I get the cover off the furnace and run through the restart sequence. Nuttin. Just makes a humming noise. That little black spinning wheel isn’t spinning. Inducer motor is fucked. Dammit.
I got my furnace guy on the phone and luckily he can get the part for the over-20-year-old-beast. Best of all, he can be there by noon.
The problem with my furnace guy is that he’s honest. I knew in my gut what he’d tell a few minutes after he got there: “You should probably replace this thing.”
BUT, not before we install the new inducer motor, because you can’t just install a new furnace on the spot. It’d be three days before he could return to do that little project. Luckily he only got charged $200 for the part (no labor.) Normally, that part swap would’ve cost $550 with labor.
At the end of the day, I’m looking at a $3,200 bill on my rental ledger to start 2018. Yippee!!! But again, knowing that that furnace was on the brink, and would’ve needed replacing at some point, I can’t get too worked up about it.
A lesson in home appliance repair
That very same day, before I got the distress signal from our tenants (or rather, before I bothered to check my phone) I had it in mind to look into a new washing machine for our home. See, we have one of those LG top load washers from HELL. The model that experiences uneven loads half the time, and wastes, time, electricity, and water to finish a cycle.
I figured we should start the new year by replacing that wasteful machine with a much more environmentally friendly front-loader. Maybe donate the old box to a shelter or facility that only needs to wash towels (or similar items that won’t cause the dreaded “uneven load” error.)
At any rate, having to buy a new furnace for three grand kind of puts a dent in things. I reckon I’m fortunate in the respect that I didn’t go through with buying a new washer first, only to find out later about the furnace. Silver linings?
I did have one bullet left in the chamber. My plan was to give YouTube one last shot at helping me resolve the uneven load problem with a DIY hack of all hacks. (Here’s what I found, if you’re into YouTube appliance repair hacks.)
Off to the hardware store I go. A nice 10 block walk in 5 degree F crisp, F’ing winter weather. I came back with a bag full of appliance springs. Mainly because I wasn’t sure which ones would fit best. Always good to over-purchase and return later. A Home Depot lesson I’ve learned multiple times.
Springs installed. First load successful. Nothing explodes. Win! Let’s monitor this for a bit, and maybe see what Handy Millennial thinks of all this before I celebrate too much. Hopefully though, this simple fix helped us avoid an unnecessary $800 expense on a new washing machine.
On needing a new roof
One of the big expenses I had somewhat anticipated was the need for a new roof on our house. Our roof-Nazi insurance carrier is planning to drop our policy later this summer unless we replace it. Honestly, the roof isn’t THAT old (maybe 25 years?) It doesn’t look that bad. There are no leaks.
BUT, there are a handful of shingles with slightly upturned corners. Usually that’s a sign your roof needs to be reshingled.
My trusty roofing guy (because when you have rentals, you come to build a team of trusted pros) estimates the job at a little north of $5,000. So here we go, another biggie to bite off before early retirement.
I’ll probably go through with this project in the springtime and avoid losing our insurance policy in the process. I mean, I could hold off on getting the roof reshingled and find a more expensive home insurance carrier, but that’s just kicking the can down the road. And if a nasty storm hits, the last thing you want is a worn roof allowing water into your home.
Bottom line on the Big Expenses
My plan is to tackle as many of the big-ticket expenses that are on our horizon (roof) and not (furnace) as possible, over these next 18 months. This isn’t to say that we won’t be ready to handle them in early retirement. But why not go into the next phase of life with as few bogies as possible?
Some of these big-ticket expenses could push my early retirement target date out a little, but I’m not ready to concede that just yet. We’ll see how the Airbnb experiment goes, among other things.
Accounting for Health Insurance
Oh man. I’ve got some homework to do on this one. I’m estimating that we’ll spend $500 per month in premiums for a high deductible plan, and about $1500 per year in out-of-pocket expenses.
We are a healthy-ish bunch here in the Cubert household, so my hope and intent is to avoid health being something that holds us back, but rather and enabler for living a good life. That means lots of exercise, whole foods, limited screen time, and plenty of sleep.
Even with all that noble planning, we can’t avoid health insurance. That’s just too risky. We can, however, mitigate our premium costs in a couple of ways:
- Deduct premiums from our business taxes. This is huge. Having a business allows us to effectively discount our cost of coverage by roughly 33%
- Max out a Health Savings Account. For our family of four, we can put away close to $7,000 per year. The best part? That money gets treated as an extra deduction on our taxes. The second best part? We can use those pre-tax dollars for our out-of-pocket medical costs.
The main thing is, I’m not overly worried about how we’ll manage healthcare costs in early retirement. Factors 1 & 2 above are immensely helpful. We’ll simply have to wait and see if our elected officials are eventually able to extract their heads from their collective asses to work together with the industry on cost containment.
Utilization isn’t the problem. It’s the cost of procedures, pharmaceuticals, and everything else associated with care. But I digress…
I saved the hardest one for last. Some things will stay constant (or change little) with the transition to retirement:
- I’ll continue to blog (lucky you!)
- I’ll continue to have our house, plus five rental properties to manage
- The kids will need Papa’s time and loving care for all sorts of things
Some things I expect will get more of my time:
- Exercise with kettle bells
- READING (at the lake nearby, under a tree, Abe Lincoln style)
I’ll have a few more responsibilities too, since Mrs. Cubert will continue to work her near-full time gig as a chiropractor:
- Chef de cuisine (although I’m not 100% sure the family will be ready for me to step into mighty mommy’s apron.)
- Shopper de cuisine: Groceries by way of bicycle with Burley trailer. YES!
- House cleaning? We’ll see…
That sure seems like a healthy amount of activities to keep Senor Cubert occupied. But there’s room for a little more action in the plan. I expect to tackle some home improvement projects, since as we all know, it is possible to make a small house feel like a palace.
I’m also thinking about what charitable organizations would be a good fit for my time and talents. Habitat for Humanity is high up on the list. But there are others I need to learn about and consider.
And finally, I had some notion of taking on a part-time gig that better aligned with my interests. Maybe I could fire up a property management business? I’ve even thought of home inspections as a possibility. Regardless, there will be no cubicles involved. That’s for damn sure.
There’s a lot to look forward to
This is just the top three on a list floating in my head these days. What did I miss? Well, I’ll need to keep an eye on our mortgage pay off project. There’s also the notion I have of pre-loading the kids’ 529 plans.
I’ve certainly got my work cut out for me. In the midst of the next 18 months, the Airbnb experiment will bring new variables to the mix. Life itself is full of unknowns. Despite the planner in me, I know I need to be ready to accept, adapt, and adjust. For all the knowns, no better time than the present, to PREPARE.