Help Me Retire: I’m 53 and hate my job. My husband, 59, and I have two homes, plus $1 million in savings. Can we afford to retire?

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Dear MarketWatch, 

I’m 53 years old and my husband is 59, and we have three children. I make $160,000 a year at my one job, which I hate, and I bring in between $22,000 and $27,000 from my secondary job, which I love. My husband is self-employed and makes between $150,000 and $250,000 a year. We have $100,000 in dispensable funds

We’re currently investing approximately $70,000 per year. We have $1 million in retirement funds, a mixture of IRAs and mutual funds along with some tech stocks. We have two homes — worth $1 million and $750,000. We have a $100,000 mortgage between the two. I’m the primary insurance carrier. Insurance is my biggest fear, to be honest.

We provided $100,000 to help our oldest child to purchase a home, and we would like to do the same for our other two children once we sell one of our houses. I have a pension of $50,000 a year when I’m 62, if I leave in a year, but that will increase by $3,000 for every additional year that I stay at my primary job.

My husband will likely turn his business over to two of our sons and will collect some residual money from it. Most likely, we would like to sell our cheaper home and purchase something smaller with the funds, and give $200,000 to our remaining children. Alternatively, we could sell both homes and purchase something smaller and easier to upkeep. 

I’m trying to figure out how long I need to keep going. Can you help me work through some of the pros and cons of early retirement? When can I comfortably afford to leave my job?

See: Will our Social Security checks be reduced? My wife has a school pension and I’m a veteran.

Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com

Dear Reader, 

Insurance should be your biggest priority — if only because it could easily be among your biggest expenses if you retire early. 

This isn’t to scare you out of retiring early. When a person chooses to retire — if they have that opportunity — is dependent on many personal and financial factors. If you can afford it, and it won’t derail your needs or wishes later in life, it’s feasible. Weigh the pros and cons before you move jobs — afterwards, you can address some of the bigger stressors, like healthcare.

If you carry the primary insurance, and leave that job, either you or your husband will need to pick up private insurance. That can be quite expensive — $1,500 to $1,800 for a couple in their 50s — and you’ll need to have coverage until you each turn 65. So while your husband would only have six years left until he’s eligible for Medicare, you would have 12 years to go. 

Whether you choose to retire from your primary job, get an idea of how much you could expect to spend on healthcare. You can use the government’s website to look for plans, but be sure to include any and all potential expenses. Make sure the plan in question covers doctors, health institutions and medications you would both need in any given year. (You will need to review this annually, as plans are subject to change.) 

For two 58-year-old non-smoking adults enrolled in a silver plan (one of the more basic levels of coverage), the average cost of health insurance is roughly $1,800 a month, according to New Retirement. The cost varies though. Couples can choose a more inclusive — but also more expensive — plan. Middle- and lower-income people could choose subsidies/tax credits that reduce their premium. Costs also vary by state. 

Make a list of your retirement expenses

After you get a ballpark figure for healthcare, incorporate it into your financial plans. List all of your expected expenses in retirement, such as mortgage payments, food, utilities and taxes, and compare it to what you can reasonably expect in income. I say “reasonably” because self-employed incomes, as well as part-time gigs, can fluctuate.

When you look at your expected cash inflow and outflow side by side, how does that make you feel? Are you confident that your new income levels can sustain your desired cost of living, and if not, how would you need to adjust — and how does that make you feel? 

Having money on the side, like the $100,000 in dispensable funds, is great, but be sure to have money specifically earmarked for an emergency fund. An emergency fund is important when you’re giving up a major source of income. The typical guideline is three to six months’ worth of expenses, but you might feel more comfortable putting away a year or more of expenses. It will help you avoid having to tap into retirement accounts, especially when the market is volatile. 

A qualified and trustworthy financial planner can do more intensive calculations, and run numerous scenarios — if you sell one home, or both homes, or give money to your children. Financial planners can even help your husband structure a sale of his business to your children so that he continues to receive an income, and help you with all of your tax planning.

If you are worried about your income and insurance, but hate your current job, consider taking on another role that offers health benefits but is less taxing. (You might even be able to find another position within your company, so that you can keep growing that pension!) That way, you can use this time to make extra income, boost your pension, and add to your savings and investment accounts — while finding a new path you’ll truly enjoy for the foreseeable future. 

Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com

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