The Retirement Mindset
This will be a brief discussion as I’m not sure what that means, and I’m not currently planning on shifting to the retirement mindset anytime soon. My long term plan has always been to pay off the mortgage and remain debt-free before we think about a self-sustaining income/lifestyle. Due to the COVID-19 layoff, we’ve been granted the opportunity to explore those realities sooner than planned.
Thus far, it seems that if we decided to really buckle down and eliminate most if not all discretionary spending, then we’re already capable of living on my pensions alone. Notice the plural. The pension I draw due to my service-connected disabilities has been a key source of income now that I’m not earning any sort of a normal salary. We, fortunately, had a bit of an emergency fund, just because our checking balance had built up to a decent level by the time of the layoff. That balance has been slowly dropping, but there’s also been a great deal of arguably discretionary spending as mentioned in the last post.
We’re going to try and cut way down on that for the next few months and see if we can get that balance crawling back upwards. At our present payoff level (essentially the minimum), our mortgage should be paid off in about five and a half years. We had been paying it off at about three and a half times the required amount for the three years since I switched to fee basis, so we made quite a dent in the principal. We’ve been paying the mortgage off since late 2013, so we’ve managed about twenty-five year’s worth of payments in under seven years so far. Once the mortgage is paid off, that should free up about 1.5K in monthly expenses. We’ll still have the rather high property taxes and insurance that are just part of living where we do. I sometimes wish they had a state income tax and would pass on some relief to property tax rates, but I doubt that will happen anytime soon. Our property taxes and insurance are the equivalent of many people’s rent.
The biggest concern with the reduced income is if we get hit by a large financial requirement like home/car repairs, major dental/medical expenses, etc. If we had a few of those in succession, we could quickly drain the remaining cash balance we have at present. If I’m able to return to work in the next year or so (hope), then the goal is to build the cash reserves up a bit more and then work on paying off the mortgage. If I’m able to sustain the work level I had previously, this should be manageable in about two years. Having the mortgage paid off will give us quite a bit more breathing room. At that point, any work that I did would be mostly for discretionary income purposes. I can see working one day a week indefinitely at that point.
So, I don’t know if I’ve adopted the retirement mindset just yet because I’m hoping to be able to return to work and if I’m being honest, I don’t want to completely cut out the ability to earn discretionary funds by virtue of the odd shift here and there.