I would like to quit my job in the beginning of 2022, but I’m trying to figure out if I am foolish and/or selfish to do so. Here’s our situation:My husband and I have been happily married for over 30 years. He is 58 and I am 54. We have a beautiful “forever home” worth about $900,000 and we owe about $285,000 on it, which is our only personal debt.
We also own a small business that doesn’t really generate much income. We bought it with the hopes that in the future it would earn enough to at least pay for health-insurance premiums when I was ready to quit, which may be true when we pay off the business loan in two years. We also have a bit of other property, cash and stocks worth about $400,000. Our retirement accounts are fairly healthy with a total current value of about $1.5 million with a mix of 401(k), Roth and IRA accounts. I earn a low six-figure income, plus I teach online classes because I enjoy it, but that only grosses me about $25,000 per year and is not guaranteed income. My husband’s income is variable because it’s 100% commission based.
“‘We have three adult children that are all living on their own and mostly financially independent.’”
So when he makes a commission, we deposit enough into our “house savings” account to bring the balance up to 18 months’ worth of house payments and then decide what to do with the rest. We have three adult children that are all living on their own and mostly financially independent; however, one child may need us to set up an annuity for him at some point for his future. Our financial adviser has done a great job running different scenarios for us trying to estimate how we’re doing for retirement savings. Most scenarios look just fine, especially the one where I work at my current position until I am 65. That one has us leaving over $10 million to our children when we die in our 90s! But he also says we are estimated to have about $2 million left if I quit my job early next year. Still, I know these are just estimates. I am very unhappy at my job and have been for some time. Because I carry all our health-insurance benefits at my job, I feel trapped. My husband loves his job so I don’t want him to get something else, at least one of us should love their job, so insurance has been a concern.
“‘I could quit my job and we could afford to buy insurance on the exchanges for 2022. We never could afford to do that before.’”
However, Congress passed a law in the American Rescue Plan due to COVID-19 that eliminates the “subsidy cliff” for 2021 and 2022. I could quit my job and we could afford to buy insurance on the exchanges for 2022. We never could afford to do that before. We already have two years of house payments saved up in our cash account, and I would still be making a small income for 2022 through my teaching and maybe something else I could pick up, plus whatever my husband brings in. My husband is currently going through cancer treatments, and I have a couple of minor health issues as well. I want to take 2022 to focus on us, our health and take a break from my stressful job. But I’ve only got health insurance covered for 2022, I don’t know what the costs will be in 2023 so it’s a bit of a gamble. Am I being selfish and/or foolish to give up my good salary with benefits at my full-time job just because I am unhappy? Looking for a new job is not really on the table for me. It’s also the industry I am tired of, and I don’t want to start over somewhere else. My husband will support whatever I want to do, but I don’t think he would do the same if the situation were reversed. Trying Not To Be SelfishDear Trying, It would be more helpful if we changed your question from “trying not to be selfish or foolish.” What is behind Door No. 3? How about approaching it from the viewpoint of trying not to do something that you may regret at a later date, and making a financial decision based on emotion that could be irreversible. Your financial situation would be the envy of millions of Americans. You’ve done well to build up your retirement and pay down your mortgage so aggressively, but you and your financial adviser are also correct to factor in another 30 to 40 years, a period during which you will likely have increased medical bills. Read: Your retirement plan can’t deliver financial certainty — here’s how to think about the big risk factors You are around a decade into your peak earning years. Women reportedly hit their peak in their mid-40s, about 11 years earlier than men, according to Payscale. One of the reasons for that is because women pay the “motherhood penalty” with part-time work and career breaks to take care of their children. Your Social Security Benefits are based on the 35 years of work when you paid the most in Social Security Insurance. As such, you are heading into the middle of that last leg of your working life that will determine your benefits, and you would lose that money if you were to give up work now.
“‘Your financial adviser’s optimistic vision of a $10 million nest egg is based on an enviable longevity.’”
It wouldn’t hurt to get a second opinion from another financial adviser — your financial adviser’s optimistic vision of a $10 million nest egg is based on an enviable longevity — and explore some alternatives such as downsizing, family and medical leave, or even a career switch in case you are experiencing burnout. Something else to keep in mind: It’s in your adviser’s interest to model a bright future for you, because it makes it seem that he’s great at his job. Turning your $1.9 million into a portfolio so robust that you have $10 million leftover after decades of drawdown would be quite a feat. Read: Find out what Social Security knows about you Under the American Rescue Plan, “the vast majority of people buying their own health insurance coverage can be sheltered from premium increases by taking advantage of the subsidies offered in the ACA marketplace,” according to the Kaiser Family Foundation. “If these subsidies expire, though, middle and upper-middle income people who lose subsidy eligibility will not only have to make up the difference in the subsidy; they will also be on the hook for any increase in the “sticker price” of the premium between now and Jan. 1, 2023,” KFF says.
“‘Stress-test your retirement plans with your financial adviser — giving you a road map in five-year increments.’”
“Without a subsidy, a 60-year-old’s health insurance premium currently averages more than $11,000 per year,” it adds. “If that 60-year-old has an income just above $51,000 — over four times the poverty level — their ARPA subsidy covers more than half of their monthly costs. Without the ARPA, their premium would increase 165%.” Another spanner in the works of your working life: the COVID-19 pandemic. It has made people reassess their work/life balance and — for some people at least — the prospect of returning to full-time, in-person work gives them not a small degree of anxiety. It’s not an ideal time to make life-changing decisions. Stress-test your retirement plans with your financial adviser — giving you a road map in five-year increments so you at least have something to aim for — and stress-test your emotional life with a therapist. If you gave up work next year, it may not address your underlying unhappiness, and merely introduce a new set of problems. Having a job that you don’t care for is infinitely better than having no job and facing unforeseen medical bills and, given your respective health conditions, I urge you to proceed with caution before pulling that employer-sponsored health safety net and guaranteed income from beneath you. You can email The Moneyist with any financial and ethical questions related to coronavirus at firstname.lastname@example.org, and follow Quentin Fottrell on Twitter. Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns. The Moneyist regrets he cannot reply to questions individually. More from Quentin Fottrell: • My married sister is helping herself to our parents’ most treasured possessions. How do I stop her from plundering their home?• My mom had my grandfather sign a trust leaving millions of dollars to two grandkids, shunning everyone else• My brother’s soon-to-be ex-wife is embezzling money from their business. How do we find hidden accounts?• ‘Grandma recently passed away, leaving behind a 7-figure estate. Needless to say, things are getting messy’