looking for targeted retirement advice
Hello dear BPN members -
After a lifetime of living frugally and saving everything I could, I have a carefully-thought-out retirement plan that has me retiring early -- in two years. I feel very lucky! But I'm also completely burnt out and want to leave my current job immediately, if not sooner. The idea of suffering through two more years of my current job is becoming hard to bear. Can you recommend a person (or an online service) that can help me map out alternative scenarios and which might work best?
For example, one idea is to quit now and go work overseas for a few years (which would involve a salary cut, but would allow me to avoid tapping into my pension early). I already have a good offer (at half my current salary) and I'm intrigued by the opportunity to have a new life adventure.
Another idea is to build an ADU on my property, move into it, and rent out the main house. That would hopefully provide some steady income, allowing me to downsize and travel. But it's hard for me to calculate when or if I would break even on this proposition. In addition, I'm not sure that being a landlord is my cup of tea, and would want to explore having a property manager - more cost, less return on investment, but also less responsibility.
I realize I'm in an incredibly fortunate position, and I don't want to mess it up by making a poor decision so close to the finish line. Thanks for any and all advice!
Parent Replies
I congratulate you on having a retirement financial plan and not just waving your hands around and assuming it all works out!
Building an ADU in the scenario you describe doesn't make sense as presumably the same cash you'd use to fund the construction, is drawn from your retirement fund. Also don't discount the emotional toll of being a "tenant" on your own property where you also have the headache of being the landlord.
Going overseas to work sounds fun if that's what you want to do and it fits into your life plan, not as a stepping stone to financial independence! Why... wouldn't you just get a new job here for a couple years? Are you looking?
Finally, 2 years is extremely close to the finish line. Can you push that up by getting overtime, picking up contract work, drastically reducing expenses somehow for a few months?
It sounds like it makes sense to look for a new job, that’s a bit different from your current one. It could relieve some pressure and perhaps inspire some new options.
Good luck!
Hi there, I can relate to many aspects of your post. Just a few comments on the ADU issue. I had similar questions (absent theone about the property manager; more later) when I started considering an ADU.
This was about a decade ago now; for context, construction prices have increased dramatically, and rents in Berkeley have also softened (although my personal belief or hope is that this is less true for a cottage than multi-unit apartment buildings).
One thing I did at the time was visit a financial advisor; I remember his conclusion being “you can’t afford not to do it”; that’s how good an idea he felt it was at the time. I did take the plunge, and have been renting out my ADU since.
Several thoughts: you will be sharing your property very closely with another (or others),which is both a plus and a minus re: being a housing provider. (I personally view it as a large plus.). Given this, in my view you absolutely do not want a property manager choosing your tenant(s), nor being a go-between if issues come up (repairs, concerns, etc). You will be face to face with your tenant on a daily basis; this needs to be someone you connect pretty well with - & this isn’t something a property manager can assess for you. Now, if you’re planning on both being abroad and having the ADU that would of course be different.
Secondly, make sure you understand Berkeley’s rent control regulations (assuming you are in Berkeley). Being under rent control and/or eviction protection changes everything about being a housing provider, and not in a good way. Especially for the eviction protection issue, with someone living in your backyard and feet or yards away from you. That being said, I believe you would be exempt from those, but PLEASE verify this first (either with the Berkeley Property Owners Association, BPOA, the Rent Board, or both). If you do move forward, I would say joining BPOA is a must.
This piece of my retirement planning has worked out well for me, and I’m happy I made the choice. Not every minute is peaches and cream, of course, and there’s a steep learning curve, but you’ll learn things and grow in confidence rather quickly. I’ve had 7 renters (sometimes couples) in the time I’ve had the ADU, and only one I would describe as awful; the remainder have been a pleasure, and the income stream certainly helps.
One other recommendation, tour a few ADU’s before you decide, and talk with at least a few contractors to get an idea of pricing, designs, timing, etc. Also read up on zoning requirements etc. At the time I was considering building an ADU, there was an ADU Task Force that held workshops etc.; I’m not sure if that (or something similar) still exists.
If you have questions I’m happy to answer them, and I wish you good luck in your decision making.
Congrats on your soon retirement.
Building an ADU can be expensive and it will take time, more if you do it with permits.. and then being a landlord is not that easy either. It is still a good option for the future.
Working abroad can be a lot of fun, if it is what you want and depending where… what would the living expenses be? Also maybe a great opportunity to enjoy a new city with a good cultural scene cheaper than here, even if you get pay less. The Bay Area is so expensive that you may be surprise on how far your new salary takes you.
Good luck!
In regards to the living overseas option please make sure you have good cross boarder tax advisors. It can be costly for the ill informed.