Hey, everyone! This is for all harassing federal workers. Most civil servants are dedicated and hardworking people. The president and his supporters see them as unnecessary water ches, which is a horror. Since the process was illegal, thousands of workers were fired and then rehired. This is a ridiculous confusion. In any case, efforts to clear the federal labor force continue. Next week, all institutions will attribute plans to legally reduce the workforce. I’m sure they open Vera for almost everyone (voluntary early retirement authorization). This will leave many older government employees without many problems. They should have done this from the beginning, rather than trying to fire people without any reason. Today, I want to help qualified Fed workers figure out whether they should participate in Villa. read…
Vila
This is the qualification to retire early.
Meet minimum age and service requirements –
- At least 50 years old, have at least 20 years of federal service or
- At least 25 years of age at federal service.
Thousands of workers are eligible. This is a great way to reduce the Fed’s workforce without all the drama. I think this is a great opportunity for GTFO if you qualify. Doge will continue to harass workers and try to force them. Why stay in a hostile workplace when you don’t need it? OK, hold your horse. Can you really retire early? Two months ago, most civil servants planned to continue working for many years. They are not ready to retire early. I’m here to help. Today, let’s figure out if you can retire early.
Cash flow is king
When retirement, cash flow is king. Cash flow is the monthly income and how much income it is. It will indicate whether you can pay after retirement. Starting from 2024, we can take RB40’s household cash flow as an example.
expenditure
First, start taking cash flow spreadsheets from 2024. What? You are not tracking your income and expenses! How do you know where your money went? I think it doesn’t matter. Most households do not track their cash flow very closely. However, your financial situation will change dramatically after retirement. You need to work hard and stick to cash flow before you retire.
Fixed cost
First, add up all the fixed costs. These are everything you need to survive.
- Housing – Rent, mortgage, property tax, utilities, insurance, HOA, maintenance and repairs.
- Food – groceries.
- Transport – Car payments, gasoline, insurance and repairs.
- Healthcare – Health insurance, medications, Copay, Band-Aids, etc…
- Other bills – mobile phones, internet, etc…
- Taxes – This is tricky because retirement can cause significant changes in your taxes. We can skip this now.
You can start with all your billing and account descriptions from last month. This will give you an idea of where you are. It’s better to be a record from the previous year, as some expenses are clumsy. For example, our shipping expenses are usually around $200 per month. However, it will be priced at as high as $1,600 in May 2024. We had to replace the spark plug and hood. If I didn’t track my fees every month, I wouldn’t see it. Anyway, last month was a good starting point.
This is the fixed cost for RB40 households starting in 2024.
This is the standard cost of living for us, about $2,500 per month.
Flexible spending
Next, add the rest and put it in a flexible spending category.
- Kids – Sports, activities, school trips, gifts and various other child-related expenses.
- Entertainment – Dining out and some shows.
- Travel – Our maximum discretionary expenses.
- Personal – Hairstyles, clothing and other personal expenses.
- Parents – Last year I sent a little money to my father.
- Miscellaneous – Everything else.
Our flexible spend is $33,177 or about $2,800 per month. Surprisingly, this is more costly than our fixed costs. If we really need it, we can remove most of it. However, spending as appropriate is what makes life worth living. You don’t want to delete everything.
Well, now we have a look at the cost of living lifestyle versus comfortable lifestyle. Every family is different. You need to sit down and find out your family’s cash flow. Now, let’s look at the other side of the equation.
income
For most families, the income part is easier. Most households have only one source of income. That’s work. If you retire early, you will need income from other sources to cover your expenses. We can check out the RB40’s household income to see how it looks.
This is the cash flow we have received again from last year.
I earn income from many different sources. They are almost enough to cover our annual expenses. However, I had to draw $1,086 from my savings to help. This is very good. That’s why we save on retirement.
For Fed workers who are eligible for Villa, you will have a pension. Check out the online retirement calculator to estimate how much you receive per month. The bad thing about early retirement is that your pension will be smaller than you work longer. As long as the cash flow is calculated, that’s fine.
Establish a cash flow chart
Now, assemble your retirement cash flow puzzle. It should look like this.
This is just a guide as your fees may be smooth. If your pension can cover a fixed cost, you will be very solid. You should be able to significantly reduce your discretionary spending after retirement. You don’t have to drive, dress up or get a haircut. But let’s aim to maintain the same lifestyle.
If you need more income than just a pension, you can get it from savings. In the above estimate, our early retirees will need to withdraw about $32,000 from their savings to maintain the same lifestyle. We can use the 4% rule as a guide, but I think it’s a bit clumsy here. Until you are 62 years old, the Fed’s pension will not receive any life adjustments (Cola). If you retire at 52, that’s 10 years of inflation. You need to withdraw more and more from your savings every year.
In this case, I think 3% is the safer withdrawal rate. For just $32,000, you need about $1 million in retirement savings. A large portion of this should be in a taxable account, maybe $300,000. You can get no penalty until 59½.
You need to monitor your cash flow every year. If your savings withdrawal exceeds 4% in a few years, you will need to make some adjustments. You can try to spend less or work part-time to increase your income. Once it reaches 62, things should improve. At that time, your pension will receive Coke and Social Security benefits will begin.
Should you bring Villa?
Well, if cash flow looks good, then Vera may be a good choice for you. Many Fed workers do not intend to retire as soon as possible, but the workplace will continue to deteriorate. Doge sends multiple confusing instructions every week, making the job painful. They are bringing a lot of busy work to everyone. This kind of workplace is frustrating. The workers who survive the next round will have to work hard for those who leave. In short, work for a long time will be painful. If you can retire, why keep going?
Even if the cash process looks tight, early retirement is a good choice. You can take a few months off and look for a job in the private sector. Another option is to move to a lower living position. This can greatly reduce your monthly expenses.
All in all, if you qualify, I think Vera is a good choice. Even if you are not ready to retire, take a break to explore other options. However, early retirement is not for everyone. Try it for a while and see if you like it.
If you are eligible, would you take an early retirement option? Or will you stick with it and try to survive the several rounds of layoffs? Good luck to everyone!
Image source: Xavi Cabrera
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Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects all over the United States, so check it out!
Joe also strongly recommends providing personal capital to DIY investors. They have many useful tools that can help you achieve financial independence.
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