Something I may not have talked about here but earlier in the year the firm where I have been for 19 years got in serious trouble. More specifically, the two partners of the firm (I've never been a partner/principal) got into different types of trouble over the same incident. The non-partner advisors (that's what I was) were not in any type of trouble but we had to find a new place to land to continue to practice.
The outcome was uncertain for a short time. It all worked out pretty quickly thankfully but during that window of uncertainty I had to figure some things out in case we were unable to land anywhere.
I was still 56 when this started in the middle of winter. Could I retire if it came to that? I've said quite a few times here before that I probably could make it work but we'd probably have to reduce discretionary spending. That was the worst it was going to get. The rental income from our Airbnb just about covers our fixed monthly expenses so maybe we'd have to take $1000 or so out in most months to cover the difference, more when we buy propane every fall. This would not have been optimal but we'd have been able to last for quite a while in that scenario.
Keeping tabs on how long we might be able to last before going into retirement accounts is something I check in on periodically. Our old firm disappearing was definitely a black swan but true to what I've been writing about for ages, I was prepared for something bad to happen without know what that might be.
Part of a Plan B that I have talked about was to work in some capacity on large fires as part of an Incident Management Team (IMT). This little scare I had was a good kick in the pants to try to put that in place if needed. Try is the operative word as I had to be "approved" to be a liaison officer trainee. I was approved, I know a few qualified liaison officers (you are considered qualified after you successfully complete the training) which can hopefully be the gateway to getting trainee assignments on fires. So far there haven't been any fires which is odd but can happen. My plan with this for now is to be available for one assignment later this summer after the fire season in Arizona ends. I'd essentially be taking a vacation and spending my time working as a liaison the way other people might go work for Habitat for Humanity. Just like always, I'd be very reachable if clients needed anything.
Liaison is pretty high up on the org chart so the pay is very generous. A couple of full two week assignments per year would more than fill the spending gap mentioned above. Part of what liaisons do is help little fire departments like mine navigate through a serious event and I love the idea of paying that back after all the help I have received over the years. The downside is being away from home, away from my wife.
This part of the story supports the idea of taking a long runway to monetize a hobby or in my case a volunteer endeavor. There is other work I could do on fires that would pay less than liaison so I realize how fortunate I am but it is the byproduct of 20 years total, 11 years as a decent fire chief mostly making friends along the way. Networking matters here.
In starting to work through the various what-ifs of this situation I realized something about health insurance that might be useful to anyone who ends up in a similar situation that doesn't work out as well as mine did. For health insurance I need to either go to healthcare.gov or get temporary insurance. We do not qualify for any sort of subsidy through ACA so we've been going with temporary, which is to say lousy, insurance. We pay about $700/mo for a free physical and what amounts to catastrophic coverage. We are very lucky that we can get away with lousy insurance but we can. The last time I looked for a plan on healthcare.gov it was about $1500/mo which again is unsubsidized.
When you read articles about retirement planning, there will frequently be discussion about catching up in your 60's to hopefully turn what is really just an emergency fund into a more robust retirement fund. Now contrast that with all the anecdotes of people in their 50's and 60's who are forced into retirement or to otherwise take a serious hit to income which is what I was facing.
The scenario of being 50's or 60's with a decent retirement nest egg, having the house paid off with no other debt is plausible with a couple of good decisions early on. If you don't need to catch up on your retirement savings thanks to actions taken when you were younger then you have a lot more optionality when facing a serious decline in income. You maybe have even more optionality in this scenario related to paying a lot less for health insurance.
Look at your expenses, hopefully you have some sort of spreadsheet for this. With no mortgage, your health insurance premium is probably your biggest expense. Your income is now uncertain, you look at your expenses and realize you might be able to save a lot on health insurance if your modified adjusted gross income goes down a lot. I tried to find information on this but no matter where I searched I would have gone all the way through to talking to a sales person which I didn't want to do. Based on past recollections, I think a MAGI of $50,000-$60,000 might cut that $1500/mo down to maybe $400-$500 which if correct would be a huge drop, it would even be a noticeable drop versus the $700 we're spending on our lousy insurance. The $2400-$3600/yr saved, if my numbers are correct, in our situation is meaningful.
If someone in this situation is just pulling from savings every month then their MAGI could be much lower, further lowering the cost of health insurance.
It might be too optimistic to call this a windfall but it is an incremental benefit that stems from the work done to enhance optionality.This is almost an outcome where less income and being semi-retired would be the better outcome.
I had all of this in place if I needed it. My situation is going the other way. I have absorbed the clients from the partners at the old firm into my practice. This was not something I ever planned on. The extra income will be nice but optionality meant I didn't need this to happen which allows for providing unconflicted help to anyone who needs it and say ok to any of their clients who didn't.
This all could have been much worse stress-wise. The pre-planning I've been writing about for 19 years of blogging meant my only worry was about not being able to help clients any longer. That was resolved quickly and so the rest was gravy.
This is not a pitch of any sort, I would be very hard pressed to add anyone new, take this as more of an accountability check for people who've been reading me for a while that I do walk the walk of what I say.
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