Jay the other day asked the following:
With your plan to have $5000/year income from your wife’s work, that’s the only part I question. Obviously you know the situation better than I do, I’m just wondering if she’ll want to end sooner because you’re not working and she’ll want more time with you. I don’t think you’ve written enough on the subject, its ready for a post.
Thanks Jay for pointing out to me that I haven’t discussed my wife’s plans much on the blog. This is despite us personally having many discussions on the topic. So what exactly are her plans?
Well in general I think you all know that she has no intention of stopping working for now even when I retire later this year. We discussed it and she decided that she enjoys her work and isn’t ready to stop yet. So in total she puts in about $7200 a year of income to the house from her business. The business has been running since 2006 (with the exception of a year long maternity leave) so it is mature and the income is stable overall. So I’m not worried about her having less income for long periods of time which could impact our plan.
The interesting part of her situation is when she stops working she has very little desire to ever work again. Unlike me where I can see me picking up some income after I leave my day job. So in that regard we need to ensure when she stops that we don’t need any further income from her in the plan. After a few discussions she has indicated she sees herself working for another five years or so. This of course gives our investments some time to grow and eventually cover her retirement income as well over that period of time. In order to give her control over the timing of that I gave her the following guideline: as along as we keep the current house you have to keep the daycare. The reason for that guideline is simple. We bought the house expressly for its layout being suitable for her business. As such, when it comes to just us as a family it is a bit too big. So we plan on downsizing the house in the longer term, but to reflect that in our plans I put her in control on when she wants to move and retire.
Of course, that is the plan but has Jay points out: what happens when she changes her mind? Well I really don’t see that occurring to just spend more time with me. In fact, if I’m honest, I have concerns about the opposite occurring. We aren’t used to spending more than evenings and weekends together expect for vacations. So if anything I may be ‘requested’ to leave the house periodically to allow my wife to recover from me invading her routine. But if she does insist of leaving her business earlier than five years we would then just sell the house and downsize. The left over equity would then fund her remaining commitment to our expenses. Which keep in mind is a small amount at just $7200/year for five years. So worse case, after a year she wants out. We are only missing $28,800 which is like 7.2% of the assessed value of our house. Not a big deal.
So hopefully the provides some information on my wife’s plan. Even with working another five years she will still be an early retiree compared to most people and likely done work by the time she turns 45 or so.
I hope the helps explain things. Do let me know if you have any follow up questions.