'I'm ready to walk away': I have $400K in retirement savings and want to quit my job of 30 years. Can I do it?

By Alessandra Malito

'I really, really hate my job. I do work from home, but I'm very burned out.'

"After my sister-in-law left me the IRA, I decided to purchase a house in Portsmouth, Va. I put my daughter on the deed so that I would be able to do this." (Photo subject is a model.)

Dear Help Me Retire,

I am 62 years old. I've worked for the same company for over 30 years and I am ready to walk away.

I have a 401(k) which, unfortunately, I was not able to invest in for 10 years due to a poor housing decision. Once I started investing, I put the maximum in for 11 years, but I am still behind. As of today, the total is $227,520. My sister-in-law left me part of her IRA when she passed and, due to the market, it fluctuates between $179,000 and $182,000 week to week.

I moved back in with my father about 12 years ago to help him, and I don't pay rent. There has been a reverse mortgage on the house for over 20 years. When he passes, I don't anticipate anything coming out of this house, even though it is in a very nice area of California.

I was able to save almost $80,000 in the last 12 years. After my sister-in-law left me the IRA, I purchased a house in Portsmouth, Va. I put my daughter on the deed so I could qualify for the mortgage. Currently the mortgage is at $1,600 a month, with my daughter, her wife and a roommate paying 90% of that mortgage. After I get everything wrapped up after my father passes, I'm going to move back to Virginia.

I really, really hate my job. I do work from home, but I'm very burned out and I would really like to retire to spend more time with my dad (he's 92 and not in great health). I've been working since I was 18, so I have all the credits necessary for full Social Security benefits. At this point in time, the monthly would be approximately $1,900.

I have a goal roughed out wherein if I quit, I use the IRA to support myself for three years (as it is inherited, I have to spend it within 10 years) while I wait for Medicare, and hopefully also wait that three years to apply for Social Security.

There's a possibility that I might have the genes to live into my 90s, but my dad was in the military for 25 years so all his healthcare is basically free. I don't anticipate getting free healthcare, and you never know what's around the corner - I might get hit by a truck tomorrow.

What do you think?

Need a New Start

See: 'I have definite issues with their math skills': Social Security gave me too much survivor benefit. Who's wrong?

Dear Need a New Start,

You should refine your retirement plan before you decide to quit your job.

Your reasons for wanting to leave are completely valid. Spending time with your dad matters deeply, and after decades in the workforce, it makes sense that you want mental clarity and relief from burnout. Still, you need to think carefully about your later years.

Healthcare can be expensive. It's fortunate that your dad doesn't have to pay for it, but most people are not that lucky. If you leave your job before you're eligible for Medicare, health insurance could cost far more than you expect. It could cost $1,300 a month. Premiums and deductibles on the Affordable Care Act's Marketplace are also extremely volatile at the moment. You don't want to shortchange your future simply because you feel an urgent desire to retire now. Stress test your pre-Medicare healthcare costs with ACA and/or other healthcare options.

You might opt for a part-time job, which gives you more hours to spend with your dad in addition to a paycheck (and maybe even benefits). There are so many work-from-home opportunities, with very flexible hours and responsibilities. I don't want to sugarcoat the challenge of finding a job in your 60s, but a change of pace might help you feel differently about still working. Obviously, I'm not aware whether your skills are transferrable to part-time work. I'll leave that to you.

Read: Here's a new, flexible way to work that can ease your fears about retirement

Do you have questions about retirement, Social Security, where to live or how to afford it at all? We want to hear from you. Join the conversation in our Facebook community: Retire Better with MarketWatch.

There's an extra perk of working a job with a 401(k) when employers offer company matches, so if you're not sure that you're already receiving one by meeting the requirements, reach out to your human-resources department to see if it's available and get started.

If you feel that burned out, talk to your manager about trying a new role, switching to a different department or taking on different tasks.

The more money you earn, the more money you can put aside, especially if you are keeping your living expenses low for the time being. You could save a little extra cash in a traditional or Roth IRA, which gives you more breathing room when you retire (and also adds more diversification to your taxable income in retirement).

Yes, you do have to drain that inherited IRA within 10 years, but it would be a shame to see it all (or mostly) disappear in just a few years when you still have the ability to earn an income and boost your own retirement accounts. You don't necessarily have to spend it, you just have to move it out of that original account.

As you said, you could get hit by a truck tomorrow, but you could also live into your 90s, so you need a plan for both. Retirees constantly say, when asked, that they are afraid of running out of money in their old age. Inflation and emergencies are among the major concerns. If your daughter moves, your costs could also increase.

Long-term care is another potentially huge expense. A nursing home could cost $120,000 a year, according to some studies (although it obviously depends on the facility in question and the location). All of these decisions will impact your finances.

The 4% rule

Let's say you went with the plan to start drawing down your nest egg now, and let's round it up to $410,000, combining your own savings and the inherited IRA balance.

If you use the 4% rule - which says you take an initial withdrawal of 4% from your retirement savings and then adjust every year based on inflation - you'd have an initial withdrawal of about $16,400 for the year.

The 4% rule has been contested a number of times. Some experts say it's too much and could be lowered. It depends on your circumstances, including your life expectancy. The rule assumes a 30-year time period, too. It doesn't incorporate other sources of income like Social Security.

You also have to think about how Social Security will fit into this retirement-income puzzle. The earliest you can claim is age 62, but the Social Security Administration permanently reduces your benefit for every month you claim prior to your full retirement age. If you're turning 65 in three years, your full retirement age is 67 (as it is for anyone born in or after 1960). That means you won't get 100% of what you're owed.

There is no one right strategy for when to claim. Many people claim as soon as they can because they can't afford to delay benefits, while others try to wait until at least full retirement age so they get 100% of what they're owed. Then there are retirees who decide to wait even longer, since the agency incentivizes delaying benefits by offering about 8% more in benefits per year for the years between full retirement age and age 70.

You can also time your Social Security and withdrawals. For instance, you might start taking more than 4% out of your investment accounts in the short term and reduce the distributions once you start receiving Social Security benefits. Questions to ask: How will your distributions affect your overall balance? Do you feel comfortable drawing down early?

Does that initial calculation even feel possible for you? For some people, it is. For others, it is not. You'll have to get very granular about how much you spend on housing, utilities, transportation, healthcare and so on. Medicare premiums, copays, prescriptions and, of course, emergencies must also be accounted for.

People do just quit their jobs when they've had enough, but you're in a really good position in that you're still employed, you're in good health and you're still able to earn an income and figure out a better way to use your assets to their full potential.

You also clearly have good relationships with the people around you. They could help you come up with a solid plan. As much of a temptation it may be to leave your job right now, take advantage of those wonderful gifts - and don't hurry a huge life decision.

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Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com.

-Alessandra Malito

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01-06-26 1429ET