Updated: 6/7/2012 12:30 PM ET|
Is retiring early too risky?
All you have to do is bet wrong on your funds, bet wrong on inflation, bet wrong on your expenses. Here are the questions you need to ask yourself as you start planning.
If you watch television at all, you've seen him. He's fit, at least 50 and improbably good-looking. He wants to chuck it all and teach inner-city kids the meaning of life, or race his Shelby Cobra at the Sears Point Raceway in California, or . . .
There are variations on the theme, but all lead to the same life destination: early retirement.
The thought of quitting work while still vigorous in mind and body is much more than a carrot dangled enticingly by Madison Avenue. For many Americans, it's the modern equivalent of the Holy Grail; when time becomes precious, it seems, how it is spent becomes urgent.
The fellow in the TV commercial succeeds, we are told, because he picked his investment adviser wisely. That's certainly part of the equation, but it's not the whole story.
Rat-race escapees need to plan
Anyone contemplating an early exit from the rat race faces as many risks as he does rewards. The most obvious challenge: A longer retirement means more nonworking time to pay for. It also means more time to fill in some meaningful way. It seems fair to say that the younger the retiree, the greater the amount of forethought and planning required.
Despite the challenges and risks, early retirement -- or at least earlier retirement -- has been the choice of an increasing percentage of Americans since World War II.
Social Security Administration research shows the median age of retirement falling from age 68 or 69 to 62 between 1950 and 1985. Though the trend has flattened in subsequent years -- gaining or losing steam according to economic variables such as the tech bubble and its bust, the housing bubble and the Great Recession -- the baby boom's aging has reinvested the issue with importance.
Though the boomers are hardly a monolithic lot, they are united in some common beliefs that are particularly relevant to any discussion of early retirement. A survey of the group's retirement attitudes by the AARP found that, compared with their parents, boomers believe:
- They will need more money to live comfortably in retirement.
- They are more self-indulgent.
- They are healthier.
- They will live longer.
The graying of the largest, longest-lived, most self-indulgent and most prolifically spending generation in U.S. history promises to make retirement -- especially the early variety -- an increasingly complex exercise. Still, by avoiding three central pitfalls, retirement wannabes from whatever generation can at least begin the process with some prospect of success.
They must begin by answering three short but encompassing questions:
- How long?
- How much?
The answers will go a long way toward telling them whether they can retire early -- or even should retire.
What do you plan to do over the next 25 years?
The motive for retiring is all-important. Simply ceasing to work -- while undeniably appealing on Mondays and other bad days -- does not in itself constitute a fulfilling retirement lifestyle.
"Be sure you have something to do that occupies your time and interests and takes advantage of your talents," says Tom Gnuse, a principal in HTG Investment Advisors in New Canaan, Conn.
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RetireRight: Not sure what or who you are selling, .....................but, since the average American male life expectency right now is 78, ...............more importantly it took 25 years to go from 72-78, what Harry Potter like magic lets you Kreskin the age of 90 (a 12 year increase in 10 years)?
Straight out B/S!
Retire @ 65 and live to 78, is 13 years x the average S/S payments WITHOUT ANY COST OF LIVING ADJUSTMENTS is 175000.......with the COLA, closer to 300000!
Retire @ 65 and live till 90, is 25 years x the average S/S payments WITHOUT ANY COST OF LIVING ADJUSTMENTS is 340000........with the COLA , closer to 510000!
This is without any consideration of ANY SAVINGS OR ACCUMULATION OF SALABLE ASSETS, like a paid off house to reverse mortgage, or any # of personal valuables that will do you no good unless you are alive beyond the full on lie about living till 90!
Fact, if you have 200-300 grand in assets and an average S/S income, you will do just fine if you live your retirement with the brains and class (not throwing yourself on the mercy of those who are responsible) that you did to be in this position.
Luck. Who knows what decisions will lead us where. At 18, I enlisted in the military, while most of my friends went off to college. I now have a retirement after 20 years of service to my country. Fair compensation, I would say, for a decision that places my body between the havoc of war and the civilians who choose not to take the risk. Oh, by the way, I used my educational benefits to get a Bachelor of Science degree while still on active duty. I used those same educational benefits to pursue a Masters degree while still on active duty. I had to complete it with a couple of low-level student loans after I retired, but they are payed off. Thanks to my Bach. Sci. degree I had a couple of assignments while still active that gave me experience within my field of study. Thus, when I retired I had "experience."
After I retired, I finished my Masters and then moved to the State where I now live.I got a job, commensurate with my level of education and my experience. I worked there for 15 years until I became a widower. I resigned and took early retirement at 55. Retired and drawing pension from two careers, with access to both medical and dental care (at a small fee).
To be quite honest, I started "bouncing off of the walls" after a few months. Income locked in and limited to essentials, so I looked for work. After an abortive six-month stint at job in the coastal area of a neighboring state, I came "home" and looked for work locally. It took a few months, but I got hired on as "seasonal help" at the local expression of a corporate chain. I was picked up for a regular position at the end of the season.
Two years later, due to "corporate" micro management of wages and hours, I started putting out applications again, not for the high end jobs, to much stress for a widower, but just something that provided more hours and higher pay (relatively speaking). It worked, it took six months, but it worked. For the last year I have been employed full time and at a higher wage. The key? I work, from the moment I clock in I work. I show up on time (20 to 30 minutes early to look around and see what needs to be done). I am also an independent worker, I don't wait to be told what needs to be done. I see it, I do it without asking. I don't read books at work, I don't play games on an iPod, IPad, or NOOK at work. I do the job I am paid to do.
I have no plans to claim SS until 2019. I will turn 66 in that year, I can claim Survivor Benefits based on my late wife's work record and save claiming mine until I turn 70. I might choose to work past 66 or I may choose to start traveling a bit.
Of course, I am betting that the United States will still be around then, and that I am not fighting off ravening hordes of mindless zombies/looters. I think we will still be here as a nation and that we will pull through this current financial morass.
This is America.
Ok I started drawing my ss at age 62, work was slow, economy bad. Now I am 78 and working some,
I got lucky in 09 and the work paid about 300.00 a day so I paid in a lot of ss. so does that raise my benefits any???
- If he retires at 65, he can expect to pay roughly $476,000 out-of-pocket throughout the course of his retirement.
- If he retires at 63, he can expect to pay roughly $501,500 out-of pocket throughout the course of his retirement.
- If he retires at 60, he can expect to pay roughly $531,750 out-of-pocket throughout the course of his retirement.
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