Updated: 6/7/2012 12:30 PM ET|
Is retiring early too risky?
Finding the right avocation is no less important than selecting the right vocation, Gnuse says. For more retirees, he adds, recreation -- simply having fun -- isn't enough. Workaholics may have a particularly difficult time finding their way. Asks Gnuse: "If you haven't been doing other things, do you really like other things?"
Individuals who draw a blank when they try to envision themselves as retirees may benefit from a systematic approach to retirement planning of the sort advocated by McLean, Va., financial planner Frederick McNair. He tells his clients to break their retirement years into three segments:
- The active years. This phase is typified by "very active behavior," McNair says. "Travel, the development of hobbies -- things you were constrained from doing before. These are the opportunities that were deferred."
- The legacy years. In the following period, retirees tend to be less self-indulgent and more concerned with legacy building. It is a time of "giving service to others," whether the community at large or members of one's family -- the grandchildren, say. It's also in this second phase that plans are made, logistics arranged and assets allocated for the third and final stage.
- The final years. This is when, frankly, life's endgame is played out.
The money needs to last a long time
A person who retires at 50 today probably should assume a retirement lasting anywhere from 33 to 45 years, McNair says.
This gets to the issue of longevity and, even more important, morbidity, the natural tendency of health to decline as people age. A well-planned retirement recognizes not just how long a person might live, but that his or her final years very well could be characterized by ill health requiring nursing care or hospitalization.
It is difficult, but necessary, McNair says, for a 50-year-old contemplating retirement to "conceptually grasp the potential for health to decline and for finances to be depleted."
More than just recognizing the three segments, the planner has his clients create "wish lists" detailing the most favored lifestyles and circumstances for each period. In turn, the lists help determine the financial agenda, McNair says.
After identifying the desired retirement lifestyle -- and gauging, as accurately as possible, retirement's likely duration -- it's critical that sufficient assets be amassed to pay for it. A realistic cost assessment is a necessary first step, but there's evidence that most Americans defer such calculations and then aren't very realistic when they finally get around to them.
When the Employee Benefit Research Institute surveyed U.S. workers on retirement issues in early 2002, it found that only 32% had attempted to calculate how much they would need to save for retirement. Still, 70% expressed confidence that they would have enough.
But do pre-retirees really know how much they'll need? Only 17% of the workers surveyed anticipated needing 80% or more of pre-retirement income during retirement. The rest said they could make do with less than that, and more than 40% reckoned they could get by on less than 60% of pre-retirement earnings.
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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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