When to Retire

[timjet]

I know this is a little off topic, but probably a question many of you have or will be asking yourselves. I have been in my chosen career 30 years and have the ability financially to retire ---- I think.*

Soon to be 61 and I feel I'm a little young to retire, but just a few years ago the govt would have made me retire at 60.*

I have lost 75% of my defined benefit retirement plan, but with SS, wife's SS, and the remaining company retirement, *I will be able to bring in about 50% of my current income if I wait til 62.5 to draw from these. *

I do not want to go to age 65 the new mandatory retirement age. My biggest concern is medical insurance, which is partially paid for by my company. At age 65 medicare kicks in, but a supplemental plan will still have to be budgeted for.*

So here's the plan. Work til 62.5 and live on savings until 67. Allow SS and my pension to grow which will then combined be about 65% of current income. Until I attain 65, a larger amount will be budgeted for medical insurance. This will of course draw down my savings considerably. And of course Obama and the Dems will take care of me if some catastrophic medical event occures, right??

Anyway, would like to hear some of your thoughts.

BTW, some of you may think you can save enough for retirement. Impossible. You can not save enough to quit work in your 60's and live til your 90's. At some point my savings will run out and hopefully my SS and company retirement will still allow a comfortable life.*


-- Edited by timjet on Tuesday 2nd of August 2011 10:54:37 AM

 

[timjet]

superdiver wrote:
my personal thoughts.. no one should retire unless completely debt free, and then retire as soon as you can afford it (assuming you do no want to do your current "job" anymore), live with in your budget and find something to do that keeps you busy (you will probably never make the money you do doing the job you have now). If thats doing the same job that got you there then continue to do that...

*

Retireing dept free is a given. The affordability is the question and is different for different folks.*

*

 

[dwhatty]

At age 65 1/2, I am about to retire due to economic circumstances, both positive and negative.

As a small town, non litigation, solo practice attorney, my income has about dried up after 37 reasonably profitable years as very few people are currently buying, selling or mortgaging real estate, dying (estates), forming small businesses, or doing estate planning. To wit: my bread and butter. I don't see this picture improving in the foreseeable future.

On the other hand, I have a small bit of savings and investments, the mortgage is almost paid off and I have no other debt.

More importantly, I have a very kind and loving wife who has a good income from a secure job, good investments and a recent fairly sizable inheritance who has agreed to make me a "kept man" by providing me with a small income to supplement the Social Security that I started taking two years ago. I also now have Medicare, with supplemental, until the pols take that (and Social Security) away. In return, I will do much of the maintenance and upgrading on our house and on a small commercial building she owns in our town, which will save having to hire someone to do this. Ditto with the boat, although I have been doing most of the boat work up to now anyway.

Will have to eventually look for some part time work somewhere for additional income (Walmart greeter? No, too far to travel).

Actually, I am looking forward to no longer having the stress of trying to make office ends meet.

Note to self, be very, very nice to wife.

 

[ARoss]

Everyone's situation is unique, and I'd suggest that in addition to the great minds available here that you check with local financial advisers, etc. on advice when to pull the plug. You're correct to be wary of medical costs/insurance as one of the real wildcards in this decision.

I have been retired for 10 years, and am debt-free but for a home mortgage. It makes more sense for me to borrow at 4.25% than to withdraw $XXX,XXX from a 401K that's earning well above that, and take the tax hit, just to pay it off.

If you aren't sure, sometimes it's better to keep a few toes in the water (i.e. work part time?) than to get stranded on the beach a few years out.

 

[skipperdude]

I hope to die flat broke living on SS.

I have enough to live on 50% of income*debt free*till I reach 85 if I make it that long.

If I knew I was going to live so long I would Have taken better care of myself when I was younger.

SD

 

[Codger2]

dwhatty wrote:
At age 65 1/2, I am about to retire due to economic circumstances, both positive and negative.

******** Since I have had the pleasure of getting to know David & Emily, I wish them all the best in Dave's retirement. Two nicer people I have never met! Both my wife and I thoroughly enjoyed their visit this year and were surprised as to how easy they are to have as guests. We had a lot of laughs, fun on the boat, eating out and some spirited conversations. (Don't worry about your SS & Medicare , Dave, it will be taken care of in November of 2012. ray: )

*

 

[jleonard]

We have been planning retirement for several years. I am 58 (59 in November) , she is 57.* 4 years ago we downsized homes to be mortgage free. 5 years ago we bought this boat to be our first couple of retirement years home while criuising the great loop.

I have been working with a couple of financial advisors (they all have different theories) and I think we are there....ready to retire in June 2012. A little scary as we will have to self fund medical, but that is just another line in the calculations. According to my advisors we should be able to swing it and still have way too much left in the 401K so I think we'll be ok. So we will do another reality check this December.

We plan on using the home sale proceeds to fund the first year, maybe 2 years if we can stretch it.* I was planning on pulling SS at 62 but David M presented a point of view that I never considered so I'll have to think about that.

It is a little scary thinking about leaving a pretty well paying job (I am an mechanical engineer), however we want to make the move while we are still healthy enough to cruise and anjoy a few years.

After a couple of years of cruising I may decide to go back to work...who knows.

*

 

[magicbus]

ASAP because we aren't getting any younger! We recently sat down with our adviser and ran the numbers with a planned retirement of 2 years from now while we are both in our mid to late 50's. Looks like it'll work so we're going for it. I kind of hit the wall mentally on my career - 30 years of writing freelance computer code and I can't handle the way the new computer world is heading (upsets my sensibility scale). My wife is mentally tired of her business so we have allotted 2 years to get it sold or closed. Our recent trawler purchase was really the first step in this plan and now all we need do is follow it through and see where it takes us. As jleonard said, who knows what we'll want to do in a couple of years - maybe go back to work. But for now it is time for a change.

Dave


-- Edited by magicbus on Tuesday 2nd of August 2011 01:46:03 PM

 

[timjet]

David touched on a good point about allowing SS to grow. Many I've talked to recommend taking it as soon as you can. Unless you have to, I've never understood that thinking.
I can never go back to my current job so when I pull the plug I'm done.

Thanks Dave for your insights, I'll need to so some figuring.

 

[Moonstruck]

Tim, don't forget your taxes if you have earned income.* I am looking at 70 and still paying SS and medicare tax.* Being that I pay both sides the SS is $15,300/yr and Medicare Tax is 2.9% with no cap on earnings.* That can get to be a significant figure.* They also give me the privelege of paying about $3600/yr extra for medicare.* Of course that is not means tested or anything like that.* Just remember, if you work, you will still pay.

I am not a good one on advising when to retire.* I haven't, but then again I'm in the booming real estate development business.* Am I an optomist or what?

I'm blowing mine on diesel fuel.* How about the rest of you guys.

 

[markpierce]

During the last five years of my employment, I've known people in our office (with a staff of*16 to 18)*who have died within a couple of years of retirement from my office*who were in their fifties and sixties.* One died in an automobile accident and the other from brain tumors.* Two died before retirement, also in their fifties and sixties: heart attack and cancer.

Life is short.* Every year of retirement delayed is one less year of retirement.* If your job is stressful, you are probably losing 1+ years of retirement for each additional year at work.

Retire as soon as you can afford to, assuming you have healthy diversions to keep active.* I retired at 55 with a 58% pension (and never eligible for social security benefits).* The kids had finished college and the house was paid for.

 

[skipperdude]

Moonstruck wrote:
Tim, don't forget your taxes if you have earned income.* I am looking at 70 and still paying SS and medicare tax.* Being that I pay both sides the SS is $15,300/yr and Medicare Tax is 2.9% with no cap on earnings.* That can get to be a significant figure.* They also give me the privelege of paying about $3600/yr extra for medicare.* Of course that is not means tested or anything like that.* Just remember, if you work, you will still pay.

I am not a good one on advising when to retire.* I haven't, but then again I'm in the booming real estate development business.* Am I an optomist or what?

I'm blowing mine on diesel fuel.* How about the rest of you guys.

*Yep. Gallon Gallon Gallon *ad*infinitum.

SD

 

[Codger2]

markpierce wrote:*I retired at 55 with a 58% pension (and never eligible for social security benefits).* The kids had finished college and the house was paid for.

******* I retired at 51, wife deceased, kids grown & gone, no pension, good investments (at that time) & no debt. That was in 1992, the year I sold out to my partners. I've never regretted retiring early. My health was declining, diabetes, chest pains, etc. Except for my weight (too fat!) my health has markedly improved. (No stress!) I'm staring down the barrel of completing my 19th year, in September. Almost every day I report for work in my new office which is pictured below.

*

*******

 

[dwhatty]

SeaHorse II wrote:*(Don't worry about your SS & Medicare , Dave, it will be taken care of in November of 2012. ray: )

*That's what I do worry about.* A tea party victory = :fear:

 

[skipperdude]

SeaHorse II wrote:
I'm staring down the barrel of completing my 19th year, in September. Almost every day I report for work in my new office which is pictured below.

*Walt you are my hero.

SD

 

[timjet]

Mike,
Your O-5/FedEx friend is set with military retirement and Tri-care. No worries for him.

The retire now before something dreadful happens plan sounds good, and we.can all name friends whom that has happened to. But far more likely is the guy who.retires early and soon runs out.of money and now must go back to.work at the bottom of the pay scale being a janator or restocking at Wal-Mart. We've all seen them. I'm going to work 2 more years and hopefully avoid that fate.

 

[dougd1]

This was a recent blog by Scot Burns...pretty disturbing:

http://assetbuilder.com/blogs/scott_burns/archive/2011/07/22/how-to-be-a-millionaire-and-live-in-poverty.aspx

 

[Moonstruck]

Tim, we are looking at a crap shoot here.* Just today our 401Ks and IRAs took about a 2% hit.* That is probably about an 8% hit in the last month.* We could be headed for a double dip recession.* I would say for the foreseable future that anyone that has a job should keep it. By 2014 we should have some answers.

In the mean time the Tampa Bay area is great.* I would not be averse to living aboard in St. Pete.

 

[Codger2]

Sortie wrote:
It will all work out for you. The politicans are difficult to influence and or control, so don't over worry that angle. Concentrate on those areas you can control.

******* Sage advise.

 

[Edelweiss]

dougd1 wrote:
This was a recent blog by Scot Burns...pretty disturbing:

http://assetbuilder.com/blogs/scott_burns/archive/2011/07/22/how-to-be-a-millionaire-and-live-in-poverty.aspx

*But that has been pretty much true for a long time. *$1 million dollars in a bank account CD is not a retirement investment. *The return is too low and interest rate fluctuation affects your earnings, if you can call it that, and is*not a good hedge against inflation. That said, yes, you need some cash in the bank, at least several months' worth of living expenses. *

I was fortunate enough to grow up in a family who worked in and valued real estate investment as a long term hedge. While growing up, I learned early on that house rentals can be painful at times. *But they are a very dependable return on investment, which is running greater than 10% on the dollar, regardless of the status of the national economy.

Since the economy crashed, the rental market has been flying high. *Everybody needs someplace to live, regardless of economic conditions. *Granted you want to be careful where you own rentals. *Some areas are severely depressed and you wouldn't want to be in that market. *The real estate buyers rule of thumb still is, location, location, and location.

Socking cash away is a great start, but you have got to do something with it, if you intend to use it in your retirement years. *An IRA, 401K, stock and bond market, etc. all derive their earnings from the same source and are heavily influenced by the economy. *They're really great returns while things are good, but a recession can drop the bottom out of your fund and leave you stranded on the beach with the tide running out. *

For you younger folks, you only get one chance at it, so choose your investments wisely and start now.

 

[timjet]

Edelweiss wrote:

I was fortunate enough to grow up in a family who worked in and valued real estate investment as a long term hedge. While growing up, I learned early on that house rentals can be painful at times. *But they are a very dependable return on investment, which is running greater than 10% on the dollar, regardless of the status of the national economy.

*

Socking cash away is a great start, but you have got to do something with it, if you intend to use it in your retirement years. *An IRA, 401K, stock and bond market, etc. all derive their earnings from the same source and are heavily influenced by the economy. *They're really great returns while things are good, but a recession can drop the bottom out of your fund and leave you stranded on the beach with the tide running out. *

*Al*Neuharth*the founder of USA Today once wrote in an article that in his many years of experience in financial dealings both in real estate and the stock market that in his opinion the stock market is the absolute best investment*vehicle*there is and has proven that over time.

Charles*Schwab*the investment guru wrote a book several years ago titled something like "Investing in the second half of your life" and he echoed Al's observations. Interesting,*Schwab*stated in his book that he did not recommend buying individual stocks but rather Index Funds,*interesting*and perhaps insightful advise from someone who made his fortune selling individual stocks.*

That being said, the success of ones investment*portfolio*can be decided on the allocation of their savings and this can further be determined over a very short period of time. The two esteemed gentlemen I mentioned above are correct in their observation as they took a very long view*time wise, of their investments. Both have mentioned that the stock market has returned on average 10% when calculated over 70 yrs.*

However for most of us, especially me, the last 5 years and the next 10 will have a very big impact on the success of my investments. Though the last 70 years have favored stocks as the place to be, I don't think that can be true when taking a 15 year slice today.*

Real Estate may be good today, but who in FL, AZ, NV, or CA would recommend that as an*investment*vehicle 5 years ago. We've seen my wife's condo fall in value from 200k in '05 to less than 100k today. That really doesn't matter because it's just a paper loss; she bought it for far less than it's worth today.*

There are some very good buys in real estate now in FL and those that have the cash or can get financing can probably do very well. My wife's condo just became vacant and we're raising the rent $100. Just two blocks from the Gulf. We should have several folks interested.*Ive thought many times of selling it, but it is a constant source of income. Condos in my opinion are lousy investments because most have association fees that reduce its income potential. In our case association fees and taxs eat up over half our rental income. But now is not the time to sell so we'll keep it.

*
*

 

[timjet]

Edelweiss and superdiver,

Just curious what kind of real estate do you have? *I've heard mid to lower income housing is the most profitable.


-- Edited by timjet on Wednesday 3rd of August 2011 01:05:24 PM

 

[Keith]

I did things rather unconventionally. My retirement is already over, at age 54. I paid off all my debt, accumulated lots of cash/investments, had one absentee owner business (haircut places) etc. and was basically retired for about 15 years. I watched both of my parents work themselves into the grave, and decided I wasn't going to do that. Had a blast for a long time, then had to go back to work last year. Still having a blast but two houses are rented out providing additional income. Will just play it by ear from now on. Don't be scared to retire, do it, have fun, then go from there. No matter what, you'll always have great memories rather than regretting the things you never got to do.

 

[JohnP]

If you have a secure , great paying job, with no stress and full bennys, and you Love to go to work everyday then----------

Never Retire!

I did not have a job like that, retired at 55,* now almost 59 and nevered looked back!

JohnP

 

[FlyWright]

JohnP wrote:
If you have a secure , great paying job, with no stress and full bennys, and you Love to go to work everyday then----------

Never Retire!

I did not have a job like that, retired at 55,* now almost 59 and nevered looked back!

JohnP

Johnp, that's exactly my quandry.* I have a job that's secure, great paying, full bennies and I love to go to work.* The problem is that I love boating more!* Not such a terrible problem to have, but I need to decide which fork of the road to take.*

I'll be 54 this Nov and qualify for 55% pension at age 55 in Nov 2012.* I'm thinking of living for 6 months on my retirement income starting this November and seeing how that works out.* I plan to have the house and boat paid off by the time I retire.* I have no other debts.

I have read and will re-read all post in this thread to help me with this decision.* Thanks for the great input and advice!!

 

[Edelweiss]

timjet wrote:
Edelweiss and superdiver,

Just curious what kind of real estate do you have? *I've heard mid to lower income housing is the most profitable.

*

We have some commercial property that we inherited, but we have always concentrated on single family homes, which would appeal to middle income families. I particularly like ranch style, three bedroom, two car garage, 1400 -1800 sq. ft. and buy nothing older than 20 years, they rent easy and are low maintenance. *I have one like this that we bought in 1993 which has been continuously rented except for one month since (only because we needed to paint it inside and out and put a new roof on it.)

This September, the current renter will have been in it for 9 years. *They pay $1000 a month and all utilities. We should be getting $1200, but don't like to raise rent on good renters who don't demand constant improvements. *So do the math, $1000 x 12 = $12000 per year x 9 years = $108,000. *We paid $129,000 for the house. You will probably ask, "Why is this person renting?" *Damm good question, but some people are just not interested in owning and have rented all their lives. *The key to getting good renters, is run a credit check and check county records for leans and adverse comments. *Don't rent to people who are dead beats and have a history of not paying their bills.

You're right, no condo's, unless they're in Manhattan, or downtown Seattle.

The rise and fall of the property value of the home is not that important, because we are not "flipping" properties. *As you say, the gain and loss in value is only on paper. The profit is derived from the rental income.

Stock funds are ok, I dabble in the market and have capital in a State Deferred Compensation program. *But I don't rely on this money for my retirement. *It's my form of gambling, instead of going to the casino with my for sure loser friends. *But you have to be on top of it all the time and get out when the market goes south and back in when you think it's turning around. *You have to do your research and follow the financial news. *It can be intense at times, (like right now!!) but a whole lot of fun!! * *

Larry B

 

[Edelweiss]

FlyWright wrote:that's exactly my quandry.* I have a job that's secure, great paying, full bennies and I love to go to work.* The problem is that I love boating more!* Not such a terrible problem to have, but I need to decide which fork of the road to take.*

I'll be 54 this Nov and qualify for 55% pension at age 55 in Nov 2012.* I'm thinking of living for 6 months on my retirement income starting this November and seeing how that works out. *

-----------------------------------

This is my personal opinion -

You are too young to retire and really not ready yet or you wouldn't be asking the question !!

I'm in the same situation you are, but about ten years older. *I love my job and look forward to going to work each and every day. *No, I am not a workaholic. *Quite frankly, I can't believe they pay me, to do what I do!!

Too many of my friends, in this situation as you and I are, have retired because they "could" or because some damn fool told them they are "working for half pay." *Only to regret it later. * I think I am about a year away, maybe two, from pulling the plug.

But you and only you will know when that time comes. *It seems like a difficult decision now, but when you are ready, it will be an easy call.*

Whatever your decision

Best of luck

Larry B

*

 

[Budds Outlet]

Edelweiss wrote:I was fortunate enough to grow up in a family who worked in and valued real estate investment as a long term hedge. While growing up, I learned early on that house rentals can be painful at times. *But they are a very dependable return on investment, which is running greater than 10% on the dollar, regardless of the status of the national economy.

I grew up in a similar family and learned to hate rentals.* Although I've been in*real estate for 36 years my total combined months of rental property ownership equals about 12.* Both were deals I couldn't turn down but I found a way out of both of them within 6 months.* Even at that I experianced the normal landlord blues.

There can be a good return on rentals but you usually earn*a good*part of it.* It is not passive income even if the IRS says so.

 

[Peter B]

"I'm in the same situation you are, but about ten years older. I love my job and look forward to going to work each and every day. No, I am not a workaholic. Quite frankly, I can't believe they pay me, to do what I do!!"

Larry, I'm intrigued...what is is you do you love so much you "can't believe they pay you to do it." To misquote 'when Harry (?Larry) met Sally' - I'll have what you're having.....

 

[FlyWright]

"This is my personal opinion - You are too young to retire and really not ready yet or you wouldn't be asking the question !!"

There are other reasons people retire. For example, Tuesday was one of those eye-opening days on the job. It highlighted for me that the working isn't everything, life is short and sometimes it's best to just slow down and smell the roses.

We were flight checking some airport lights at Coos Bay/North Bend, OR that guide aircraft into the runway at the proper approach angle to clear the obstacles. As we approached 1000 ft, the right engine failed. We executed a go around, retracted landing gear and flaps, climbed safely above all obstacles, declared an emergency and secured the engine. We diverted to Eugene to get enough runway for landing and attempted a restart. No oil pressure on restart, so we re-secured the engine and landed uneventfully.

I've been flying for 37 years and this is the first actual engine failure I've had to deal with. Of course, I've had hundreds of practice failures of every kind in the simulators over the years. I was hoping to retire without having one, but now that it's happened, I'm thinking, "Why not pull the plug at the earliest opportunity if the numbers all work out? Life's too short." I don't need to be rich to be happy...just enough to pay the bills and enjoy boating in retirement.