Retirement Question

[jtygoku]

Knowing that there are a bunch of TBN'ers that are retired, I'm looking for some thoughts. I reached full pension eligibility a couple months ago. At 56, I'm not done working but looking at other options that take me away from my current job ( 30+ years with the same employer) which has lost a number of the attributes which made it a great job just a few years ago. I'm certainly not miserable but just not having as much fun as I once did.
My question: before you decided to retire from your "career" job, what percentage of your "fully employed" income was necessary as a retirement income?

 

[almaryholm]

$$$- not a problem if everything paid off...but health insurance / dental/ prescriptions/ vision coverage until 65 is a BIG problem !!

 

[NY_Yankees_Fan]

I just retired Aug 2015 at 58 after 36 years with the same employer. The best thing you can do it contact a financial advisor, one that you pay for, they have your best interest in mind. Check out this web site for a certified financial planner.

CFP Board

We interviewed 3 different companies and found one we liked, usually the 1st hour is free. They will run the numbers for you and let you know when you can retire. We have been working with an advisor for 18 years. We went to her and she ran the numbers and said why are you working? If you have medical plan, house paid off and owe little why not.

 

[Fidler4]

If you get a chance check out the forum on Early Retirement & Financial Independence Community. There is some great financial advice given by people on this forum. I read that forum and Tractor by Net almost everyday. The ER forum has plenty of people who are in your same situation and can give some great practical advise.

 

[Fidler4]

Double post sorry

 

[ch1ch2]

I just retired Aug 2015 at 58 after 36 years with the same employer. The best thing you can do it contact a financial advisor, one that you pay for, they have your best interest in mind. Check out this web site for a certified financial planner.

CFP Board

We interviewed 3 different companies and found one we liked, usually the 1st hour is free. They will run the numbers for you and let you know when you can retire. We have been working with an advisor for 18 years. We went to her and she ran the numbers and said why are you working? If you have medical plan, house paid off and owe little why not.

Good advice!

I retired at 55. I planned it 32 years.
The money you need varies greatly. General ideas are... with no pension 13 times your annual income. w/pension 70 / 80% of your annual income. Does your pension keep up with inflation?
The biggest concern for me was the money disappearing from the economy.

 

[txdon]

The big question is how much your insurances (especially health) will cost you. To answer your question 100%.

 

[troutsqueezer]

Agree that insurance is the big concern. Things are better nowadays in that regard with ObamaCare (yikes! I hate saying that!) as it did reduce my health insurance costs by fifty percent for the year that I had it. It might not last, depending on who rises to power.

 

[Deere Dude]

I would hesitate to retire with Obummercare up in the air as much as it is. I would consider what you spend now, how much you plan on spending over the years, how much if any in debt you are, and how much each week you are sticking in the bank each week and go from there. A financial planner is a valuable resource.

I retired at 52 and lived on maybe 1/3 of my original income. I snowbirded for many years in FL from Wisconsin while fuel prices were nuts and lot rent was high. I paid high enough property taxes in WI even while snowbirding. I wanted to retire and the early retirement trade off was to eat at cheaper restaurants, don't blow money on alcohol, drugs or cigarettes. I hardly ever need to hire anybody for anything because I am fairly handy. I would call myself cheap, but I would rather live cheap and not work as to work for things I don't really want or need.

Retiring fairly early is great and do it if you can. I know to many people who scrimp and save and work a long life just to drop over just before they retire or shortly after. The trick is to retire longer than you worked.

 

[newbury]

An important thing to consider is how much will the income difference REALLY be when you compare working to not working.
Do you spend $$ and time on:
Clothing
Transportation
Food
Taxes
etc.
That you wouldn't be spending if you were retired?

How much per work period (hour, day, week,..) is the difference between what you get paid for working and what you would get paid for being retired??

When I calculated my stuff I figured I was working for a few $$ an hour at the most. Many of my senior coworkers were effectively PAYING for the privilege of working, especially if they had a "normal" commute.

Of course that is if you have a good GUARANTEED retirement plan w/ medical etc.

And another thing is what will your retirement income buy you where you will be retiring?

To calculate that accurately can be quite complex but there are several "general" wabsites such as Cost of living: How far will my salary go in another city? - CNNMoney which can give you a good idea. For example a $100K salary in my Alexandria, Virginia area translates to $58,670 in Tupelo, Mississippi, which is the nearest to where our retirement destination is.

 

[CurlyDave]

...My question: before you decided to retire from your "career" job, what percentage of your "fully employed" income was necessary as a retirement income?

A lot of the answer is "it depends".

Let me give you an example. While I worked, I was putting 14% of my salary into a 401(K) plan. This meant that I really was living on 86% of my salary already. So if I looked at the typical advice that one needs 85% of his pre-retirement income to live comfortably, in my case it was only .85 x .86 = .73, or 73% of my pre-retirement income. If this math is unclear, consult a financial advisor.

The other thing I would strongly advise is to look at inflation and how you might be protected from it. DW and I have a mortgage in retirement, but it is a fixed rate mortgage and the payment is less than 25% of our retirement income. We are protected from inflation in that area. A variable rate would not be a good idea.

Part of our income comes from rental properties. This is another protection from inflation, rents go up as prices rise. But, be aware that most financial advisors are not big on rental property. They understand stocks and bonds, but do not like rentals.

 

[TomSeller]

I would hesitate to retire with Obummercare up in the air as much as it is..

Have't followed it that much, are there any candidates stating they would reverse it? Which ones?

 

[NY_Yankees_Fan]

Have't followed it that much, are there any candidates stating they would reverse it? Which ones?

Yes anyone from the "R" party.

Let's not turn this into a political battle, retirement is a good thread to discuss here given how many baby boomers we have in TBN.

 

[NY_Yankees_Fan]

One of the other things we did was downsize from a big house, 3500 sq ft to a 1200 sq ft home. We also moved from NJ to PA, this reduced our property taxes from $13k a year to $3k, not to mention our kids are now 35 min away instead of 90min. Also in PA your pension is not taxed along with SS. we are spending the winter in FL , being a snowbird is a wonderful thing.

 

[Fossil Farm]

There are a lot of questions only you can answer, and you need to be as truthful as possible. There are many things you need to consider. Below are only a few, and the other posters have listed some good information also.

- If you have never done so, track all of your expenses for at least a full year. I am not talking about a budget, but what your really spend. I did it for over 30 years and it really helped see where the money went. Mortgage, utilities, groceries, eating out, medical, vehicle, clothing, hobbies, house improvements, insurances, etc.

- How secure is your pension and what percentage of your current pay will your pension be? Some of the companies around here have cut their pensions, and after being retired for 20 years or more, a few guys are not in very good financial shape.

- Does your pension allow for yearly COLA's?

- How long is your commute and what do you spend on it versus what you plan on in retirement? My wife's job got moved over 30 miles further from home after 25 years. After she retired, she drives much less and even without a COLA, she basically got a raise from less gas and vehicle maintenance.

- Does your company cover any medical insurance in retirement? This is a big one. Especially if you have had any medical issues in the past that may need addressing. You must be 65 to get Medicare.

- Do you still have a large house mortgage or other debts to pay off if you retire?

- What do you plan to do in retirement? If you plan to work part-time elsewhere, will that affect your pension amount? Do you have hobbies or travel plans that will eat up additional money in your savings?

- What other income sources do you have that are reliable?

- Are there updates to your house that need done if/when you to sell or make it more comfortable for you later in life?

There are other things, but spend some time looking at life after retirement and do not make any snap decisions. Good luck to you and enjoy !!

 

[dmccarty]

... health insurance / dental/ prescriptions/ vision coverage until 65 is a BIG problem !!

My parents are retired and well over 65 but they are paying a huge amount of money for health care coverage. :shocked:

Later,
Dan

 

[ultrarunner]

Part of our income comes from rental properties. This is another protection from inflation, rents go up as prices rise. But, be aware that most financial advisers are not big on rental property. They understand stocks and bonds, but do not like rentals.

This is also my experience... rentals owned and managed are outside the realm of expertise... also hard for them to generate management fees.

We had a mandatory review a couple of years back of our 100% employee funded 401k.

I mentioned I had rentals and the conversation flipped as the adviser had a lot of questions as to how I came to have paid off investment property?

It's hard concept for some to believe I did not inherit or otherwise given property or come from a family background with investment property.

The upshot is I'm very glad to have them as there is no company funded plan...

In my case... the day stop working... that is the end of my work derived/sourced income since 1991.

The real nut to crack is Healthcare... now even more since it seems more unsettled than ever.

 

[jtygoku]

Thanks to those that have contributed their thoughts/advice. I had previously sat down with my financial planner and his "best" advice was to retire, start drawing my pension (about 60% of my current salary) then get another full time job in my occupation (civil engineering) and continue to "bank" that entire salary in my existing 401 for five more years.
That approach is probably the best if looked at strictly from the $ standpoint.
My father passed away just as he was within a year of retiring and that has got me thinking that I'd rather err on the side of retiring too early versus too late
As many have said, healthcare is the huge piece of the puzzle.

 

[murphy1244]

Thanks to those that have contributed their thoughts/advice. I had previously sat down with my financial planner and his "best" advice was to retire, start drawing my pension (about 60% of my current salary) then get another full time job in my occupation (civil engineering) and continue to "bank" that entire salary in my existing 401 for five more years.
That approach is probably the best if looked at strictly from the $ standpoint.
My father passed away just as he was within a year of retiring and that has got me thinking that I'd rather err on the side of retiring too early versus too late
As many have said, healthcare is the huge piece of the puzzle.

Yes better more time than money.

 

[buckeyefarmer]

I'm in a similar situation, can't help much but am also interested. Thanks for The CFP link. Seems like the CFP's near me want you to have .5 - 1M before they will talk to you, and it seems they want to invest your money for you, for a commission. I did find my credit union will do a free session with you, and they have a CFP, so I'm going to go talk to them.

I'm eligible to retire early from my present company. The company is no longer contributing to the pension, so I've been thinking about drawing it early, and putting it into a Roth. However I need to work a few more years to pay for kids college, so I would retire and work elsewhere for a few more years.