Retirement: “How Much is Enough?”May 09, 2022
A reporter asked me this question not long ago. I thought I would share my response so you can have an idea of what’s best for you.
The reporter, Marcia, authored a story about early retirement, and she asks: “How does someone begin to decide when they can or should retire? How does someone know the best age for them to stop working? Are there milestones we can use as guides to determine if retiring at 50, 55, or 65 is possible or advisable?”
These are great questions that so many pre-retirees ponder!
Unfortunately, so many people think they can never retire since the cost of living can be so high. If you fall in this camp, I have good news—you probably can retire!
It just takes some planning and discipline.
My response to Marcia might be helpful if you worry that you will never be able to enjoy your golden years.
I told Marcia that the best age to retire is the youngest age at which you can reasonably sustain your cost of living. Contrary to the commercials, there is no set dollar figure you must hit. Nor is age 65 some automatic retirement age. Each person’s situation is unique. Everyone should have their own plan.
Instead of wondering what the perfect retirement age should be, the real question you should think about is: “What does “retiring” mean to you?”
Maybe you find that you still have a lot you want to accomplish in both your life and in the working world. While you might not want to work full-time, you still might wish to keep busy during the week. So, the answer to the question, “what is the best age to retire?” might be tomorrow. Perhaps it’s time to go back to school to realize that dream of becoming a culinary chef. Maybe you want to work in the community because giving back is close to your heart. Is being a beach bum and living the simple life appealing? Or do you have ambitions of purchasing a second home to earn some rental income?
There are so many important questions to pose to yourself. It’s all about figuring out your wants, needs, and desires so that you find purpose and have financial security.
There are important planning items to consider, though.
Consider Social Security:
For one thing, retiring early might reduce your future Social Security benefits. The Social Security Administration uses your lifetime earnings by taking your top 35 income years to determine your benefit. If you quit working relatively early in life, or reduce your hours, that could ding your monthly benefit later.
Consider Health Insurance:
Another area that must be addressed is what you will do about health insurance. Medicare does not typically kick in until age 65. Getting the most out of Social Security and bridging the gap between now and Medicare age are two big reasons why folks delay retirement.
That’s not to say that you cannot work with your employer to cap your hours to an ideal amount. If you’ve already had many solid salary years, then reducing your hours likely won’t have that great of an impact on your future Social Security monthly check. And you can always delay benefits to age 70 to increase your Social Security amount. Another upshot to reducing your workload is that you can still qualify for benefits like health insurance. If your current employer won’t budge, you can look for another one that will.
At Yields4U, we are on a mission to help one million people retire with financial security.
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