How much do you REALLY need? (moving, vacation, friends, housing)
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That's great. Sometimes life derails plans though, and of course in those situations all you can do is adjust. There are many people though that walk through life without giving the future much thought, and others who over plan while smothering years when they could be enjoying them more. It's tough.
Sure. That's why I have contingency plans. I was unemployed for 14 1/2 months at the Great Recession. I figured out how to live on a $425/week unemployment check and maintain a pretty high quality of life. When your housing is paid for and you have no debt, that becomes possible. That was a very useful learning activity.
Since getting close to retirement, my wife and I have completely rethought our spending habits. Cleaning out in preparation really made us think. We found that we had purchased all kinds of things that we really didn't need or use. So we have trimmed our expenses tremendously. Trust me, you can live on a lot less than you think if you just reexamine your spending. Do your really need a NEW car. Do you need that big a house? How many times are you eating out in a week? How many pets do you have and how much do they cost? Cell phone bill? Do you need all those channels and cable movies too? Rethink your spending and you'll find out that you don't need as much as you think you do.
I don't see that as a "big problem". Living on Social Security is very doable, provided one isn't trying to do it in a place such as New York City. Sure, frugality is required, and frequent eating out will not be possible, etc. I don't see that as a big problem. Sure, it my loom as a big problem personally to those who have been living high on the hog and now have to make painful adjustments, but that does not constitute a societal problem. In that case, all the previous high on the hog living is part of the problem.
The assumptions we make color our perception of the situation. If we posit the average SS monthly benefit amount of about $1,300, then yes, that is a big problem. But the average is skewed considerably to the low side by people who do not have a full work history under SS, such as me with my monthly $165 SS benefit. Most of my work history was not under SS and I am doing just fine at age 72. A person with a 35-year SS work history will get something on the order of $2,000 or more, and if there is a spouse who also worked, then that is icing on the cake.
While we did save for a variety of reasons we didn't save what we should have so I am working longer to build my social security benefit which goes a long way towards making up for my past sins.
I'm now 68 and if I had retired at my FRA my benefit would have been close to $2,300 but by putting off taking benefits, while continuing to work, my benefit goes up by approximately $196/month for every additional year I work. If I make two more years, and I will even if I have to take money out of our retirement savings, my benefit alone will be close to $3,100 while my wife receives $1,150 giving us a combined monthly social security benefit of $4,250 alone. After all the medicare and supplement cost ($560/month) we'd still be at $3,690 social security alone.
That's $44,280/year after deducting all medical and we will not be paying any federal or state income taxes on any of that money.
While we have some additional income I know we could live very comfortably on our social security alone which was made possible by working just four more years.
Another way I look at it is what is the value of not collecting for four years? For the four years our benefit will increase by about $784 which is equivalent to having an additional $235,200 in savings if you figure withdrawals over 25 years. So by working not only did I earn money but it is exactly as if I earned my paycheck and was able to save $58,800 in after tax money for each of those four years. Ok, I worked to 70 but even if you figured withdrawals over 20 years it is still a lot of money.
According to social security for 2016 the average aged Couple, Both Receiving Benefits, is $2,212 but nearly half the population starts collecting at age 62 while working an extra 8 years would go a long way towards nearly double it.
Working longer is the silver bullet for those with an underfunded retirement if they can and want to .
It can be worth as much as an extra 800k in savings.
Your ss check is 69% bigger plus colas
You are not spending down assets
You are still growing the assets you are not spending
You can still add to a 401k or ira
You have 8 years less of life to support.
Yep! Your points above entered my thought process when I concluded that working the five years between early retirement and FRA is going to be in my best interests.
But, my day will come! Hopefully good health and continued employment provide me with work till FRA.
It isn't just your age 65-75 lifestyle and needs to focus on but also your ages 75-90 and beyond. What level of comfort, health and lifestyle support do you want and need. It can come at a steep price and differences between having and not having can be considerable. Especially if you could have had more/better and didn't do what you could have.
Sure, but a household net worth of $1 million at age 65 is about 85th percentile. 70th percentile household net worth at age 65 is maybe $350K to $400K and much of that net worth for most is home equity.
$30K in Social Security and $40K in retirement savings draw down is certainly doable. It's a top-25% retirement.
Thank you--- I think after reading more of this thread in particular ( I do read most of the threads on this forum) we all can agree the real wild card other than health costs- is our health/ lifespan.
Such a balancing act.
I do feel a bit better about this, but being 63 (well next month) with a retired spouse who is not yet drawing soc sec, there is a finality to leaving employment. That thought of no more paychecks is just too scary for me now.
Thank you--- I think after reading more of this thread in particular ( I do read most of the threads on this forum) we all can agree the real wild card other than health costs- is our health/ lifespan.
Such a balancing act.
I do feel a bit better about this, but being 63 (well next month) with a retired spouse who is not yet drawing soc sec, there is a finality to leaving employment. That thought of no more paychecks is just too scary for me now.
I feel like a real happy camper right now because if I had to retire today we'd be just fine so now all I am working for is the "extras".
While not unique I know if I work until 70 between my our combined ss benefit, along with two smallish pensions, I will actually receive a "raise" in take home income the day I retire. It won't be much, a little less than $100/month, but it is still a "raise" which makes financial planning pretty much breeze.
Knowing you have the capability to retire at any minute brings tranquility to life as is knowing I am in charge of my future.
You'll need a boatload of moola if you want to own several homes and cars, travel every year, go out to dinner a lot, plus whatever outside interests you have that cost money.
If you are not materialistic, aren't into traveling, are content where you are and don't feel as though you're sacrificing your 'happiness' by not having a lot of money to spend, then you won't need as much as those who required those things to find their happiness.
No one can tell you the dollar amount you need.
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