Simple joys with family and friends. Mostly everything walkable. That’s a dream retirement right there…
OT: Retiring early
- Thread starter JerseyNoles
- Start date
This thread reminds me of what Kurt Vonnegut wrote in honor of Joseph Heller when he died:
True story, Word of Honor:
Joseph Heller, an important and funny writer
now dead,
and I were at a party given by a billionaire
on Shelter Island.
I said, “Joe, how does it make you feel
to know that our host only yesterday
may have made more money
than your novel ‘Catch-22’
has earned in its entire history?”
And Joe said, “I’ve got something he can never have.”
And I said, “What on earth could that be, Joe?”
And Joe said, “The knowledge that I’ve got enough.”
Not bad! Rest in peace!
———
It seems like a lot of folks here have a good sense of what “enough” means for them. Good to see/read.
True story, Word of Honor:
Joseph Heller, an important and funny writer
now dead,
and I were at a party given by a billionaire
on Shelter Island.
I said, “Joe, how does it make you feel
to know that our host only yesterday
may have made more money
than your novel ‘Catch-22’
has earned in its entire history?”
And Joe said, “I’ve got something he can never have.”
And I said, “What on earth could that be, Joe?”
And Joe said, “The knowledge that I’ve got enough.”
Not bad! Rest in peace!
———
It seems like a lot of folks here have a good sense of what “enough” means for them. Good to see/read.
She knows my sense of humor, so she said, "that's right baby, eventually it's all mine". (all our retirement investments)
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I often see this exact factor omitted from people arguing to take SS early. Baffling.
Pretty simple. Take the money at 62, invest in equities, have way more money than waiting to max out payments at 70.
In my opinion it really depends on individual circumstances and your thoughts about how long you might live, guesses on future legislation regarding SS, tax rates, potential return on investment if you take it early, etc. There really is no one “right” answer for everyone. It becomes a personal judgement call.
Our thoughts as well. Just more money you can have sitting in investments rather than waiting for 8yrs. Odds are you're going to make more and even if you don't, the difference will be insignificant.
This. It‘s possible we have 6-7MM already in equities at that age. We’ll wait and use SS as the annuity part of our portfolio.
+1
The math is simple. 8 years head start making 8% annually (and that's conservative). You wait until 70 and you are giving up a ton of cash.
Of course, you and/or wife may live for decades more. Stay with equities. Very easy to beat AAA rated investments.
I'm retired for 1.5 years my wife still works and likes here job. She will retire in a bout a year.
Go see a financial planner we used Fidelity and they have been great. You will need to know all your expenses and what you foresee in retirment
#1 thing you need to do is have your essential expenses covered by fixed guaranteed expenses ie social security rental income annuities. We did an annuity that has a 6.4 % payout ratio until we both die. Kids would get any payout if we pass early.
The rest is gravy that you would have for other variable expense ie vacation hobbies etc.
Go see a financial planner we used Fidelity and they have been great. You will need to know all your expenses and what you foresee in retirment
#1 thing you need to do is have your essential expenses covered by fixed guaranteed expenses ie social security rental income annuities. We did an annuity that has a 6.4 % payout ratio until we both die. Kids would get any payout if we pass early.
The rest is gravy that you would have for other variable expense ie vacation hobbies etc.
A reason to enjoy the power of compounding returns via equities. Stop being a sissy.
You don’t get the math. If you expect to live a long time, you should absolutely wait.
I’ll most likely work until nearly 70 anyway. It’s funny, making serious cash now and get to work from home unless I am meeting with clients or entertaining.
It would be easier to retire if my current pay was just moderate. But each year I work adds significantly to my net worth.
The wife is 5 years younger and just wouldn’t make sense to retire early and start collecting SS.
At 70, wife 65- we are able to go max on tge SS, get Medicare etc. that can take care of living expenses in a comfortable way. The extra $ I make over the next 10 years will be the play money.
It would be easier to retire if my current pay was just moderate. But each year I work adds significantly to my net worth.
The wife is 5 years younger and just wouldn’t make sense to retire early and start collecting SS.
At 70, wife 65- we are able to go max on tge SS, get Medicare etc. that can take care of living expenses in a comfortable way. The extra $ I make over the next 10 years will be the play money.
Trying to figure out my life based on my genes is tough. Mom died at 40 and Dad died at 90. Both smoked 2 packs a day entire lives.
Can’t count how many lives Dad lived through with his Purple Hearts and bronze star…most likely, was given more than 9 lol
Can’t count how many lives Dad lived through with his Purple Hearts and bronze star…most likely, was given more than 9 lol
The math screams - don't wait!
Example:
At 62 SS = $2644 per month
At 70 SS = $4814 per month
Take the money at 62 and invest monthly. 8% annual return, which is well below the S&P 500 norm.
Starting at 62, in 8 years you will have:
62 benchmark = $353,948
70 benchmark = $0
After 18 years, so you will be 80:
62 benchmark = $1,269,347
70 benchmark = $880,336
Pretty simple decision here. Take the money ASAP!
What I did
All the calculations of when to take it usually don't consider what happens to the money you start getting at 62
+1
If you need the money for normal life then take the money ASAP to use. If you don't need the money, still take it and invest. It's a common sense decision in both cases. And of course, you never know when you will die and the payments stop. Everyone is on the shot clock.
But can you actually invest the full amount you receive starting at 62? If stop working then this money has to make up for lost salary. If still working then depending on salary you are making taxes will be applied against the amount received.
If you had to spend the social security money, then it would mean less you take out of your existing equities to get by
Either way, you are better off taking it early, you either add equities from 62 to 70, or you don't reduce equity with withdrawals
What you aren't considering is that from 62-70, if someone does not retire but continues to work.
Your number only consider stopping work at 62 and not working ever again. I am at 61 right now and never worked a job with a pension. So, I would have to live on SS and savings.
So, if someone is 62 and let's use even a low number- they are earning $150k (in order to stay at the max)per year for those 8 years. In those 8 years- they earned $1,200,00 and now- at 80- they would be over $2 mil
Actually- didn't even figure in the 8% annual
But pretty much every year after the age of 80- that number you gave starts to quickly favor waiting until 70
Of course if you keep working you don't take SS until you stop.
You’re describing “channeling”, a common investment strategy in the early 2000’s
When I was in my residency in the late 80’s, the director of general surgery at my hospital said if you stop smoking, start exercising, stop eating sugar and fats, stop drinking alcohol, you’ll live an extra 30 days!
I started collecting at 65 and 4 months for maximum SS. If I waited until I was 70, I would t break even until I hit 83. No guarantee I’m alive at 83
I took it because I made just under the maximum allowed and this year I have no limit.
I wonder what they calculated for if you get hit it the head by a huge tree limb when 5 amateur tree trimmers decide to cut down a huge tree or if you chase a thief into an alley and he pulls a knife on you or when a car falls on you or when you are 65 and fall off the roof or when you are 80 and decide you are in good enough shape to ride your bike in the hills of Morris county on a 100 degree day in August and you take a header over the handle bars or about 5 other how did he survive events.
This is a great thread. One thing not discussed since it seems many in this thread manage their own monies. I do with one of my accounts. The rest are managed professionally. I love the philosophy of dividing assets into 3 buckets, longterm, medium term and short term. The short term bucket is for my monthly distributions (I retired at 64, 4 years ago) and is in fixed income covering 3 years of distributions. Three, because that is the average length of bear markets. As this bucket reduces, monies from the mid term bucket (5-7 year outlook ) replenishes the short term bucket and monies from the longterm bucket (10+ years ) replenishes the midterm bucket. I collect SS, a small annuity, retirement distributions and dividends/interest from my nonqualified account. In those 4 years my net worth (not including my house) grew by about 500k. I don’t need all the income I get but take pleasure in helping my 2 kids (in LA and Wash state) weddings, down payments and life in general since I don’t think this generation of children are better off than their parents. Why not watch them enjoy their inheritance while I’m still alive?
Great post on all points! The 3 retirement buckets sounds like the way to go. However, I did read an article a few months ago that advocated for an even more simple 2 bucket approach. Short term bucket (5 years and less), long term bucket (more than 5 years). If the market is going up, spend from the second bucket. If the market is going down, spend from the first. Haven't reviewed or done any math on this.
Here is a good question- not so much those that already have the 3-6 mil or more at 62 to retire but the 90% of people that have $1 mil or less when they hit 62.
How many of these people are looking at banking their SS in 8% annual vs using it to just pay bills.
Do these people work until the max age or just call it in at 62 and cut back on everything they do just to survive for the next 30...
How many of these people are looking at banking their SS in 8% annual vs using it to just pay bills.
Do these people work until the max age or just call it in at 62 and cut back on everything they do just to survive for the next 30...
They keep working until they feel like they have enough or you can’t find work anymore. Not really a choice.
One other opinion I neglected to mention earlier is that it is extremely important to become and remain very strong in personal finance literacy. I’ve always been amazed over the decades how many people who are very smart in many fields but lack in knowledge in this all-important area. I don’t use a financial advisor but I don’t begrudge others who do as long as they understand finance, how to ask the critical questions, asses their own personal situation, and realize the expenses associated with financial advisors, etc. But whether one chooses to use an advisor or not, the best investment you can make is in committing to understanding investments and realizing you are your own best advocate. I’ll get off my soapbox now.
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You do understand that the guaranteed increase in benefits is 8% per year from age 62 to 70, right? And that it is indexed for inflation?
One book that I can recommend to you all (except old guys, who may fall asleep reading it and never wake up) is Wade D. Pfau’s “Retirement Planning Guidebook,” Chapter Six on SS is 36 pages long. Page 179 in the paperback edition begins his consideration of delaying claiming SS benefits until age 70 by comparing the decision to an inflation protected annuity. It is compelling reading
Each person’s situation is different. Budgets vary.
Marital situation, kids, no kids?