Does “1 More Year” of Work Matter for Retirement Safety?
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- Опубліковано 4 тра 2022
- This video addresses the question, does one more year of work matter for retirement safety?
Knowing when to retire is not as simple as it seems. There are a lot of financial and personal variables that go into this decision. While the personal variables are quite individualized, the financial variables are a little easier to understand. This video discusses three financial variable’s that everyone should consider when deciding if this is the year to retire.
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Disclaimer: this video is for educational and entertainment purposes only and is not meant to be a substitute for legal, accounting, tax, or professional advice. If you have any specific questions about any legal, accounting, tax or other professional service matter you should consult the appropriate professional services provider.
I was ready to retire at 55... worked and planned forever. But, when I was 55, I looked for my sweet spot by doing calculations particularly on my pension and found that if I stayed 2 more years my pension would increase by 25% (primarily due to less penalties for early retirement). I did stay 2 more years (and don't regret it), but I also knew that I did not want to stay any longer since I have a bucket list of adventures that I wanted to experience in life. I absolutely love being retired... 🙂
Doesn't everyone? But unfortunately you need money to enjoy retirement. Otherwise you'll be spending all your time sleeping and watching TV.
@@tancreddehauteville764Dr. Who re-runs FTW woo hoo LOL. Sorry just trying to inject a spot of humor.
The age old dilemma between $$ and time. I'm on the very cusp of full age retirement ( 2 months to go!) and income sources vs expenses are fine even while inflation is up and the market is tanking. I felt mentally all set but at a work meeting yesterday, we were told we've been approved for a "substantial raise" (unspecified as yet) so I was briefly tempted; thought, "well, another year or so not having to start pension, let the market maybe stabilize, soc sec up a tick" but then remembered neither my wife nor I are getting any younger (later 60s now), the retirement dollar increases of waiting while nice are factually marginal and concluded that time and health (activity) are more important than another year or so of carting my carcass into work!
Great decision! I know people who just cannot give up the income part of working. Most likely, some will die while working and that would be the greatest tragedy of all.
Sir if you are in your late 60’s and can retire ...do it don’t wait another day. Life is to short. Enjoy.
That substantial raise, taxes will take about 30%, so forget about the raise and hang up the boot. If anyone has worked for 40 years, it is time to retire. Got a message from my doctor that after 40 years, he is closing his practice and I wish him the best. Take time to travel and enjoy life with your wife and family. Just make sure that the mortgage is paid off.
Probably a bigger SS tick than you think maybe $3,240 than $3,000
More important than time, is quality time. Too often I have seen friends and Co workers who put off retirement only to suffer health issues which negatively affect their future quality of life. Regardless of one's health and genetics the older you get the greater your chance of declining health.
I knew my number to achieve a comfortable retirement. Once I hit it I retired (at age 59). The new retirement includes a part-time job ( which is much less stressful) and allows for lots of free time. Time is more valuable than money.
I retired last year at the young age of 40 years old. I think its one of the best decisions. I can now spend time with my family doing the things i love. I am not rich but i did plan for this retirement.
I was able to determine my own retirement date which I think is unusual these days. None of my friends were able to do that, they were all pushed out in their mid to late 50s and most were never able to find work again. Age discrimination is a real thing.
In my case I had retirement at 60 penciled in from about age 55. My 60th birthday came and went but did I get serious about planning leaving withing the next year. A couple of months after my 61st birthday I told my employer, giving them 3 months notice, and that was that. One thing for sure, no matter how old you are, it is very easy to keep pushing off retirement for a year, one year at a time. You keep going in, they keep paying you, nothing changes and you keep on doing what you've been doing for the last 40+ years. With that kind of inertia it can be scary to pull the plug on your career and once you leave it's pretty much for good. Very few employers will take you back and almost certainly not at the same salary you were making before.
Still, with my plan in place I did retire before I reached 62 and it's the best thing I've ever done. So glad I retired when I did.
I will be 60 this year. I gave notice to my work that I will be retiring 6/1 of this year. With all this talk of recession and inflation, I’m getting a little nervous. I have no debt, house is paid off. I’ve never made as much money as I am right now. But how much do I need? I’m not worried about leaving assets to anyone when I die. I live very modestly. Hardest decision ever!
I recently retired. I’ve told my working friends that the first 13 days felt like a vacation until I reached my first $0 payday in 40 years. Now I feel like I’m retired. I’ve saved well over the years and am secure in my retirement but I admit that I am used to each paycheck contributing to my net egg. I need to transition my thinking to a spending strategy from my accumulation habits of the past. Luckily I have 2 years of living expenses in cash so my IRA losses are not keeping me awake at night.
I appreciate your comment and believe most people will share your feelings and experience. I still have another 3-4 years to go, but I hope to have a plan in place before I call it quits. Besides just planning for the financial side of things, I'm interested in finding my purpose for the next phase in life.
Your example of 64 and retiring in a year is exactly me. I'm really not too worried about it. Not that I have a lot of money, but I have no debt, house paid off, and I live very frugally. I've always known how to live below my means.
Not only do you have more money now you're happiness and sense of well being go up ! Well Done !
Congratulations! I'm going to be in same boat...not far behind! :-)
Yes. I am same as you. Good position to be in. House paid. No debt. Live modestly.
As long as rest estate taxes is not ridiculously high.
Exactly right. It's really a mindset that people are born with or they're not. It obviously can be learned, but for many people walking the walk, and talking the talk, is like maintaining good eating habits. Can't be done.
This is GREAT advice. I am right in this position - very close to retirement age and debating about continuing to work. One thing you did not mention , and important to me, is the Health Care Plan I have with my employer. Working for a large corporation my Health Insurance plan is pretty good and includes the things that Medicare does not (vision, dental, for example).
Reading the comments I wonder why some people are here.. for entertainment? I mean, I watch to learn something. But you got these experts in the comments pontificating about their retirement accounts and IRAs and other investments, wondering when would be a good time to retire. I have worked in the hospital setting a long time, and if you can retire, DO IT. Nothing is guaranteed. I saw people every day that were just living their lives as usual and then BOOM, they were in the hospital at deaths door due to stroke, heart attack, dementia, car accidents.. in that order..... Your chances of making it 10 years past fra if you have diabetes, high blood pressure or heart disease is FAR LESS than what you are being told. Most of the ppl I see dying of these chronic diseases are in their 60's and 70's. ppl in their 80's it's dementia or stroke. And if you are obese, your life expectancy goes WAY down. google it. And another huge thing is sepsis from Diabetic wounds that do not heal. of the people I saw in the hospital, I would say over 80% had diabetes.
Good point Annie! Tomorrow is not guaranteed. I have known people who held on to work as long as they, only to have a heart attack or get cancer right before they call it quits. For some people, tomorrow never comes. My Dad is one of those people... he worked a lifetime, and never enjoyed a single day of retirement.
you are only seeing the sick people who go to hospital, try to remember there are plenty of healthy people who do not go to hospital
@@DrSchor My point is that most were seemingly very healthy DAYS before...
I think you are spot on. Tomorrow is promised to no one. I'm 61 and starting to dream/think more and more about retirement. I've found myself checking the obits in the paper where I once lived and worked almost daily. I cannot believe the number of coworkers who passed away in their early 70's. If Medicare was available before 65, I would retire as soon as eligible.
@@anniesshenanigans3815 Their point is still totally valid you only see a very small minority. If one is going to live like you suggest they won't save anything for retirement but be very heavily in dept as they will spend as much as they can now because tomorrow they may be dead.
I literally just turned 63. I'm in great shape physically and working on my doctorate right now. It's my gift to me for all of my years of hard work and overcoming a disabling injury in the 1990's from SSDI to working full time in a new field after earning four degrees. I'm not ready to retire but I have started the countdown. I want to travel and have some years of fun with my wife. This last year of working will pay off the last of debts and leave us with a small mortgage. I can't wait! But I will. I should finish my doctorate in two more years. I want to do my dissertation on the road.
I want to go back to college, if only for retraining.
Great advice! I'm turning 63 this year and plan on working to 65. Besides healthcare the other thing I didn't want to do is draw down our retirement savings before Medicare kicks in and yes I'm still contributing to my 401K plan as well. Unfortunately if you happen to need a lot of money to live in retirement you're going to pay a lot for healthcare in a state's marketplace for healthcare. One thing that's not mentioned often is that in our younger years (I know Geoff has mentioned it) we probably earned less and adding a year or two should increase the SS benefit by getting rid of the lower years. I know that I have gotten rid of the years where my SS adjusted salary with the indexing factor was about $30K less; it might not be much but it'll be in our pocket. The closer I get to 65 while working is the less I'll need to draw down from my retirement funds... hopefully more money for "fun" things!
I come from a world where retire early means 62 unless you got a big corporate buy out! 🙂
I plan on early retirement at 62. There's no guarantee we will live longer and even less of a guarantee that commie Biden won't try to do away with SS. Take it early & collect longer.
Agree. If you check the SS calculator, you can determine exactly what the extra year will add. I was surprised but it was very little additional.
When calculating Social Security, there is a formula where your earlier work years are adjusted for inflation. So, once you are over age 60 I believe, the higher salary you make today will not increase your Social Security payments as much as you'd think. There are some videos out there that explain this in more detail.
@@jeffb.2469 I do know about the indexing and I agree that SS won't go up a lot. I had some indexed years where it was about $30,000 less than I earn today. I'm not working for that reason, I'm working because the healthcare market place is too expensive and want to get closer to FRA before Istart drawing on our retirement savings. I calculated that before 65 it would cost us possibly $12,000 a year more for healthcare. My job's not killing me so at this point I don't need to reture.
I have a solution that works for me on the "one more year" issue - I love the job I've done for years. I'm past 65. I could retire, but why? I know people who retire and then can't figure out what to do with themselves. I'd be one of them. So I continue to work. As the saying goes, if you love what you do you never work a day in your life. By that score I haven't worked a day in my life and never will. Barring a serious health issue, I'll keep getting up and going to work. No reason not to.
That is your choice, I hope that you live longer. Three more years, I will be 62 and that is it for me, don't care about insurance. I will buy Obamacare.
Congrats. My dad was the same way and worked into his 80s! Myself, while my career has had its upside and downs, I'll say goodbye next year at 65.
@@billl1127 : Congratulations, I pray long life for you.
Same here. I'm almost 68 and I don't feel close to done. So why not work at least until 70 and then see how I feel, and In the meantime my SS will be even more. No downside.
Plus I see so many who bowed out at 62 and now they're really sorry they did.
I hear you. I retired as a low-level clerical worker at the VA earlier this year, but I am 18 months away from reaching SocSec full retirement age. Rather than taking reduced SocSec, I am getting a part-time job (24-30 hours/week) until I start drawing SS benefits; even then, so long as I am healthy and like the work, I plan to keep working part-time. I don’t want reduced benefits now and having to watch my income so I don’t exceed the $20K earnings requirement.
This is the best retirement planning site on UA-cam. Thanks
THANKS, JEFF YOU ARE ALWAYS VERY HELPFUL ON RETIREMENT OPTIONS!
Thank you Geoff!
Thank you Mr Schmidt
Excellent, timely video. Husband (past FRA) is retiring from full time work 10/1. Market turmoil is anxiety inducing for everyone invested, not just those soon-to-be retirees. Much to think about. Thank you for always being the calm voice of reason in all matters financial.
Another great video. Thank you
Thx for the vid, Geoff
Sadly no place I worked in the last nearly 50 years, neither offered 401 or pensions. I realize SS isnt suppose to be your full support. My body is breaking down, and waiting a year, it only goes up about $13. I'll semi-retire, get my SS, and my wife, who's younger than I, will still work. As long as I can work 16 -24 hrs per week, I'll make more than working full time.
A very good video. Thank you. Joe
Thanks for these videos.
Well said and thoughtful consideration
LOVE your videos!!
A consideration for those whose working life included some years of low paid work or no work but who is now fully employed it is important to consider that last year of higher paid work will increse your beneft calculation by removing a low earning year and substituting a higher paid year. For me working one extra month threw out a low earning year with a high earning month increasing my benefit. Very important for those who took time off or delayed working for family or education.
Love your channel. A lot of us that were thinking of retiring in the next year are reconsidering after the past 6 months. If I could put $500k in ibonds I would!
You are the best!!!
Thanks Geoffery for "telling it like it is". To many "advisors" want you to work forever (or at least 70). Each year you continue working is one more year you can't enjoy the freedom of retirement. Of course you have to have planned, saved and invested the previous 30 - 50 years to be able to retire.
I am 70 and due to pandemic stayed working as I am an expat and couldn’t travel. Retiring soon and can attest to the thrust of this video… great information
I am within months of retiring. I was daydreaming yesterday of my agenda post-retirement. The morning walk, the business periodical reading, working on my software projects, taking a nap when i felt like it, etc. LOL. I thought should I work another year.... no way. I have enough with dividends alone to live at least at my current spending level. And once I reach FRA I will add in SS. In fact I am thinking of telling my boss next week I intend to retire. Hopefully he isn't reading this. LOL.
I cut the rope at 63. If you have a plan of fun activities, you should still be able to relax more often than you did while working. Few people wish that were back at work and rushing through life, after retirement. Of course you should allocate time for weight-bearing exercise to maintain adequate bone density and muscle.
@@davepaturno4290 I ride my bike a lot and have my 55 pound kettle bell too. LOL.
@@chessdad182 Great! still have a $5/month membership at a gym but also dedicated a room with exercise equipment like adjustable angle bench, some dumbbells, a pull up bar, and rubber bands.
@@davepaturno4290 I like your style! My gym membership is $7 per month and I use it all the time thus feels like it’s free! A home gym would be real nice too. I’m planning on setting one up in our new home once we’re retired next year. Blessings!
Another excellent video!! Thanks Jeff!!!
Thank you for this great video, I’m 66 and getting ready to retire and debated to work one more year with my wife, but we are going to take the plunge!
Thank God we listened to you and have three years of cash reserves ready to go so we are not worried about this crazy market nowadays!
Again thank you for your great videos, we are forever in your debt!👍🏽🇺🇸
I enjoy listening to your videos. It reinforces that I made some good decisions. I retired just before 64 years old, delayed my Social Security 'til 67, living on part of my IRA funds. I have 2 small pensions and an annuity that kicks in next year. My only fear is inflation, and the fact that my pensions and annuity are not going up with inflation, thus robbing me of future income.
If house is paid off and in good shape and you don't spend much on gas, inflation may not be that bad for you.
They ran me out……thank God!
It depends!
I retired at 45. Best decision of my life! So much less stress, less frustration, less time commuting, less time spending the limited time I have in this world trying to squeeze a fraction of a percent more profit out of a box of crackers or a pack of toilet paper. So completely meaningless in the whole scheme of things. My financial assets and passive investment income are growing many times faster each year than my spending, so I'm never really 'drawing down' my assets. I assumed at age 22 that Social Security would go belly-up by the time I reached retirement age. So my plans never factored SocSec into them. If it's still there in 15 years then great! If not, then no big deal.
Im 59 and had been planning for retirement for 6 months. Since covid I've been working from home all the time, I'm told that won't change. Given I don't have a commute anymore and the markets have been bad I'm likely to keep working until either I've got a solid 401k growth year behind me or I hit 65.
"I retired at 45. Best decision of my life! "
I hear this from a number of people, but I wonder about confirmation bias. What I mean is, we're only hearing from those where it worked out great. What we aren't hearing from is from those where it did not work out, likely both from embarrassment, but also because if they're homeless, they don't have any way of posting about it.
@@kurtbilinski1723 😂
I appreciate your videos!! As the world projects insanity - You are avoice of reason... Thank you..
I am at FRA my wife is almost 3 years younger. I plan to work to 68 to 70 ish to retire (really like my job and colleagues) and maximize her spousal benefit (she never worked much outside the home). I have several low earning years and "0"s to get rid of in my work history by working a bit longer. Also, I am continuing to add to my 403b and an inherited account. I want to get the max I can prior to stepping into retirement.
Take the money and run!
Enjoy your video's looking at 4 more years to retire.
3yrs ago (2019) I retired at age 60 from high tech. Great pay and benefits, but the job came with living in Silicon Valley and having to work everyday with 30somethings who didn’t appreciate my wisdom and experience. So last year (2021) I looked back to see what another year of income would have meant. Giving that land in Vermont (where we retired to) nearly doubled (not to mention the quality and selection of properties declined significantly) and covid/inflation almost doubled everything else associated with building a custom house - the additional income in 2019 would have been completely wiped out by higher costs just a year later. Timing is everything and we got lucky on the housing front. When you add in the non-financial aspect of ~250ish days I got to “not work” combined with living in a beautiful healthy place - we definitely came out ahead. Not sure how to put a dollar value on the ~160 days I mountain biked and the ~50 days I snowboarded, but the extra income wouldn’t have given me as much satisfaction or health benefits. Will I outlive my savings? Not according to my financial planning. So there really wasn’t any upside to another year of high income in a place we didn’t enjoy.
I monitored my bottom line and in 2014 was forced to retire at 55 when I lost my health ins at my job due to the aca. With the price of gas at the time was $2.85 making the commute a losing proposition. I baled out of the work force in the northeast and relocated in Florida. Millions did this and the media was silent.
It certainly did for me.
Another factor for working longer will be the health insurance from your employer especially if a low deductible, low contribution cost program.
Sadly for many they cannot afford to quit working full time as a lack of savings in a IRA, Roth IRA, or 401(k), divorce, health problems, debt, low income all their working lives or in later years, money spent to help children.
I say, don't wait too long!
I just had open heart surgery I’m 56 and was going to retire at 62 ,now I’m thinking on adding an extra year towards retirement at 63,now that I’m going to miss about 3to4 months of contribution,as long as my health allows.
Sounds sensible.
If you are debt free, including and especially your house, when you retire, you can live very well on less money than you think. Unless you're thinking about traveling the world on a year-round basis
Great video as always. Sadly medical insurance cost will be my single largest monthly expense.
Me too
On the ACA? If you plan it right should be free.
Planning on working until full retirement--80! Active body; active mind; and more choices.
Full retirement age is about 67 for Social Security. Please consider health and travel plans. You want to be healthy enough to be able to walk up staircases, on cobblestones, during hikes, etc. As for me, I ended up getting an unexpected disability about five years ago, so my travel isn’t as fun as it once was. I once thought that I would work until age 70, then my disability ruined those plans.
It's like you did this one especially for me. Just turned 64. I believe I'm financially set and could retire, but in one year I will go from 80% to 100% vesting in an ESOP, I will qualify for Medicare, I'll continue contributing to retirement plans, continue to have use of a company car, expenses, etc. So it just seems to me the extra year is worth it but not really necessary.
Sounds like you have given this a lot of thought Bill.
Great video. I had to consider all of that, as I retired early.
December 1st 2022 I reach my FRA. The past 3 months have taken a toll on my IRA / ROTH IRA / Personal investing account. Looking at another year would bring more 401K matched contributions / possible raise in salary / give time for the IRA's to recover. At my age the work never gets easier. Hoping to retire in December but one more year might be to hard to pass up. You bring many good points to one more !
Thanks Alan
The markets go down occasionally get used to it. Not saying you don't need to work another year but even if you do the markets will still go down occasionally through your retirement. It happens and your plan should reflect this
@@johngill2853 My plan does reflect it. I have a IRA / Roth IRA / Regular trading account / 401K at work. So its different buckets with different investments. Really have many options even to keep working at my job for probably as long as I want. I feel blessed to be in this spot.
I recently retired. The business I worked for did not want me to retire. I agreed to help them out if they need my help. One month into retirement they called me and asked if I could work for one week this month. I agreed. I figure that is an open door for extra income. And I recently had to get a new furnace. So some extra money will help to pay for it even though I have the money to pay for the new furnace.
Great video Geoff. One more year is a good idea to maximize retirement income from all sources, if possible. I am turning 62 this year and I am not sure I can work full time at my job much longer. Work demands/environment have become overwhelming in recent years. I am sure many others have experienced this as well. I think the key is to create a secure base of lifetime income that will cover my basic expenses, and that I could manage on if I had to. Leave a smaller amount to grow for use in the future. Then I plan to look for some part time work that I might enjoy, either in my profession or some thing completely different. I am at a level of income where I am eligible for health care subsidies. It’s important to build a solid foundation of income. Thanks again.
Aging out of your job is real. Especially if it is high stress, unless you are capable of performing at a very high standard. Hard to do for most as we witnessed throughout our careers. My husband and I did not want to be seen as old in our profession and planned early retirement. We retired together, he at 61, me at 60. Our health insurance is expensive, but we are otherwise debt free. We saved up and took pensions early, yes a reduced amount than if we waited, but lucky to have and we live comfortably. We have barely touched our savings and will not touch 401ks, IRAs until 72. We will be 65 and 64 this year and will file for SS next January, rather than wait for FRA. We did the cumulative math. Waiting gets you a larger monthly check, but over time you don’t make more. If you retire at 64 and take SS, expect to live to 90, you get the same total income over 26 years as if you wait and take SS at 70 and live to 90 over 20 years. Higher monthly income at 70, but 6 years less accumulation. Nearly every day we say how happy our planning worked out. The only disappointment is I wish we had the option of ROTH IRAs when we were young. The “raise” we get when we have to take the RMD will be consumed by tax. Converting it now with immediate tax consequences is not appealing at all.
We are just about where you and hubby are. My wife is going to retire in 2023 with a full pension after 35 years just because she can't stay at that high level without the stress she is consumed with by under achievers. I'm already earning my first pension (after 30 years in job 1) and started back to double dip for more. No mortgage, nice accumulation of DROP (X2) in both our portfolios, 457(b) IRAs (X2), and SS (X2), to look forward to. Like you, we don't ever need to really touch our DROP savings as we make enough with the pensions and later, our combined SS. I'm going to work one more year myself, I have no stress because job #2 is to keep me busy and I can leave after two bad days in a row, a good position to be in at age 60. That only implies more golf in my life.
Like you, we did all pre-tax deferred savings until recently we stopped and are only doing ROTH. Since we don't plan on living off the savings, we are going to convert most of the pre-tax up to just underneath the ceiling of the next tax bracket over a few year period. We figure it will appreciate organically by investing it in a large cap, dividend portfolio. The Trump income tax law sunsets in a few years so, a lot will depend if it's extended, amended or sunsets completely and new brackets are enacted.
Enjoy that retirement. -
Well thought out and executed.
60 now: At age 63, between my Pension [30 years service] & Social Security, I'm at 100%. BUT: No Healthcare. If my Employer is offering a "Two year bridge to Medicare" as a Retirement incentive, I'll take it. They only make those offers in "Bad Budget" years. If the Budget is in good shape, the 10% increase I will earn in the last two years will pay my Medicare, Medigap, Prescription, Vision & Dental for LIFE.
Looking for inspiration here... My husband just announced today, after much diligent planning to retire in the coming spring, to continue to work for another year because of the recession. My job will end in January and I was planning on retiring at that time. Now the idea of working for another year has emotionally confused me. I am certain he is making the right decision, however, it's bummed me. Retirement is not a date, it's a condition. I keep telling myself that.
Great video, as always Geoff. I ask, "When is enough, enough?" Health? Financial goals achieved? Pinnacle of your career? At what cost...etc? I'll navigate your videos to learn but, at some point, you have to throw in the towel and live life with how you define happiness...which you very well understand. How about this, when does "one more year " not matter? - Dave
The important thing is to make an informed decision and balance feelings with facts. That’s what Geoff does: he lays out the facts unemotionally and leaves it to the viewer to make the best decision based on the facts and your personal goals.
I would love to see a video about concerns with affording long term care, especially for those without children. How much to budget for it, is LTC insurance worth it, affordability options, etc.
yes, and show us alternatives to LTC insurance: self-insuring in a Roth IRA or HSA. The way the LTC industry presents the analysis is scare tactics. Over the lifetime of a policy, that's a lot of money to buy into an insurance policy if you never need it.
but my in-laws are an example of how it does work. They have been drawing benefits from a joint LTC policy for a couple years. So my wife is a big fan of LTC insurance, unless I can show her the math where our Roth account(s) will be there if we need it for that, and if we don't use it, it can then go to the kids' inheritance and maybe fund college for our future grandkids.
Dad was in the hospital a few times and transitioned into 90 day rehab places. Mom took care of him when he was released home. He passed away at one of those rehab places at the age of 86. Mom was good and healthy until her early 90's. We took care of her for her final couple of months with the help of an aide who came to the house twice a day. Both wanted to be home where they felt safe and comfortable. Looking back, I'm glad they did not buy an expensive LTC policy that neither one would have used. It's insurance, just like you have for home and auto, and some will never file a claim.
I’d say work an extra year as an insurance policy. Just when you think you have things licked, boom!!!
Thanks for the comment CB.
6 months ago, I was 3 years out from my retirement and long service leave entitlement and the company i worked for mandated compulsory jabs and boosters. needless to say my health won over finance, I quit and am now the happiest I've been in many, many years. Having said that, my wife and I were already well on the way to being self funded retirees, it just came a touch earlier than expected.
Great!
I got out at 46 and have loved the past 11 years using the 2,3,4 plan - two days a week, for three weeks a month and take four months off.
Where do we find that?
@@HolySchmidt hello Mr Schmidt, I put the plan together myself - I am in the U.K. - I had an excellent final salary pension scheme that I had contributed to since 21 and was a natural saver, at 46 I had enough money to retire, but I needed something to do on my terms so after a few years off I decided - two days a week with one week a month off and then four months off would work for me - last year I did 50 days (freelance mentor and NED) and it gave me my “fun money” on top of my pension and savings income. More than happy to discuss further if you need more information, but in short that’s my 2,3,4 plan.
Love your content. Keep up the good work.
If anybody remembers the Great Recession your IRA value tanked. If you were working you could wait a couple of years until the value returned. If you were making withdrawals to live on it was just more going away from the value of your account.
Thanks Cal
If you've been making enough to hit the SS max ($147K) or are close, don't assume that a few more years of 'contributing' the max will make a big difference in your payment later on. While they do take the highest 35 in the AIME calculation, knocking off a lower paying year doesn't have much impact because of how the benefit is calculated.
I’m 69 and my wife just retired. I am going to work one more year till almost 70.
I'm 64 also and this is informative as are all of your vids are informative. This is a question that I ask myself all the time. Yes I work the numbers and it seems common sense but hearing it from someone that studies this means a lot. Like others we have adopted the mentality that we are living like we are already in retirement, keeping to a budget and watching our spending. Outside of an almost paid car loan we are debt free and all of our kids college expenses are paid, mortgage paid, we are making big 401k/403b and Roth IRA contributions. I would like very much in a perfect world stay full time until age 70, my wife until she is 68 delaying SS for as long as possible and putting as much as possible into retirement I think we will be happy we did.
why not enjoy life? you have no idea what tomorrow holds.
Your window of healthy retirement years, during which you can physically do almost anything is very limited for most. I would say that 65-75 is typical, but that means you will have only 10 years to thoroughly enjoy retirement. Think about how quickly that will pass.
I retired from the 40 hour grind at 63.
I plan on taking my SS very soon. I’m 66. I don’t have much money saved, so I keep saying one more year. Everyone tells me to just take it already. So I decided I’m gonna take my SS and still work for at least another yr full time.
If you don't have much money saved I'd do what you can to keep working until at least your full retirement age if not age 70 to maximize your SSA payments as well as try and set aside a few dollars.
@@edwardpate6128 👍🏻
It doesn't matter when you take SS. You either get more per year for less years, or less per year for more years. The numbers are the numbers and they are calculated to end up close either way. I retired at 56. Looking forward to SS at 62.
It doesn't matter?
How about if you're working at 62 and making over $19,000 a year?
How about if you don't expect to live a long time or on the other hand what happens if you expect to live to 100?
What happens you have a large ira that you want to spend down or do Roth conversions?
It matters a whole lot when you take Social Security but it matters to different people in different ways. But don't mistake that for it doesn't matter
@@johngill2853 guy makes dum comment, you fixed it thanks
I don't think it was a dumb comment, if you read the entire comment. Everyone has to make there own decisions but his statement was accurate ( less for longer or more for a shorter period). Believe me, SSA knows the odds better than a Vagas bookie.
@@johnnyadams1755 Social Security knows the odds for everybody as a whole. But you have circumstances that dictate your choices.
1. Maybe you have cancer or a liver disease or something and you know what you won't live a long time.
2. Maybe you have 10 family members that are in a 100 years old and you're in fantastic health and eat healthy and exercise.
But as a whole Social Security definitely knows how long we live on average. But that doesn't mean there isn't a smarter time to take Social Security then just flip a coin
@@johngill2853 maybe, maybe, maybe. Since you don't know, you proved my point. It IS a coin flip
Most writers on this subject only consider the impact of earlier retirement on social security payments. You also took into account the difference an extra year of work income and retirement savings (IRA) would make. Good thinking. I retired at 68 and benefited from all three. Granted, I had the type of job that made it possible. Also, consider the impact on a surviving spouse.
Well, I one more year'd myself from 56 to 62. And, having retired at 62, I keep asking myself if I should have worked one more year. I've concluded that I could have easily chased those yearly increments into my grave. So, maybe it should have been 2 more years.
How about if you’re “ in between “. Perhaps you have some doubts as to your income. But have had it with your job. What about working a part time hustle…something you like to do…to smooth over the cash shortcomings?
The employers I've had would pay-match 401k up to 5%.
Also, one of the most common reasons I've heard from close-to-retirement folks for waiting until 65 is medical coverage. However, here in CA, you can have a bronze plan of medical coverage with Kaiser for approximately $100/month if your self -paid income is low but more than sufficient. The key, of course, is to stay healthy throughout your working career. This especially true when it comes to dental care.
You might not have 35 years of good income prior to SS. Working longer and delaying SS could even be better because you'll add good income years to SS.
Very good point Phil.
My husband took social security at 65, I did it at 62, were 74, and still working very part time, mostly so we don’t have to dip into our investments until we really need them, or can’t work anymore.
At age 50, many are targeted because of age discrimination. For myself, my new boss is a narcissist who expects 24/7 response. The best I can arrange is 65 although my original plan was 67 before the new boss.
Thanks for the comment Tony
Yes, Most of my colleagues and friends decisions to retire early are strongly influenced by the type of boss they are working for. I have a tolerable micro-manager. Annoying but not quite enough for me to tell him I'm outta here.
I have a "one more year" question aimed specifically at how it could increase your Social Security benefits. For example, let's say you had zero earnings for one of your top 35 years. If you worked one more year and earned $60k, you'd replace that zero year and your average earnings would go up - but exactly how much would this increase your SS benefits? Is there a formula for this? Thanks - and so glad to have found your channel!
Following
Let assume after 34 years your total wages adjusted for inflation came to 2.5 million you would divide that by 420 and at age 60 you worked another year and made the 60K you would then have 2,560,000 divide that by 420 You would get about $50 more a month If you made say 2.6 million it would be around $10 more a month over the $50. Using bend points for 2022 remember you get 90% first $1,024 then 32% from $1,024 to $6,172 then 15% over the $6,172 This is just a good rough estimate
There is software to help calculate this because it’s a lot of math! . “Ask Larry” has a good one but there’s a cost for it. I think it’s about $40. Replacing one of my $0 years with current earnings ($80k) only increased my SS by about $20 per month. Would obviously be more if higher earner, but even so the extra year tends to be only a minimal increase for Social Security benefits.
@@tobirates916 it should have increased it by more than $50 a month
@@Satjr35031 I found my actual calculations, rather than relying on my memory. You’re right - the difference is $37 per month for me. It was a difference of $25 per month for my Disabled Adult Child (DAC), which was the main reason why i was doing the calculation.
I think I understand all of this and have been planning for retirement (pretty soon) for some time.. with confidence.
But I have recently been reminded that our largest generation, the baby boomers are all now of retirement age. Which means they will all stop stop putting money in their retirement portfolios, and instead will draw down those portfolios.
That means more sellers than buyers for the rest of our lives.
Thats going to change everything to do with retirement.
I have less confidence about the future now.
Do you have a video on how much is needed in retirement? I can certainly breakdown and budget all known expenses including projecting increases in expenses (and income) btu are there and broader rules of thumb. Anything that says here's the CURRENT average NEW benefit ( percentiles would be great) and here is what people report as their expenses (again percentiles) SO what is the 25th percentile SS benefit for a new retiree in 2021 (all retirees) and what is the 25th percentile living expenses of all new retirees in 2021. Make sense? Obviously 50%, 75% and 100% would be nice too. Trying to see where I am in relation to the broad population as it is retiring.
what the average person receives in ss and what the average person spends is not likely to apply to you. you need a plan customized to yourself
@@DrSchor I didn't suggest it would be a way of estimating my income and expenses, but it serves as a measuring stick to gauge where one is and where one may need to be compared to the general population. I guess you've never looked at similar statistics on net worth by age and percentile or investment returns of different kinds of investments to consider making changes in a portfolio or feeling good about the choices you've made in managing you money over time.
How do I find a fee only fiduciary ?? I am looking and wish to fund one before I retire at 68. One year a way.
One more year of work has a two year positive impact
I am eligible to Retire at 60, I was considering it? I just turned 60 but the Inflation Spike, stock Market downturn? Looming recession... Im thinking I will keeping working another year ? And hopefully things will stabilize? I have 400K iRA And will get a pension of $1840 p month but it is Frozen will not grow? Wud like to do some Roth Conversions but don't have liquid assets to pay the taxes of conversion? Dont want to work past 62? Want to wait until FRA on Soc Security?
Our taxes dropped from over 30% to 15% after retiring (but not collecting SSI yet), so we have no problem drawing down IRA. The big question is how much would you need to live on as you're drawing down your savings? The less you need, the potentially lower your income tax will be. Also, plan your activities. Many retirees get bored unless they plan ahead.
I am eligible for Full pension at age 60 so was going for that but with current situation will wait until next year?
Working through the first order math solution in my head is easier if I use "2 more years" of work. If savings at 60 years will last 10 years, at 62, your savings should be up to an 11 year buffer, good to the age of 73 instead of 70. If you have enough savings at 60 to last 50 years, stop working through the calculations and retire.
Thanks for the insight Gary
This is a great video for SINGLE people or those married couples who make the exact same income and are the exact same age. So basically this video applies to about 20% of the population.
I suppose it depends on your perspective.
@@HolySchmidt My perspective has nothing to do with it. The odds of a married couple being the exact same age and having the exact same incomes over a working lifetime is extremely low. As a matter of fact I don't even know one couple who fits this profile. Don't get me wrong you make a lot of great videos with lots of great info but this ain't one of them.
According to the U.S. Census Bureau data, a significantly increasing number of people are staying alone as they age - 45 percent of Americans in their 50s and 60s are single today, So just counting the single people alone this video would appeal to almost half the population.
These videos are entertaining but they are not what you should be using to form a retirement plan.
Too form a retirement plan you'll need to read books, learn your tax situation and constantly add to your financial education. Or you could hire a fee only advisor with a fiduciary responsibility but you're taking a risk if you don't know enough to tell if there giving good advice
I’m 65 and going to work until 70! Why not!
Maybe because you have a job you don't dread going to?
Enjoy Larry!
I plan to keep working at least part-time once I start drawing SS benefits at FRA so long as I’m healthy. I missed out on a lot of hobbies and activities while working in civilian life and being in the Army Reserve for two decades and parts of two others, so I want to have some time to myself, but as long as I’m healthy and like the work, as you say, why not?!
This pre-assumes that the problem is not enough income for retirement. Typically the problem is too much debt or expenditure in retirement.
The top three factors to transition into retirement are health, expenditures, and life expectancy (no major illness). Also stress shortens life expectancy and social security does not index earnings after age 60.
If any of these are true, your health, expenditures, and life expectancy are good by all means retire! You only have one life. No point accumulating for events that are not likely to happen
Retire! Retire early but make sure your complement factors are right.
Sad thing is … allegedly the richest country in the world’ .. a top deciding retirement factor is..Can I afford to survive (medically) if I retire? Prove me wrong
In many countries, the “free medical care” you get is worth the price. Our system isn’t perfect, but it’s not the abject failure you paint it to be. And, guess how some countries keep medical costs down? By “shorting” care for the elderly with the hope they die off quickly.
@@JBM425 1. If they that theory is accurate… where are all the bodies piled up.. and what age qualifies as elderly? Still , my statement is a valid point.
The thought of retirement scares me. What do people do with all that time?
Work part-time, volunteer at a church, a hospital, or a social service agency like Meals on Wheels or a homeless shelter, take part in hobbies you didn’t have time for while working and raising children, travel without regard to having to be back in the office on Monday…
What do you want to do with your life? Figure that out and then figure out how much it will cost and then save as much as you can to reach that goal
@@johngill2853 To be quite honest, there's nothing i really want to do when I'm old and alone. I've traveled the world in my 20s-30's, achieved materialism at a fairly young age like BMW's which now actually bores me. Work is my life. Work is my social life. When retirement comes, I think I will die a fast death - Seriously.
@@dapperlygrungy3189 then working for you might actually be the right thing.
@@johngill2853 I'm going to work until my employer decides I can no longer perform mu job, unless of course, I marry and have kids, which I don't ever see...LOL.
no, but it does mean one year less of retirement, may cost you even more than that.
Wolf of Wall Street went to prison. WHAT ARE YOU SAYING?!?!?!?
Nothing matters
Yikes!
If u follow this "one more year" deal... You'll never retire.
Yes, you will retire. It’s all about making an informed decision and weighing the positives and negatives. If you base a decision strictly on emotion, whether to keep working or call it a day, you may regret it later and have no way to make amends.
Ideally, you get debt free before retirement....
Yes!
Ideally you're debt-free way before retirement. I can't imagine having debt anywhere close to retirement.
If one is 64 years old and questioning another year delay in retirement, I would think one of the biggest variables is health insurance costs. If you have health issues, staying with a job that has a group plan until you're eligible for Medicare (age 65) can mean the difference between a comfortable retirement a little later and a financial disaster.
That's exactly why I'm staying at my job for another year.
Not if you qualify for subsidies on the ACA. Drop your income below a certain threshold and you'll qualify for a silver plan with low deductible and help with prescriptions and 10 dollar office visits. Don't work another year just for health insurance if you don't have to.
@@keithwiebe1787 Yes!!! Many people do not know this.
@@keithwiebe1787 You have a good point there, Keith. ACA is a game-changer, especially for those who retire before age 65 with pre-existing conditions. The plans offered are, however, locale dependent - they vary greatly not only as far as deductibles are concerned, but in terms of available providers. Some areas have only one provider. So, you may not have the option of low deductibles, etc. Other factors, like the insidious “out-of-network” charges are still things you have to look out for. Medicare (not Medicare Advantage) simplifies and streamlines medical care and costs. Coupled with a medigap plan, it’s the most financially predictable way I know to forecast my budget. It’s not perfect, but nothing ever is.
@Dynac that's our plan. Neither of us have health concerns that are expensive to treat, but as we get older, anything can happen at any time and having a good medical plan is a necessity. We both have good health insurance coverage at a bargain rate with our employers.
My husband is turning 60 yrs this summer and he wants to reduce his work schedule to part-time at 63 yrs, which means his employer paid health insurance will end. He's saving separately from our retirement savings to fund for private health insurance and other expenses to live off of for the last 2 years before turning 65, at which time he plans on fully retiring.
It's exciting to plan for an upcoming retirement and watch the years of budgeting and saving form into a comfortable place for ourselves!
If you have health issues, retire at your FRA. So you don't spend much in health care insurance.
Here in CA, a couple on a bronze health plan with Kaiser, and drawing down $60k from savings can pay only $220/month for health and dental insurance.
@@davepaturno4290 what is your deductible?
@@tholm4307 I'll get back to you, shortly.
@@tholm4307 $6300
@@davepaturno4290 thank you! That is a great deal! We’re in California as well but will actually be moving soon. Bought land and gonna build in Utah. I love the mountains and can’t wait for views, open space and four seasons. We also have a son and his family there) My husband and I grew up in California (he’s a surfer actually) but we are both feeling done with the State. Plan to visit regularly (family, ocean). All the best to you in retirement!
Not for me. I retired at 60 1/2 . Never looked and gave no inclination to ever work again. Yippee🏖
You ignore a number of factors and make worse case assumptions about FIREists being quite stupid about taxes, social security and IRA penalties. The question is quite valid over 55 and 59.5 and 30 years plus of SS contributions. But since these people don’t fit your mindset of FIRE, you punt and don’t include factors relevant to them like uncertainty about inflation, Health Insurance, and taxes-especially FICA.
I guess if you learn how to live in a lean year you will be ok going forward
You should expect a couple of lean years and it should be part of your plan. For example the Trinity study or the 4% plus inflation withdrawal method definitely considers lean years
Great info & well presented. I worked until I was 66 but I was able to slow way down the last 2 years to adjust (mentally) & test the waters financially. I was going to go another 2 years but decided why? it won't get any easier & figured we could live the style we had planned. We didn't live frugally but didn't spent to or above our means. Living debt free other than a small mortgage was key IMHO. Think of the parable of the Cricket & the Squirrel. Like eating an elephant; you can look at it and say no way or take a bite at a time and finish it in the long term. We planned financially for retirement for 40+ years. Our goal was to retire at or above our working income. Missed a couple deposits along the way but made them up.We had 3 kids in college. 3 at the same time for 1 year and twins in at the same time for 4. They had very minimal school loans as we had reserved for that as well. We wanted them to have a little skin in the game. So far so good the last 3+ years. Your channel is full of good advice.