Retire earlier or wealthier?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.

If you were 55 and your savings increased 50% overnight, would you...

retire earlier
88
67%
spend/give more
10
8%
neither
17
13%
both
16
12%
 
Total votes : 131

Retire earlier or wealthier?

Postby JimInIllinois » Sat Feb 09, 2013 7:34 pm

I'm wondering if people save more so they can be retire earlier or have a higher standard of living in retirement.
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Re: Retire earlier or wealthier?

Postby pennstater2005 » Sat Feb 09, 2013 7:36 pm

Would like to go part time by 55. To be seen I guess.
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Re: Retire earlier or wealthier?

Postby cinghiale » Sat Feb 09, 2013 7:47 pm

I voted for spend and give more, though not beacuse it would be my preference. I liked "both."

However, a poll like this can bypass a sober truth: a nice 50% pop in net worth may not be the sole variable in finding oneself able and ready to retire. For me, making it to age 60 at work means that, once I retire, I can continue to participate in the group BC/BS program and pay the group rates I currently pay. That eclipses a calculation of my "number" or whether I have reached the promised land of "enough."

Now, if my employer lowered the qualification age to 55 for continuing in the group health plan, I would be joining the majority vote in this poll.
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Re: Retire earlier or wealthier?

Postby hicabob » Sat Feb 09, 2013 7:59 pm

cinghiale wrote:I voted for spend and give more, though not beacuse it would be my preference. I liked "both."

However, a poll like this can bypass a sober truth: a nice 50% pop in net worth may not be the sole variable in finding oneself able and ready to retire. For me, making it to age 60 at work means that, once I retire, I can continue to participate in the group BC/BS program and pay the group rates I currently pay. That eclipses a calculation of my "number" or whether I have reached the promised land of "enough."

Now, if my employer lowered the qualification age to 55 for continuing in the group health plan, I would be joining the majority vote in this poll.


It seems that under "the affordable care act" everyone will be able to pay "group rates" by 2014.
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Re: Retire earlier or wealthier?

Postby VictoriaF » Sat Feb 09, 2013 8:06 pm

hicabob wrote:It seems that under "the affordable care act" everyone will be able to pay "group rates" by 2014.


To pay low rates one needs to have a very low income. This excludes those with pensions and precludes Roth conversions.

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Re: Retire earlier or wealthier?

Postby digit8 » Sat Feb 09, 2013 8:08 pm

Definitely retire early. With my personality, that will probably morph into a new job, if only volunteering for charity pretty quickly- but I always liked the idea. I like it more as some of my senior co-workers reach the point where they could retire, but are delay it for whatever reason. The look of relief, of the weight off your shoulders when you can walk at any time....I like my job overall, but how could I not want to get to that point?
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Re: Retire earlier or wealthier?

Postby hicabob » Sat Feb 09, 2013 8:13 pm

VictoriaF wrote:
hicabob wrote:It seems that under "the affordable care act" everyone will be able to pay "group rates" by 2014.


To pay low rates one needs to have a very low income. This excludes those with pensions and precludes Roth conversions.

Victoria


I'm not talking about low health insurance rates - but group rates rather than the current , probably 80% higher than group rates that individuals buying health insurance pay vs groups. It may well be good ( I hope :happy ) for early retirees which was the original topic since it would seem to remove some of the "health care uncertainty" from the retire early equation.
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Re: Retire earlier or wealthier?

Postby VictoriaF » Sat Feb 09, 2013 8:18 pm

hicabob wrote:
VictoriaF wrote:
hicabob wrote:It seems that under "the affordable care act" everyone will be able to pay "group rates" by 2014.


To pay low rates one needs to have a very low income. This excludes those with pensions and precludes Roth conversions.

Victoria


I'm not talking about low health insurance rates - but group rates rather than the current , probably 80% higher than group rates that individuals buying health insurance pay vs groups. It may well be good ( I hope :happy ) for early retirees which was the original topic since it would seem to remove some of the "health care uncertainty" from the retire early equation.


You may be right. I was not paying much attention to the Affordable Care Act, because my situation is similar to cinghiale's. Once I qualify, my payments will be much lower than anything I would get with the ACA.

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Re: Retire earlier or wealthier?

Postby Minot » Sat Feb 09, 2013 8:21 pm

They did (inheritance), and I did (retire earlier).
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Re: Retire earlier or wealthier?

Postby pennstater2005 » Sat Feb 09, 2013 8:33 pm

VictoriaF wrote:
hicabob wrote:It seems that under "the affordable care act" everyone will be able to pay "group rates" by 2014.


To pay low rates one needs to have a very low income. This excludes those with pensions and precludes Roth conversions.

Victoria


Any idea what qualifies as low income?
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Re: Retire earlier or wealthier?

Postby VictoriaF » Sat Feb 09, 2013 8:44 pm

pennstater2005 wrote:
VictoriaF wrote:
hicabob wrote:It seems that under "the affordable care act" everyone will be able to pay "group rates" by 2014.


To pay low rates one needs to have a very low income. This excludes those with pensions and precludes Roth conversions.

Victoria


Any idea what qualifies as low income?


I don't know, because as I noted I will not be using the ACA, and thus I was not studying its details.

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Re: Retire earlier or wealthier?

Postby ascenzm » Sat Feb 09, 2013 9:15 pm

hicabob wrote:
cinghiale wrote:I voted for spend and give more, though not beacuse it would be my preference. I liked "both."

However, a poll like this can bypass a sober truth: a nice 50% pop in net worth may not be the sole variable in finding oneself able and ready to retire. For me, making it to age 60 at work means that, once I retire, I can continue to participate in the group BC/BS program and pay the group rates I currently pay. That eclipses a calculation of my "number" or whether I have reached the promised land of "enough."

Now, if my employer lowered the qualification age to 55 for continuing in the group health plan, I would be joining the majority vote in this poll.


It seems that under "the affordable care act" everyone will be able to pay "group rates" by 2014.




No sure what you mean by group rates, but check out this on-line PPACA premium calculator.

http://healthreform.kff.org/subsidycalc ... ?source=QL

If you are single, 55 years old, live in a medium cost area and make $46,021 in 2014 dollars you get subsidized and pay $4372 in premiums (get a $4123 tax credit). Make one dollar more, $46,022, and you pay $8495 in premiums. That is not affordable for most people. My employer's health insurance group rate is about $3,000/year (employer pays $2222 of this amount based on my W-2 info).

It's my understanding that pension income, tax exempt municipal bond interest, etc. all count towards figuring one's income when it comes to the PPACA.

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Re: Retire earlier or wealthier?

Postby heyyou » Sun Feb 10, 2013 12:29 am

@ the original question:

I saved more and kept the same job in order to retire early. I did stay until 55 instead 53.5 or 54, in order to get no deductible, retiree health care for $50 a month. Retire early was my goal within a year of starting full time employment, but I wasn't a good investor during those early years. Now I see friends making those same early mistakes, but they are in their 50s, so there was a benefit from those losses.

Staying at work to become wealthier when you have enough to have a good life at a lower middle class level just doesn't make sense to me. Others are welcome to do as they wish, to suit their definition of "enough".

DW and I still save to travel, but when we go to Hawaii we do not stay at expensive hotels. We do go to the same beaches and scenic places. That shows the different utility of marginal wealth.
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Re: Retire earlier or wealthier?

Postby YDNAL » Sun Feb 10, 2013 11:36 am

JimInIllinois wrote:If you were 55 and your savings increased 50% overnight, would you...

It surely depends.
  • Does 50% increase in savings mean that much because you were close to target/goal to begin with?... or it doesn't.
  • Unfortunately, many 55yo are not that close to meeting savings goals/objectives for retirement.

EDIT: to include the premise of the poll, otherwise my response is not clear.
Last edited by YDNAL on Sun Feb 10, 2013 12:17 pm, edited 1 time in total.
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Re: Retire earlier or wealthier?

Postby livesoft » Sun Feb 10, 2013 12:09 pm

We saw in an earlier thread that folks who kept working did not increase their standard of living because their taxes ate up all the gains that their wealth gave them. They would have been better off retiring earlier and would have maintained the same standard of living.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: Retire earlier or wealthier?

Postby Toons » Sun Feb 10, 2013 1:09 pm

Retire Earlier :happy
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Re: Retire earlier or wealthier?

Postby JimInIllinois » Sun Feb 10, 2013 1:13 pm

YDNAL wrote:
JimInIllinois wrote:If you were 55 and your savings increased 50% overnight, would you...

It surely depends.
  • Does 50% increase in savings mean that much because you were close to target/goal to begin with?... or it doesn't.
  • Unfortunately, many 55yo are not that close to meeting savings goals/objectives for retirement.


I think the choice of response is the same either way. If you're behind a windfall could let you either not work until you're 70 or not move in with your kids.
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Re: Retire earlier or wealthier?

Postby YDNAL » Sun Feb 10, 2013 2:37 pm

JimInIllinois wrote:
YDNAL wrote:
JimInIllinois wrote:If you were 55 and your savings increased 50% overnight, would you...

It surely depends.
  • Does 50% increase in savings mean that much because you were close to target/goal to begin with?... or it doesn't.
  • Unfortunately, many 55yo are not that close to meeting savings goals/objectives for retirement.

I think the choice of response is the same either way. If you're behind a windfall could let you either not work until you're 70 or not move in with your kids.

You either missed my point totally, Jim, or I wasnt sufficiently clear.
  • A 55yo with $100K saved whose savings "increase 50% overnight" is not in position to be thinking retirement, etc.
  • Relatively speaking, 50% is 50%, but $100K vs. $150K at 55yo is what it is.
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Re: Retire earlier or wealthier?

Postby JimInIllinois » Sun Feb 10, 2013 3:06 pm

YDNAL wrote:
JimInIllinois wrote:
YDNAL wrote:
JimInIllinois wrote:If you were 55 and your savings increased 50% overnight, would you...

It surely depends.
  • Does 50% increase in savings mean that much because you were close to target/goal to begin with?... or it doesn't.
  • Unfortunately, many 55yo are not that close to meeting savings goals/objectives for retirement.

I think the choice of response is the same either way. If you're behind a windfall could let you either not work until you're 70 or not move in with your kids.

You either missed my point totally, Jim, or I wasnt sufficiently clear.
  • A 55yo with $100K saved whose savings "increase 50% overnight" is not in position to be thinking retirement, etc.
  • Relatively speaking, 50% is 50%, but $100K vs. $150K at 55yo is what it is.

I think the opportunities are exactly the same: work less or spend more. $50K isn't "retire now" money, but it's a year or two of living expenses so you can retire earlier than you otherwise could have or lifestyle enhancements (before or after retirement) if you don't.
I suspect that most people have both a target retirement age and a target retirement lifestyle and would retire early if they could be sure of maintaining that lifestyle, but will reduce their lifestyle expectations to avoid working much past their target age.
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Re: Retire earlier or wealthier?

Postby epilnk » Sun Feb 10, 2013 3:21 pm

digit8 wrote:Definitely retire early. With my personality, that will probably morph into a new job, if only volunteering for charity pretty quickly- but I always liked the idea. I like it more as some of my senior co-workers reach the point where they could retire, but are delay it for whatever reason. The look of relief, of the weight off your shoulders when you can walk at any time....I like my job overall, but how could I not want to get to that point?

This isn't a hypothetical for us; it happened last year. It occurred to my husband that he could retire and volunteer for a charity that we support. But his time as a volunteer isn't worth nearly as much to the cash strapped charity as the $ he can afford to give while he keeps working. So we increased our financial support.

I think much the value lies in the knowledge that one is free to walk away. You don't have to actually do it.
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Re: Retire earlier or wealthier?

Postby epilnk » Sun Feb 10, 2013 3:25 pm

livesoft wrote:We saw in an earlier thread that folks who kept working did not increase their standard of living because their taxes ate up all the gains that their wealth gave them. They would have been better off retiring earlier and would have maintained the same standard of living.

What??? Could you link to this please?
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Re: Retire earlier or wealthier?

Postby ocdokie » Sun Feb 10, 2013 3:37 pm

ascenzm wrote:
hicabob wrote:
cinghiale wrote:I voted for spend and give more, though not beacuse it would be my preference. I liked "both."

However, a poll like this can bypass a sober truth: a nice 50% pop in net worth may not be the sole variable in finding oneself able and ready to retire. For me, making it to age 60 at work means that, once I retire, I can continue to participate in the group BC/BS program and pay the group rates I currently pay. That eclipses a calculation of my "number" or whether I have reached the promised land of "enough."

Now, if my employer lowered the qualification age to 55 for continuing in the group health plan, I would be joining the majority vote in this poll.


It seems that under "the affordable care act" everyone will be able to pay "group rates" by 2014.




No sure what you mean by group rates, but check out this on-line PPACA premium calculator.

http://healthreform.kff.org/subsidycalc ... ?source=QL

If you are single, 55 years old, live in a medium cost area and make $46,021 in 2014 dollars you get subsidized and pay $4372 in premiums (get a $4123 tax credit). Make one dollar more, $46,022, and you pay $8495 in premiums. That is not affordable for most people.
Mike


I would be thrilled to pay only $8495 in health care premiums, compared to the $12K I now pay annually.
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Re: Retire earlier or wealthier?

Postby MP173 » Sun Feb 10, 2013 4:28 pm

I am 57 years old, currently working and really enjoy my career in sales and can see doing this until they shove me out the door (with workplace changes which are difficult to handle) or they make me an offer I cannot refuse. Meanwhile, my wife can see the day she retires, so perhaps I will continue on with the health coverage (currently her's is better) and work for another 10 years.

Technology has made my career much easier. With 23 years with the same company, I have gone from making phone calls from phone booths to limited number of minutes of cell coverage to today's world of email being the primary means of communication. Actual sales calls (face to face time with customer) has gone from 20+ per week to perhaps 5 per week. Working out of my home makes it that much better.

So, for me it is not about more money, but simply figuring out what to do with the next phase of my life and keeping busy. Health care is probably more critical than accumulating more $$$.

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Re: Retire earlier or wealthier?

Postby FrugalInvestor » Sun Feb 10, 2013 4:42 pm

I chose to retire earlier. It's done wonders for my overall health. I've had more time and inclination to eat healthy and exercise and my stress level has been decreased substantially. I was fortunate to be healthy and have remained so.
Last edited by FrugalInvestor on Sun Feb 10, 2013 7:09 pm, edited 1 time in total.
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Re: Retire earlier or wealthier?

Postby foxfirev5 » Sun Feb 10, 2013 5:16 pm

I'm close anyway with only a year or two to go. It would only take about 10% for me to pull the plug now. :happy
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Re: Retire earlier or wealthier?

Postby YDNAL » Sun Feb 10, 2013 7:19 pm

JimInIllinois wrote:
YDNAL wrote:You either missed my point totally, Jim, or I wasnt sufficiently clear.
  • A 55yo with $100K saved whose savings "increase 50% overnight" is not in position to be thinking retirement, etc.
  • Relatively speaking, 50% is 50%, but $100K vs. $150K at 55yo is what it is.

I think the opportunities are exactly the same: work less or spend more. $50K isn't "retire now" money, but it's a year or two of living expenses so you can retire earlier than you otherwise could have or lifestyle enhancements (before or after retirement) if you don't.
I suspect that most people have both a target retirement age and a target retirement lifestyle and would retire early if they could be sure of maintaining that lifestyle, but will reduce their lifestyle expectations to avoid working much past their target age.

Not quite, Jim, $100K + $50K is not "retire earlier than you otherwise could.." The point is that a 50% increase in savings is relative.

Sure, people with with a "date" target vs. "lifestyle" target MAY retire early if they can meet the latter. That doesn't necessarily translate to a 50% addition to savings or anything of the sort.

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