Would you retire?

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Hugh Prolly-Wright
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Would you retire?

Post by Hugh Prolly-Wright »

I may have hit my #. I am 58, have approx. 18X annual salary saved in retirement accounts. If I followed the 4% rule, the balances would throw off about 75% of my current annual salary, but I've been tracking expenses for nearly 2 years, and those come in at around 47% of annual salary.

To fund expenses, a withdrawal rate of 2.7% will sustain our lifestyle, and at 62, if I claim SS, that withdrawal rate drops to 1.5%.
Looking for holes in the plan, but I am thinking there's no reason not to retire.
theorist
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Re: Would you retire?

Post by theorist »

Hugh Prolly-Wright wrote: Sat May 01, 2021 6:23 pm I may have hit my #. I am 58, have approx. 18X annual salary saved in retirement accounts. If I followed the 4% rule, the balances would throw off about 75% of my current annual salary, but I've been tracking expenses for nearly 2 years, and those come in at around 47% of annual salary.

To fund expenses, a withdrawal rate of 2.7% will sustain our lifestyle, and at 62, if I claim SS, that withdrawal rate drops to 1.5%.
Looking for holes in the plan, but I am thinking there's no reason not to retire.
It sounds like you have 38x expenses saved; this is safely above what most analyses suggest you need for a safe retirement. SS makes this even much more decisive.

Health care costs may be a new expense after retirement; have you figured these in to your estimates of annual need?

Enjoy your retirement!
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retired@50
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Re: Would you retire?

Post by retired@50 »

Hugh Prolly-Wright wrote: Sat May 01, 2021 6:23 pm our lifestyle,
...
and at 62, if I claim SS
...
Looking for holes in the plan...
You use the words "our lifestyle" which leads me to believe there is a spouse involved.

It may not be a reason to "not retire", but you may want to check your Social Security claiming strategy here: https://opensocialsecurity.com/

It can often be advantageous to delay claiming until 70, as this can lead to a better benefit for the surviving spouse.

Regards,
This is one person's opinion. Nothing more.
livesoft
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Re: Would you retire?

Post by livesoft »

In a situation such as yours, I really really really enjoyed my rewarding job, so I would not retire. Sometimes it is not about the money.
Last edited by livesoft on Sat May 01, 2021 6:34 pm, edited 1 time in total.
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quantAndHold
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Re: Would you retire?

Post by quantAndHold »

I retired younger than that on a smaller multiple.

The one thing to think about is healthcare and what I’ll call “young retiree” expenses. Travel, hobbies, etc, that you have because you have extra time on your hands. You don’t say what your expenses actually are. Someone who’s expenses are $40k should probably up their expected spending to account for those. Someone who’s planning on spending $120k probably has all of that covered already.
Yes, I’m really that pedantic.
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calmaniac
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Re: Would you retire?

Post by calmaniac »

Hugh Prolly-Wright wrote: Sat May 01, 2021 6:23 pm To fund expenses, a withdrawal rate of 2.7% will sustain our lifestyle, and at 62, if I claim SS, that withdrawal rate drops to 1.5%.
Looking for holes in the plan, but I am thinking there's no reason not to retire.
Lots of moving parts and additional items to be addressed, but yes on the surface you look ready for retirement.

You mention "our lifestyle", so I will assume there is a spouse? SS can be thought of as longevity insurance, and depending on spouse's age, gender, and earning's record, it may be of value for the higher earner to wait until age 70 to take SS. That increased SS benefit will last until the second of the couple dies, so likely to go into late 80s or 90s for a cook in good health.

Above quote edited for brevity
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David Jay
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Re: Would you retire?

Post by David Jay »

You are set, but as others have indicated it is probably useful to review SS claiming strategy. In almost all cases, for a married couple, the optimal strategy is for the spouse with the higher benefit to claim at age 70 as this benefit will become the benefit amount for the surviving spouse, regardless of which spouse passes first.

In our case, my wife (smaller benefit) claimed @ 62 and I am waiting to claim until 69/70 (depending on a couple of variables).
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ychuck46
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Re: Would you retire?

Post by ychuck46 »

Been retired for seven years now. My all in expenses, minus SS, equal about 1% of liquid assets. Life is good, my friend. Retire.
Exchme
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Re: Would you retire?

Post by Exchme »

Many people are retiring with much lower assets - like 25X expenses (4% withdrawal), which history showed was pretty safe for a 30 year timeframe - so unless there is a serious meltdown, your finances should be in good shape and likely still leave an inheritance.

Echoing others - do check on optimizing SS, with a spouse it's almost never right to take it at 62 as the tables are built to be sort of fair for individuals, but as a couple, the larger benefit continues when one passes away, so the larger benefit should generally by maximized by waiting to age 70.

Also, once retired, you should look at your tax deferred balance (401k, traditional IRA) and run some numbers in a program like i-orp, this site's Retiree Portfolio Model or Pralana Gold to get some idea of whether you should be doing Roth conversions. The IRS will eventually need to be paid as those balances are withdrawn and making some Roth conversions can help minimize the pain.
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Re: Would you retire?

Post by UpperNwGuy »

livesoft wrote: Sat May 01, 2021 6:34 pm In a situation such as yours, I really really really enjoyed my rewarding job, so I would not retire. Sometimes it is not about the money.
I was in a situation such as yours, and like livesoft, I liked my job and kept working, but then there was a sudden change in the leadership in my organization, and I knew that my job would no longer be rewarding, so I retired. That was eight years ago, and both my life and my finances have been fine.
Topic Author
Hugh Prolly-Wright
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Re: Would you retire?

Post by Hugh Prolly-Wright »

David Jay wrote: Sat May 01, 2021 6:39 pm You are set, but as others have indicated it is probably useful to review SS claiming strategy.
Yes, many are saying to wait till 70, but that assumes no significant changes to the program.
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tennisplyr
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Re: Would you retire?

Post by tennisplyr »

I didn’t let money drive why I wanted to retire, I was inclined to let dislike for my job situation/retirement interests do it. Retired 10 years and doing just fine!
Those who move forward with a happy spirit will find that things always work out.
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Re: Would you retire?

Post by 4nursebee »

Not enough info or the info given is too generalized.
Absent that, in general seems good to go.
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Re: Would you retire?

Post by Wiggums »

Hugh Prolly-Wright wrote: Sat May 01, 2021 6:23 pm I may have hit my #. I am 58, have approx. 18X annual salary saved in retirement accounts. If I followed the 4% rule, the balances would throw off about 75% of my current annual salary, but I've been tracking expenses for nearly 2 years, and those come in at around 47% of annual salary.

To fund expenses, a withdrawal rate of 2.7% will sustain our lifestyle, and at 62, if I claim SS, that withdrawal rate drops to 1.5%.
Looking for holes in the plan, but I am thinking there's no reason not to retire.
You have the option to retire whenever you want. I retired at 56 and never looked back.

Good luck to you.
superbobbyg
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Re: Would you retire?

Post by superbobbyg »

No one can tell you when to retire. You will know it when you feel it. I just retired at 66 at peak earnings from a great position; but I had enough. Enough of the politics, PC and clueless leadership.

I am still finding my way through a daily routine. But I don't miss the early wake-up, commute and the job stress.

As for money, don't underestimate health care insurance costs, inflation and discretionary items. Don't know your family situation (children, etc.) and don't know if you want to leave a legacy.
Personally I think 58 is too young and too far away from SS and Medicare.

You need to make your own decision; do not let anyone make it for you. Especially not "strangers" on this website.

My 2c.
GoFish
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Re: Would you retire?

Post by GoFish »

Make sure your expected expenses include
  • Funding periodic car, computer, appliance, furniture, etc. replacements
  • Unpredictable health insurance premiums if you have to buy coverage on the open market
  • Spending more on travel now that you have more time available
  • Coverage to fund some new hobbies that will come up over time
My financial and lifestyle conditions point to taking SS at FRA. There is little reason to expect our investments to run short for the surviving spouse down the road, and our kids don’t need or expect an inheritance. So I am starting SS benefits at FRA in case I decide to spend like a drunken sailor during my more active years 8-)

Put another way, I am placing quality of life during younger years ahead of maximizing the total SS payout.
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Re: Would you retire?

Post by MOBugeater »

David Jay wrote: Sat May 01, 2021 6:39 pm In almost all cases, for a married couple, the optimal strategy is for the spouse with the higher benefit to claim at age 70 as this benefit will become the benefit amount for the surviving spouse, regardless of which spouse passes first.

In our case, my wife (smaller benefit) claimed @ 62 and I am waiting to claim until 69/70 (depending on a couple of variables).
This is only true if the surviving spouse waits till FRA to claim correct? If lower earning spouse claimed at 62 and higher at 70, then higher passes, the lower earning spouse will not get 100% of higher earners SS but a reduced percentage, correct? Or am I misunderstanding the SS website info?
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Re: Would you retire?

Post by beyou »

:sharebeer
superbobbyg wrote: Sun May 02, 2021 6:58 am No one can tell you when to retire. You will know it when you feel it. I just retired at 66 at peak earnings from a great position; but I had enough. Enough of the politics, PC and clueless leadership.

I am still finding my way through a daily routine. But I don't miss the early wake-up, commute and the job stress.

As for money, don't underestimate health care insurance costs, inflation and discretionary items. Don't know your family situation (children, etc.) and don't know if you want to leave a legacy.
Personally I think 58 is too young and too far away from SS and Medicare.

You need to make your own decision; do not let anyone make it for you. Especially not "strangers" on this website.

My 2c.
One can’t generalize by age.
Some professions such as a doctor, one is in training for so many years, career/money may start years later than others. Others may start making money very young (22 year old CS grads in Silicon Valley). What matters is at what age you have enough and have had enough.

Personally since I was a CS grad, I started making good money at interesting but high stress jobs during undergrad by around 20. By 50 I had 3 decades of hard work and savings under my belt. Had I never married I would have retired long before 50. With college to pay for, kept going, but when that was done, and mortgage paid…I had made it to 35 years. So am I too young in mid-late 50s as I approach the 40 year mark career wise ? I have had too much of mega corp life, long commutes (before covid) and my health coming last after those obligations. I see many colleagues pass in their 50s, time to focus on health more than money and any intellectual stimulation that remains at work (which declines with each year).
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David Jay
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Re: Would you retire?

Post by David Jay »

MOBugeater wrote: Sun May 02, 2021 7:20 am
David Jay wrote: Sat May 01, 2021 6:39 pm In almost all cases, for a married couple, the optimal strategy is for the spouse with the higher benefit to claim at age 70 as this benefit will become the benefit amount for the surviving spouse, regardless of which spouse passes first.

In our case, my wife (smaller benefit) claimed @ 62 and I am waiting to claim until 69/70 (depending on a couple of variables).
This is only true if the surviving spouse waits till FRA to claim correct? If lower earning spouse claimed at 62 and higher at 70, then higher passes, the lower earning spouse will not get 100% of higher earners SS but a reduced percentage, correct? Or am I misunderstanding the SS website info?
No, this is not correct.

I believe that you may be confusing personal benefit with survivor's benefit. Drawing survivor's benefits prior to FRA results in a reduction in survivor's benefits.

My wife filed for her personal benefit at age 62. If I pass before she reaches her FRA, my "after I am gone" letter instructs her continue to draw living expenses from our (now her) portfolio and to wait until her FRA before claiming survivor's benefits.
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Watty
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Re: Would you retire?

Post by Watty »

Hugh Prolly-Wright wrote: Sat May 01, 2021 6:23 pm I may have hit my #. I am 58, have approx. 18X annual salary saved in retirement accounts. If I followed the 4% rule, the balances would throw off about 75% of my current annual salary, but I've been tracking expenses for nearly 2 years, and those come in at around 47% of annual salary.

To fund expenses, a withdrawal rate of 2.7% will sustain our lifestyle, and at 62, if I claim SS, that withdrawal rate drops to 1.5%.
Looking for holes in the plan, but I am thinking there's no reason not to retire.
One big hole is that your expenses that you will need to fund with your investments will be a lot different at different phases of retirement so thinking of percentages or X times expenses will be misleading.

They way that you phrased that is really convoluted so it is hard to tell of you are trying to talk yourself into retirement, or trying to talk yourself out of retirement. :D

Your margin of safety is also very important. If you are planning a bare bones retirement then a shortfall would be a big problem. If you are planning a higher spending lifestyle and would be able to cut your spending by 10 or 20 percent without any big hardship that is a lot different situation.

There is a suggested format for asking portfolio questions so you might want to repost your information using that as a guideline, but you do not need to follow that exactly.

viewtopic.php?f=1&t=6212
Wannaretireearly
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Re: Would you retire?

Post by Wannaretireearly »

beyou wrote: Sun May 02, 2021 7:38 am :sharebeer
superbobbyg wrote: Sun May 02, 2021 6:58 am No one can tell you when to retire. You will know it when you feel it. I just retired at 66 at peak earnings from a great position; but I had enough. Enough of the politics, PC and clueless leadership.

I am still finding my way through a daily routine. But I don't miss the early wake-up, commute and the job stress.

As for money, don't underestimate health care insurance costs, inflation and discretionary items. Don't know your family situation (children, etc.) and don't know if you want to leave a legacy.
Personally I think 58 is too young and too far away from SS and Medicare.

You need to make your own decision; do not let anyone make it for you. Especially not "strangers" on this website.

My 2c.
One can’t generalize by age.
Some professions such as a doctor, one is in training for so many years, career/money may start years later than others. Others may start making money very young (22 year old CS grads in Silicon Valley). What matters is at what age you have enough and have had enough.

Personally since I was a CS grad, I started making good money at interesting but high stress jobs during undergrad by around 20. By 50 I had 3 decades of hard work and savings under my belt. Had I never married I would have retired long before 50. With college to pay for, kept going, but when that was done, and mortgage paid…I had made it to 35 years. So am I too young in mid-late 50s as I approach the 40 year mark career wise ? I have had too much of mega corp life, long commutes (before covid) and my health coming last after those obligations. I see many colleagues pass in their 50s, time to focus on health more than money and any intellectual stimulation that remains at work (which declines with each year).
Well said by both of you. I often think, I started earning/saving earlier, so I should get to finish a bit earlier too!
This time next year, we'll be millionaires!
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Re: Would you retire?

Post by flyingaway »

Retiring or not is not solely a money problem. Money wise you are OK.
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Hugh Prolly-Wright
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Re: Would you retire?

Post by Hugh Prolly-Wright »

Watty wrote: Sun May 02, 2021 9:56 am One big hole is that your expenses that you will need to fund with your investments will be a lot different at different phases of retirement so thinking of percentages or X times expenses will be misleading.
I'm not following you here. Of course things change throughout retirement, but that is the point in having a buffer, no? For us, expenses could rise by nearly 50%, and I'd still be within a 4% withdrawal rate. In other words, this is the margin of safety. Aside from accumulating a yet bigger margin, is there something else?
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JoeRetire
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Re: Would you retire?

Post by JoeRetire »

Hugh Prolly-Wright wrote: Sat May 01, 2021 6:23 pm I may have hit my #. I am 58, have approx. 18X annual salary saved in retirement accounts. If I followed the 4% rule, the balances would throw off about 75% of my current annual salary, but I've been tracking expenses for nearly 2 years, and those come in at around 47% of annual salary.

To fund expenses, a withdrawal rate of 2.7% will sustain our lifestyle, and at 62, if I claim SS, that withdrawal rate drops to 1.5%.
Looking for holes in the plan, but I am thinking there's no reason not to retire.
If I had no plan for what I wanted to do in retirement (other than "not work"), I wouldn't retire at 58.

Consider playing with https://opensocialsecurity.com/ before deciding to claim social security benefits at 62. That way, you'll learn about how much in lifetime benefits you are leaving on the table.
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JoeRetire
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Re: Would you retire?

Post by JoeRetire »

Hugh Prolly-Wright wrote: Sun May 02, 2021 6:09 am
David Jay wrote: Sat May 01, 2021 6:39 pm You are set, but as others have indicated it is probably useful to review SS claiming strategy.
Yes, many are saying to wait till 70, but that assumes no significant changes to the program.
Not necessarily. Waiting until 70 would still be suggested under most changes to the program. That's particularly true if you are they higher earning spouse.

Unless you are afraid of some specific change that would make starting early better, it still makes sense to delay. Do you have something in mind?
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Hugh Prolly-Wright
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Re: Would you retire?

Post by Hugh Prolly-Wright »

JoeRetire wrote: Sun May 02, 2021 7:25 pm Unless you are afraid of some specific change that would make starting early better, it still makes sense to delay. Do you have something in mind?
While the benefit from starting at 70 is higher, does this factor in the 8 years of benefits one gives up by not starting at 62? I ran numbers, and with my proposed benefit, if I assume I live till age 90, claiming later nets me more, however, I never see anyone doing an NPV on those payments. Of course the farther out a payment is, the less it is worth now, so the payments from 62 to 70 are worth more. If changes to the program come along such that those with other assets could "afford to get less" this is a risk I see no estimates accounting for.
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Hugh Prolly-Wright
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Re: Would you retire?

Post by Hugh Prolly-Wright »

JoeRetire wrote: Sun May 02, 2021 7:22 pm If I had no plan for what I wanted to do in retirement (other than "not work"), I wouldn't retire at 58.
I certainly have that. I have many project going, but my day job keeps getting in the way of them!
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Re: Would you retire?

Post by JoeRetire »

Hugh Prolly-Wright wrote: Mon May 03, 2021 6:28 am
JoeRetire wrote: Sun May 02, 2021 7:22 pm If I had no plan for what I wanted to do in retirement (other than "not work"), I wouldn't retire at 58.
I certainly have that. I have many project going, but my day job keeps getting in the way of them!
Sounds good. It's always better to retire TO something rather than just FROM something.
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Re: Would you retire?

Post by JoeRetire »

Hugh Prolly-Wright wrote: Mon May 03, 2021 6:09 am
JoeRetire wrote: Sun May 02, 2021 7:25 pm Unless you are afraid of some specific change that would make starting early better, it still makes sense to delay. Do you have something in mind?
While the benefit from starting at 70 is higher, does this factor in the 8 years of benefits one gives up by not starting at 62?
Yes. That's kinda the point.

If you are the higher earning spouse, make sure to also consider the effects on future survivor benefits as well.
I ran numbers, and with my proposed benefit, if I assume I live till age 90, claiming later nets me more, however, I never see anyone doing an NPV on those payments.
https://opensocialsecurity.com/ does.

90 seems later than the usual age. Might want to check the math.
Of course the farther out a payment is, the less it is worth now, so the payments from 62 to 70 are worth more. If changes to the program come along such that those with other assets could "afford to get less" this is a risk I see no estimates accounting for.
I know of no tools that will attempt to estimate the effects of imaginary, potential legislative changes to Social Security rules. Nor would I recommend worrying about them.

While anything is possible, you don't know if they will happen, you don't know the details, you don't know if you would be grandfathered in, etc, etc. Far too many variables to make this worry the basis of a claiming decision.
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Toons
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Re: Would you retire?

Post by Toons »

The Question Is
Do YOU want to retire?
If So Make It Happen
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SnowBog
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Re: Would you retire?

Post by SnowBog »

JoeRetire wrote: Mon May 03, 2021 7:25 am
Hugh Prolly-Wright wrote: Mon May 03, 2021 6:09 am
JoeRetire wrote: Sun May 02, 2021 7:25 pm Unless you are afraid of some specific change that would make starting early better, it still makes sense to delay. Do you have something in mind?
While the benefit from starting at 70 is higher, does this factor in the 8 years of benefits one gives up by not starting at 62?
Yes. That's kinda the point.

If you are the higher earning spouse, make sure to also consider the effects on future survivor benefits as well.
This is a key consideration, assuming your are married and the higher earner. The other key consideration is the "best use" of social security as "longevity insurance" (helping make sure you don't run out of money if you live longer than expected).

The benefit by delaying until 70 applies to you and your surviving spouse.

To put into a completely made up example (with likely unrealistic numbers, but you'll get the point).

Let's say if you claim at 62 your SS benefit is $30k. Let's have spouse claim at 62 for $20k benefit. You'd have a combined SS income of $50k until you die, and then and then your spouse would only get $10k of "survivor" benefits (your higher income - their income) for a total of $30k.

If you delay until 70, spouse will still get $20k/year - and you'll have a "gap" of what would have been you $30k/year from 62 - 69. But when you claim at 70, your benefit would be closer to $55.5k, for a combined $75.5k/year while you both are alive. Now, if you die at 71 - obviously you didn't come out ahead... But from your surviving spouses view, they'll get $35.5k of "survivor" benefits for a combined $55.5k/year (basically the higher of your individual SS payments) for the remainder of their life, even if that's well past 100...

So unless the spouse with the lower benefits is in bad health and/or unlikely to out live (maybe they are significantly older) the spouse with higher benefits, it's generally best for the higher earner to delay as long as possible.

I guess one other exception might be if both spouses had similar earnings/expected benefits. In that case, the survivor benefit is small. But in my personal case, my spouse made substantially less, so the benefit is quite significant.
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Re: Would you retire?

Post by goodenyou »

Deciding to retire is sometimes the hard part. Having enough money to retire may be a lot easier to achieve. You most certainly have enough money. Maybe not enough desire. Working and getting older allows you to save more and need to save even less. It becomes purely a legacy issue unless you decide to consume like crazy. Personally I have enough, but quitting work is so permanent for me that I’m not ready. Plus, my spouse still works and our kids are out of the house. I think it’s best for me to keep working as well. We want to time our retirements close together.
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Re: Would you retire?

Post by SnowBog »

goodenyou wrote: Mon May 03, 2021 3:53 pm Plus, my spouse still works and our kids are out of the house. I think it’s best for me to keep working as well. We want to time our retirements close together.
My spouse is [slightly] older, and has made clear they "get to retire first" even if it's just for a single day. :beer
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Re: Would you retire?

Post by LadyGeek »

This thread is now in the Personal Finance (Not Investing) forum (retirement decision).

If you decide to retire, I recommend posting in: Roll Call for the Retirement Class of 2021!

It might help you to read through the responses.
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Re: Would you retire?

Post by reln »

Hugh Prolly-Wright wrote: Sat May 01, 2021 6:23 pm I may have hit my #. I am 58, have approx. 18X annual salary saved in retirement accounts. If I followed the 4% rule, the balances would throw off about 75% of my current annual salary, but I've been tracking expenses for nearly 2 years, and those come in at around 47% of annual salary.

To fund expenses, a withdrawal rate of 2.7% will sustain our lifestyle, and at 62, if I claim SS, that withdrawal rate drops to 1.5%.
Looking for holes in the plan, but I am thinking there's no reason not to retire.
Consider adjusting your SS. Spouse with lower earnings record takes SS early (62) and the one with higher earnings record takes SS later (68 - 70).
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Re: Would you retire?

Post by Metsfan91 »

Hugh Prolly-Wright wrote: Sat May 01, 2021 6:23 pm I may have hit my #. I am 58, have approx. 18X annual salary saved in retirement accounts. If I followed the 4% rule, the balances would throw off about 75% of my current annual salary, but I've been tracking expenses for nearly 2 years, and those come in at around 47% of annual salary.

To fund expenses, a withdrawal rate of 2.7% will sustain our lifestyle, and at 62, if I claim SS, that withdrawal rate drops to 1.5%.
Looking for holes in the plan, but I am thinking there's no reason not to retire.
OP, is there a spouse in "our"? If yes, is the spouse onboard with the idea of you retiring? If yes, do you have healthcare during retirement taken cared of? If yes, then yes you can retire. If you start taking SS at 62, your withdrawal rate drops, and your portfolio should grow.

Your post reminds me of a couple. The husband decided to retire. Wife kept asking him, "What are you going to do after you retire?" Wife didn't retire. She was not ready to retire. He retired because he wanted to retire. She filed for divorce. They got divorced. He went back to work doing odd jobs.
“Time is your friend; impulse is your enemy.” — John C. Bogle
Wannaretireearly
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Re: Would you retire?

Post by Wannaretireearly »

goodenyou wrote: Mon May 03, 2021 3:53 pm Deciding to retire is sometimes the hard part. Having enough money to retire may be a lot easier to achieve. You most certainly have enough money. Maybe not enough desire. Working and getting older allows you to save more and need to save even less. It becomes purely a legacy issue unless you decide to consume like crazy. Personally I have enough, but quitting work is so permanent for me that I’m not ready. Plus, my spouse still works and our kids are out of the house. I think it’s best for me to keep working as well. We want to time our retirements close together.
Bingo. Dw recently discussed retiring at the same time in 8 years. Given the travel/trips we'd like to do when the kids are out of the house, it would only make sense to retire at roughly the same time
This time next year, we'll be millionaires!
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