I get this question from friends and clients from time to time. It can be a complicated decision, but I have helped clients retire several times over the last 22 years. So, I hope that I can be of help. If you would like to talk about your situation, I would love to meet you. Just follow this LINK to find a time that works for you.
Today, most workers have a lot of control over when they retire. Most of us no longer have pensions or other programs that dictate how we retire. That’s great news. You have a choice. The bad news is that YOU must choose.
I talk with clients about the three decisions involved in what we traditionally think of as “retirement.”
- When to stop working the BIG job? This job pays well but might be stressful. It might NOT allow for the flexibility you prefer.
- When to stop working ANY job? After the BIG job, you might consider consulting, or a part-time or hobby job that allows you to earn some income but have more joy and more flexibility.
- When to start drawing on retirement savings? Just because you change jobs or reach a specific age does NOT mean you must begin drawing on your retirement savings. Careful planning around this process can make a big difference.
- Beginning Social Security at age 62 is possible, but it means about a 50% reduction in the total benefits the typical person receives.
- Beginning Social Security at age 70 means your benefit is as large as possible. And that larger base will grow with annual cost-of-living adjustments.
- Some of your retirement money might be available before age 70 to bridge the gap to Social Security.
If you were born before 1970, like me, you probably have a voice in your head saying that you are SUPPOSED to retire at age 65. When we were kids, most people retired at 65. Many of those folks had pensions that triggered full benefits at that age. But today, the choice to downshift from the career-oriented job is typically not based on age.
As you try to choose when to make a change, I suggest that a great place to start is to take stock of where you are. Here are some questions to answer:
- What is my projected Social Security benefit at full retirement age? Check at www.ssa.gov.
- What are the current balances in my retirement accounts?
- 401k at the current employer.
- 401ks at old employers.
- IRA (traditional and Roth)
- Inherited IRAs from family.
- How is my retirement money invested? Will it grow fast enough, and will it be safe?
- How secure is my current job? Do I love it? What work would I like to do next?
- How is my health?
- Do I have chronic health conditions?
- Do I have relatives who died young, or lived long?
- What does a week look like after I am done working for money?
- Where do I want to be?
- What do I want to do?
- Who do I want to be with?
- What do I think it would cost today?
You might find that some of these questions are daunting. That’s OK. This is a great and wonderful phase of life. It IS a big deal. And, maybe, you would benefit from some fiduciary advice from an experienced and well-trained financial planner. If so, I would love to visit with you. Follow this LINK to find a time that works for you. We can take a few minutes to get to know each other and maybe I can help you decide what you want to do next.
I am a financial planner who is an advocate for my clients all the time—a fiduciary financial planner. I provide guidance based on clients’ best interests, not commissions or sales quotas. I think it’s the best way to serve clients and I am thrilled to work this way all the time.
And yes, I’m still taking on a few great families to be part of my financial planning practice in West Saint Paul, Minnesota, and, thanks to Zoom, across the country.
Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.