Quitting Early

Kristine Hayes

I CELEBRATED MY 50th birthday a few weeks ago. Since then, I’ve found myself spending a lot of time thinking about numbers. Specifically, I’ve been musing about when I might be able to retire from my current fulltime job. Age 55, 58, 62? Or will it need to be later?

Several studies suggest the age at which most people leave the workforce has been steadily rising over the past several decades. This is likely due, in part, to folks living longer, having insufficient money saved for retirement and an increase in the age at which people are eligible for Social Security benefits. Still, many people continue to retire at a relatively young age. While the term “early retirement” is sometimes reserved for those who leave the workforce before reaching 65, the average retirement age for women is currently estimated to be 62, while for men it’s 64.

For the past few years, I’ve been planning my exit strategy. Each year, around the time of my birthday, I reevaluate and update my plan. Here are some of the key variables:

Health coverage. I’m fortunate to have qualified for a unique early-retirement health care benefit offered through my employer. If I leave my job after I turn age 55, I can maintain my current health insurance coverage until I’m eligible for Medicare at 65. My employer will continue to cover the cost of my insurance premiums until I’m 65 and, after that, it’ll make contributions towards the cost of any Medicare supplement plan I choose.

Social Security. I’ve been working fulltime since age 25 and part-time for six years before that. Because Social Security benefits are based on a worker’s highest 35 years of earnings, I’d receive a higher monthly benefit if I continued to work fulltime until age 60.

Retirement account earnings. This is the biggest question mark. The current value of my retirement portfolio is about $280,000. I will also be eligible for a small pension. Until I leave my job, I’ll continue to contribute approximately 25% of my salary to my employer’s retirement plan, in addition to the 10% contribution my employer makes. Depending on how the stock market performs—I currently use an estimated return of 6% a year—I should have a substantial nest egg to draw from within a few years.

Cost of living. Once I leave my job, I plan on moving to an area with lower housing costs than Portland. I use an online cost-of-living calculator to estimate how much less it would cost me to maintain my current lifestyle. Depending on which part of the country I move to, my cost of living could be 25% lower.

While I still don’t know exactly when I’ll leave my nine-to-five job behind, having a plan allows me to analyze my options—and gives me something to aspire to.

Kristine Hayes is a departmental manager at a small, liberal arts college in Portland, Ore. Her previous articles include Social Insecurity and Site Seeing (Part II).

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