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IT TOOK FIVE FALSE starts to write this column. Each time, I’d inundate readers with information. So, here’s a sixth try.
Have you ever seen those questions to financial advisors on the internet that say, “I have [insert dollar amount]. Can I retire?”
How the heck could the advisor give a reasonable response? To answer the question, it takes more than simply knowing how much you have in the bank. You need a lot of personal and financial information to make the decision to retire. Much of it has to do with personality and family situation.
Let me tell you how I decided to retire at 60. Retiring at that age wasn’t my plan. But I came to the decision that it was for the best. Here’s why.
I’ve generally had at least two or three jobs for most of my working life. I’m not a workaholic. But you do what you have to do when you have a good wife and five kids.
My wife Cindy and I have contributed to 401(k)s and IRAs for decades. She stayed at home to raise our kids for 12 years and she’s nine years younger than me. She works at a local bank as a teller. Cindy plans to work until age 59.
Our ace in the hole for retirement has been my pension from 43 years of active and primarily reserve military duty. The pension started at age 60, increases each year with inflation, is larger than my future Social Security check and includes a family medical insurance plan through Tricare. We have no debt and we had two children in college at the time I retired. Both were covered by scholarships then and both are now employed.
My last civilian job was working as an accountant for a company that printed magazines. Well, paper and ink had a good 2,000-year run, but that has been rapidly ending with the invention of the internet. The company had been dying a slow, painful death. That’s just the way it was.
Many jobs were done away with over the years. But that was not the case with me. I watched folks above and below me get pink slips. Then their work would fall on my desk. I seemed to have had two important attributes: I could get the job done and I was a bargain. I never got paid overtime because I was salaried, and yet I did endless overtime.
All the overtime and stress at a company that appeared to be on the road to bankruptcy was affecting my health, with high blood pressure and other medical problems. But I just couldn’t seem to pull the trigger and retire. The plan was to bank my military retirement checks and work until at least age 65.
Then one Sunday, which was routine for me, I was at the plant and a supervisor I knew came by my desk. We got to talking about retirement. I mentioned that I could retire if I wanted to. I had run the figures once, and then had a financial advisor see if he agreed. He did.
My friend looked at me in astonishment and said, “Ken, why are you here on a Sunday if you can retire? This isn’t a dress rehearsal for life. This is it. You don’t get a second chance.”
He was right. If you enjoy what you’re doing, then by all means continue to work. It will probably extend your life a lot more than retiring. But if you have the means to retire and you really don’t like what you’re doing, it’s time to go. The extra money you make might not pay for the medical bills that could result from your decision to stay. You only have a limited number of years in what I call your “life bank.” Don’t spend most of this bank account doing something you don’t want to do.
Retirement worked for us. Our marriage got stronger by bringing down our family stress level. I do all the housecleaning, laundry, dishes, mowing, grocery shopping and 1,000 other little tasks around the house. Cindy trusts me with everything but cooking. Smart girl. All Cindy has to do is commute two miles to work and come home in the evening. Also, we eat out a lot. Smart boy.
Sometimes, retirement is the best answer.
Ken Begley has worked for the IRS and as an accountant, a college director of student financial aid and a newspaper columnist, and he also spent 42 years on active and reserve service with the U.S. Navy and Army. Now retired, Ken likes to spend his time with his family, especially his grandchildren, and as a volunteer with Kentucky’s Marion County Veterans Honor Guard performing last rites at military funerals, including more than 350 during the past three years. Check out Ken’s earlier articles.
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Great read and good decision. You’ve worked very hard for many years, time to enjoy these years!
Your sixth try is a winner. I retired back in March, a couple of days before my 67th birthday. I worked for family (not my family thankfully) business. Since 2020 there has been a lot of family drama. Things got really bad last summer. July 2022, I went to the ER (almost passed out at work) with my BP 200/110. (I’m on BP med now and it’s under control.) My boss at the time was forced to leave the company and I was targeted shortly thereafter. I had hoped to finish out 2023 but things came to a head in March and I said “no more.” I had been diligently saving and have a small pension from a previous job, plus 401(k) and IRA. After crunching all the numbers, I realized I would not be increasing my social security by much if I stuck it out. Plus I realized that with the pension and social security I am making about the same as when I started with the company 7 years ago. I am happy with my decision. Hubby is still working, from home. I have been able to work on things that I’ve been putting off, i.e. cleaning out the basement, yard work, among other things. It’s just not worth it to sacrifice my health to try to please others.
Great article Ken. My wife and I also retired well before 65 because our jobs were adversely impacting our health. We were very fortunate in that we worked for a company that allowed one to retire and receive a pension after 30 years. That was always our goal and we started an aggressive savings plan in our early thirties to enable us to get there. Interestingly enough, I was an avid reader of Jonathan Clements articles on investing in index funds and that is where all our savings went. That investment strategy allowed us to assume that the historical growth of the market would on average be around 6 or 7%. We built our saving plan using that average. One might ask, how did we know what was needed and if we were on track? Well I looked at our annual spending for several years. I then built a spreadsheet that plotted that spending until our mid 90’s. Our spending was projected to grow 3% annually and I threw in periodic major expenditures that happen to everyone over time, i.e. new car, new house, medical expenses, etc. I then projected how much our savings needed to grow to stay well ahead of our spending, recognizing at some point, work income would end, and at that point our pension, savings, and social security would have to offset the spending.
It was a great way to see how we were doing annually. Most years were great because our savings stayed ahead of our projections. But, that was not always the case, my spreadsheet showed us falling behind during the market swoons. During those periods, we didn’t touch our investments, we assumed the historical average would eventually prevail. When the market came back, so did our progress against the required projections. I guess you can say we are a perfect example of what Jonathan had shared for many years: invest in index funds, maintain a balanced portfolio, and trust that over time the market will yield its average. We will always be grateful to Jonathan for sharing his infinite wisdom.
In relation to your article of being able to retire before the job does one in, in all likelihood one will need to be a dedicated saver and a disciplined spender. Having surplus funds as you reach your 60’s gives one flexibility to live the remaining years of your life in relative peace.
Made a similar decision this year as well. I’m 59 and have taught high school math for 34 years. The stress in education, primarily administration, has worn on me. Luckily, I have a state pension that pays 55% of my final salary, with yearly inflation adjustments…so yesterday was my final day!
Congrats on your retirement!
Congratulations on your retirement. I hope others are inspired by your story and do what’s best for them rather than experience the one more year syndrome. One’s “life bank” is a limited amount of time with a subset of that, healthy years, even smaller.
Congrats on your decision, Ken, and well done to take to heart the advice of your friend. But it’s not just about the “years” we have left… it’s about the days. Everything can end at ANY moment.
Oddly, that awareness caused me to make the opposite decision. In 2016, with stage 4 cancer and apparently facing my last year or two of life, I sorted my priorities and discovered I didn’t really want to retire, that I enjoyed my work-from-home career too much to stop. My wife and I did pack in a lot of traveling, but in between I worked nearly full time.
Thanks to a breakthrough treatment I beat the cancer, and I’m still enjoying working, long past when I originally planned to retire.
Congratulations on seeing the light. Envy you that COLA’ed pension.
“All Cindy has to do is commute two miles to work and come home in the evening.” All? Isn’t she working in between the commutes?
Very good column. I was in a similar situation in my fifties. Many people were laid off. Those that were left like me got their work. After getting off a late night phone call from work and my BP being 180 over 100 and spending a good part of my previous vacation having to work, my wife convinced me to retire. My pension wasn’t going to get any higher and the company would continue to allow us to stay on their health insurance plan at the same rates we had while I was working. So, I retired and we are both glad I did. I’ve taken over doing all the shopping.
It was worth the time and effort for the rewrites, Ken. You nailed it. Great piece, and a wise choice to optimize your limited “life bank” resources.
“If you enjoy what you’re doing, then by all means continue to work. It will probably extend your life a lot more than retiring. But if you have the means to retire and you really don’t like what you’re doing, it’s time to go.”
This seems like common sense but your story confirms it’s easy to lose sight of this.
I was brought up by parents who taught me that I should do my best to give 110% worth of value for my salary.
I retired at 60 because I felt that I could no longer do that.
I worked in Information Technology for close to 4 decades and I couldn’t keep up with the latest developments in my chosen area of Database Administration.
The decision was a bit easier for me as we had/have 0 debt and were/are “empty nesters”.
My wife continued to work for 3 more years because she really enjoyed her co-workers. (She thought the job itself was dreadful) Finally, in her case, a “new” management team was installed and she called it quits.
in Illinois COBRA allowed us to keep our health insurance until we turned 65. Of course we did have to pay the employer’s share of the premiums. OUCH!
———
Even though I am ardently opposed to Socialism … keep your filthy hands off my Social Security and Medicare! 🤪
Just a note for others to consider in the future. COBRA health insurance is rarely a good deal. You pay over 100% of the actual cost. For most people retiring before 65 a ACA plan, perhaps with a federal subsidy because of lower income is a better deal before Medicare.
For those who retire early and are healthy I discovered that with ACA plans at least in NH (premiums are different in states for the same level of coverage ie Gold, Silver, Bronze) if a married couple keeps their taxable income below 40K Bronze plan premiums are negligible (<$20). We also get a rebate check each year that results in us being paid to have health insurance.
How is that possible?
Per the ACA law insurance companies have to spend at least 80% of the premiums on actual healthcare reimbursement. So if they only spend 75% they have to rebate the 5% difference to the policy holders. Each policy holder gets the same amount regardless of the premiums they pay. This is to limit the insurance companies from gouging their policy holders.
Since my wife and I are healthy a bronze plan is sufficient. Only one year when I incurred an ER visit have we been in the red for our overall healthcare costs.
I was planning on ACA, but then thought if I paid for one year of cobra, it would be a year where i could do a $100K ROTH conversion. I was wondering if Cobra for 12 months was worth it for this reason alone.
My 401K is 1.2MM so I figure it could be approaching 2MM by the time 70 comes if I left it alone. This large conversion now would get a chunk out of the way.
Once i get on ACA with subsidies, my ROTH conversions would be much smaller and I’d have to watch every dollar of income.
What do you wise folks think about this?
Thanks Ken. Retirement is a very personal decision and it is not always about “the number”.
Your friend gave you some great advice and you were smart enough to follow it.
Enjoy your retirement.
Sounds like a solid and reasonable plan for life to me. Enjoy what you have earned.
You are right, there is no one magic number to determine retirement.
My wife trusts me to do all the stuff you do except I’m not allowed near the washer and dryer, but I do all the cooking.
Great article, Ken! And great first name, I might add. I’m looking to retire in a few months at 61 after 38 years at one place, but have decided to have an encore career doing the parts of my current job I enjoy while (mostly) avoiding the less fun stuff.