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MY HUSBAND WAS STILL working at age 65 when he went into heart failure. After heart surgery, he wanted to return to his job as the warranty administrator at a large New Jersey auto dealership. But we worried that the commute would be too taxing. He traveled 55 miles each way to and from his job, and it could take hours and be treacherous when the weather was bad. When additional complications ensued from the surgery, we decided it was time.
As many others can attest, we don’t always get to choose when we retire. Sometimes, the time is decided for us by circumstances over which we have no control. My husband and I didn’t have everything in place for the retirement we wanted. Still, our nest egg was sufficient. We knew we’d be fine because of prudent planning throughout our marriage.
I had already retired five years earlier to care for my mother, and was receiving Social Security benefits. When my husband reached his full retirement age, he filed for Social Security spousal benefits based on my earnings record, taking advantage of a now-disallowed strategy known as “file and suspend.” Later, at age 70, he filed for benefits based on his own earnings record—a benefit that was larger thanks to the delayed retirement credits he’d earned in the meantime.
I was covered under my husband’s health insurance while he was working. But with his sudden retirement, we both needed to get coverage through Medicare, including purchasing Medigap insurance. Don’t skimp on this. Good health care coverage—along with sufficient savings—are essential to your peace of mind and well-being in retirement.
One wrinkle in our plan: What would be our primary source of income? There were no large balances in either our Roth or traditional IRAs. At the time, there was no 401(k) available through my husband’s employer. Instead, through his union, there was a cash-balance plan, but it was not a pension or retirement benefit.
Instead, it was defined as a “security fund.” When an employee retired or left the job, the balance in the plan could be used for whatever purpose the employee wanted. You could use it for retirement—but it was not lifetime retirement income. Rather, it had to be distributed in equal increments over 10 years. For instance, if the balance was $500,000, you would receive $50,000 annually for 10 years. After each payment, there was no interest paid on the remaining balance, lessening the value with each passing year.
Still, we were in good shape, thanks to the payout from the plan, along with investment income and Social Security. But we got killed on federal and state taxes. The latter was especially painful, since states often don’t tax retirement income—but the payouts from the security fund weren’t considered retirement income and hence were fully taxable. Meanwhile, it took some research just to be able to properly report this arcane income on our 1040 tax return.
One rule of thumb says you only need 80% of your preretirement income to maintain your standard of living later in life. As someone who is well along in the retirement pipeline, I disagree. As our retirement has progressed, our property taxes and health-care costs have soared.
Often, I hear folks express regret for what they gave up by taking an early retirement package. But seldom do they make much of what they gained. Sometimes, those intervening years we spend accumulating more just aren’t worth it. Meanwhile, by retiring earlier, we gain precious time for leisure, travel, friends and family. As the poet Ernest Dowson wrote, “They are not long, the days of wine and roses.”
While our decision to retire was easy, it was overshadowed by concern for my husband’s health. Indeed, we didn’t get the active retirement we envisioned because of major health issues for both of us. On top of that, we took care not only of my mother, but also of my husband’s brother and his parents. What other retirees spend on travel, we spent on family—though I did manage one memorable cruise.
Still, I think it’s a beautiful world and I get small pleasure from each day. And we have each other—a blessing not given to everyone.
Marjorie Kondrack loves music, dancing and the arts, and is a former amateur ice dancer accredited by the United States Figure Skating Association. In retirement, she worked for eight years as a tax preparer for the IRS’s VITA and TCE programs. Check out Marjorie’s earlier articles.Want to receive our weekly newsletter? Sign up now. How about our daily alert about the site's latest posts? Join the list.
Too many times we only read about how we need to retire at 72 to get the most out of Social Security. I find this absurd because I have known way too many people who never got to enjoy their retirement. These people only worked until their mid 60s and died a few years after that. Looking forward to retiring at 61 and encouraging people to do the same.
There’s no point in claiming Social Security any later than age 70 — that’s when benefits hit their inflation-adjusted maximum. While dying in their 60s is unfortunate, it’s also pretty rare for those who make it to retirement age. I’d encourage readers approaching retirement age to check on their life expectancy before claiming Social Security early:
https://www.ssa.gov/oact/population/longevity.html
What a wonderful attitude. I’m glad you’re still finding life worth living. As you know, I retired at 53 and have never regretted it. I’d have more money and a bigger SS monthly check if I’d continued to work, but as the ad used to say, the experiences were priceless.
You made the right decisions, Kathy. Your travel experiences were enriching and rewarding. We’re all waiting to hear about your CCRC experiences and wish you a smooth Transition.
Thanks! I paid the remainder of the entry fee yesterday, move-in is the 26th. Now, if the USPS would just recognize that the building exists…..
Thanks, as always, Marjorie, for your inspiring article. And thanks to my fellow commenters, for a good start to my Wednesday.
Linda, you’re welcome and thank you for your positive comments.
Marjorie, despite some tough curve balls thrown your way, you and your husband have endured, and with your positive attitude intact. That is a real accomplishment.
The theme of your article reminds me of something I once heard:
Question: “What’s God’s favorite joke?”
Answer: “But God, I had plans!”
It is true, Andrew. Our lives don’t always turn out the way we hoped they would. But to those who worry excessively I say, “He has his eye on the sparrow and He keeps close watch on you,”
Thank you for your always uplifting remarks.
Tip: even a dollar of extra income can boost annual Medicare premiums, but refunds of these surcharges are sometimes available. If. you have withdrawn funds you needed to pay for medical expenses and can tie the expenses in with the year your income triggered the surcharges, you may be able to get a refund, per Laura Saunders of the Wall St. Journal.
Keep good records. A lot depends on who reviews your case and documentation. It always pays to ask. Call Social Security and request a “reconsideration review”
You make a great point Marjorie about health in retirement. Our health is so important and sometimes people work too long, and their retirement activities are limited due to health issues.
I am not too limited by my health but my wife has serious mobility issues which limits our travel options.
However, as you said, this is a beautiful world and there are still many pleasures within it.
Jerry..you have a good attitude. Instead of thinking of all the things we can no longer do, we should be grateful for what we are still capable of. It does make our way easier.
It’s important for those of us who have been very fortunate to be brought back to the reality of others lives that haven’t gone as planned.
Your view of life is a model for others.
Thanks for your kind words, Dick. Appreciate your comments.
Thanks, Marjorie. Good lesson that we don’t always have the time we imagine—sometimes life surprises us. Your poem reference reminded me of another poem that I think of when I catch myself too full my own grand plans,
Ed–Thanks for your comments. Its OK to dream big and aspire to lofty hopes. I think you have the stuff it takes to make them come true.
Thanks for an engaging story Marjorie. It’s sounds like you two handled some difficult challenges with grace.
I’ve never heard of an employer plan such as you described. How did you end up reporting it on your income tax? Did the administrator of the plan provide a 1099-Misc or something like that?
Rick, how did I know it would be you who would ask this question? As someone who has an avid interest in tax preparation, I knew you would be curious.
And yes, the pay out was reported on our 1099 misc. The problem was it didn’t fit into any of the other income categories. I contacted my husbands union and it was determined that the payout was a “union benefit”. I still couldn’t reconcile it on the tax return, so I attached a copy of the 1099 misc. And wrote in on the other income line on the 1040 what the union had said…union benefit.
I had to send it through the USPS. Oh. It’s still wasn’t not good enough for the IRS. I obtained more detailed information from the union, in answer to the IRS inquiry, which seem to satisfy their questions.
we also had to save money from the payouts as they only lasted 10 years.
Thanks Marjorie. I’m sure you saw many unusual things during your AARP VITA career. The endless complexity of the tax code never disappoints. Thanks for the reply.
It was interesting! Meant to also say that right after my husband retired, they did away with the cash balance benefit and adopted a 401k plan.
Thanks for your comments.
Thank you, Marjorie. Is there anything that you wish you had done in your 40s to prepare for this surprise retirement? I sure would like to learn from your experience!
Jamie,
I know you didn’t ask ME but I’ll offfer advice to you. And everyone else for that matter.
If there is any chance at all you will be moving from your ‘forever home’ – NOT ‘aging in place’ – start getting rid of … stuff NOW! Doing it when moving while in your late 60’s was – is – a nightmare.
I’m living that nightmare now and wondering how I’m going to make it another day.
It actually DOES get a bit easier most every day. Usually 3 days forward … one day backwards.
Taking time out to be with family and friends – and meet your new neighbors and finding them friendly too – helps a lot.
Getting out of ‘the new place’ now and then along with trying to establish some new routines has helped us.
Good Luck! As hard as it may seem to believe it does get better.
Yes, Jamie. In fact there were things I wish I had done, well before my 40s. Women of my generation usually worked a few years after marriage and then started a family. Marriage was the primary goal. I was not farsighted enough to realize I would be working for General Motors for 26 years. They had an excellent Pension Plan. It would have been a big boost.
IRAs. 401Ks were. not then available. Even CDs weren’t introduced in the US market until 1964 but I did take advantage of them.
In looking through my yearbook, the number of graduates who said their goal was to get their M.R.S., to be like mom, or to get married was overwhelming. Remember when the Dixie cups sang “Going to the Chapel” /and we’re going to get married.
Given the mindset of most, I still feel I was a woman before my time
Jamie..in case I didn’t make myself clear, my mistake was in not signing up for GMs pension plan when I became eligible.
Thank you
My teenage daughter’s ultimate goal is to stay at home with a family. But, she recognizes she needs a plan B, so she’s choosing a career that will support her if she never marries, and one she thinks will allow her to flex in and out of the workforce.
Ed, from what I know of your. daughter, the Latin Scholar, Plan B will be no problem for her and your guidance will be invaluable.