I am 48 years old, single and have lived in different states and held various jobs.
Genetically, I see my life expectancy at about 20 years, since I lost my parents very young. In those 15 years of work, I didn’t own a car or a house. I lived in shared apartments and motels.
In a year I plan to retire and focus more on spirituality and health. I locked a CD at around $150,000 for five years at 3.30% and two CDs at $248,000 each for a month. In my 401(k), I have about $160,000 and other savings of about $40,000 (from my previous employer) in a cash-settled retirement plan that I can take anytime—$160 a month for life or a lump sum of $40,000 USD roll over to an IRA.
I see life is short and I forgot to live myself and want to make the rest of my life on this planet comfortable. I am not a high risk investor. I expect Social Security to be bringing in about $2,000 a month by age 62. What is the best plan for the next 13 years?
See: I retired at 50, went back to work at 53, and then a medical issue put me out of a job: “There’s no safe amount of money”
Congratulations on so many savings, especially considering you’ve moved from place to place and taken on different jobs – that’s a great accomplishment.
Surely you’re not the only one who wishes you enjoyed life more when you were younger. Many people like you are trying to find some kind of balance between living in the moment and paying for the necessities now and in the future. Unfortunately, that means you have to consider how long your money will last and whether it’s worth continuing to earn an income in some way.
First, you need to think about what your annual retirement income will need to be to cover your living expenses, plus emergencies like a health crisis or an unexpected move. Also, ask yourself what your own plan is for that money. Are you just trying to make it through until Social Security kicks in, or do you intend for that money to last you a lifetime? You say that based on your parents’ life expectancy, you’re expected to live another 20 years, but is there anything else to suggest you’ll live to around 68, or is there at least a chance you’ll live longer? These are all very important questions to answer to see if retiring next year is really a good idea, said Brian McGraw, certified financial planner and senior wealth advisor at Hightower Wealth Advisors.
There’s nothing wrong with wanting to enjoy life. So many Americans work so hard every day to make ends meet, and it can be emotionally, mentally, physically, and spiritually draining. But if you’re able to find something that doesn’t feel like it’s going to weigh on your happiness, and it’s generating an income, you might want to consider staying in the workforce a little longer. There’s an added bonus if the job comes with any perks like health insurance, since you’re not eligible for Medicare until you’re 65. Private health insurance can be quite expensive, and not having insurance is a financial and health risk.
Running through the numbers really helps put all of this into perspective, McGraw said. “In many cases, a ‘hybrid’ retirement, in which the customer returns to a part-time employment situation to maintain some income to support their lifestyle while gaining additional free time, can be an effective compromise for the customer retiring early.” but just don’t want the numbers to support their spending targets,” he said.
There are so many different types of jobs out there, and if you’re looking for some freedom, you have a whole world to explore. You may want to use your skills or develop new ones for a job that aligns with your passions or hobbies. For example, someone who enjoys skiing might want to try to find a job at a ski resort or in a mountainous region. Someone who prefers to be on the beach might move to a seaside town and find a comfortable gig there. A person who loves cars might find an opportunity in a car dealership and so on.
Retirement may be the ultimate goal, but you might find that just shifting gears will make you happy. “He should find out what he likes and see if he can make a living from it,” said David Haas, board-certified financial planner and president of Cereus Financial Advisors. “Maybe his goal shouldn’t be retirement, but doing something he loves and making enough money to live his life.”
Want more actionable tips for your retirement planning? Read MarketWatch’s “Retirement Hacks” pillar
I also recommend that you set up an online account with the Social Security Administration if you haven’t already, so you can get a better idea of what benefits you can expect at 62, “full retirement age” or beyond. I know you mentioned that by the time you turn 62, you’d expect $2,000 in benefits every month, but it never hurts to double-check…especially if you’re planning your future around that number.
Take the average Social Security benefit for retirees, for example, which was $1,620 in April, according to the Social Security Administration. AARP estimates that someone born on January 1, 1960 (ie, a 62-year-old) earning an average of $50,000 in income each year would receive a monthly benefit of $1,338 if they were 62 years old Social Security claims $1,911 if you waited to full retirement age at age 67 and $2,370 if you waited to age 70. This is the age at which someone can receive the maximum benefits based on their personal factors.
If you don’t expect to live beyond 20 years, you might not want to wait until full retirement age to apply so you can see the benefit you’ve worked hard for, but the Social Security Administration will use your income history to do so use will give you a clearer assessment of your future benefits. You can create an account here.
Ultimately, your plan depends — at least in large part — on your spending, said Kristin Pugh, a certified financial planner at Creative Planning. After all, you have the most control over it. She also reaffirms to her clients that “health is the best insurance”.
See also: “This is a scary time to retire”: In the age of inflation, there are steps you can take to deal with higher prices
You may also want to consider working with a financial advisor, if only once for a financial review to see if your money is being used appropriately and to help you create a financial plan. I know you said you’re not a high-risk investor, but CDs don’t typically generate the same returns as a properly invested portfolio over time. Markets may not look particularly attractive these days with so much volatility, but a professional can determine your time horizon, an appropriate risk profile, and other factors that can strain your money over time.
You’ll also examine how to protect your wealth from rising inflation, which is reducing Americans’ purchasing power. If your money isn’t growing at a healthy rate of inflation, you’re going to lose more of it over time, even if you’re spending the same amount of money on bare necessities.
“It’s important to have a financial plan and be flexible enough to adapt as your world changes,” said Sean Pearson, board-certified financial planner and associate vice president at Ameriprise Financial Services. “In addition to regular income in retirement, it’s important to have a plan B for additional spending,” he adds.
An advisor can also help you understand how much you should withdraw from your accounts each month, whether it’s better to transfer the monthly payments or the lump sum from your cash balance retirement plan to an IRA, and the tax implications of all of this Decisions.
“When you’re confident that you’re doing enough to save for your longer-term goals like retirement, then you can and should enjoy life in the moment,” says Brittany Mollica, certified financial planner at Hilltop Wealth Advisors. “We’ve seen people in their 60s retiring and getting sick straight away and not being able to enjoy retirement. So I think it’s really, really important not to wait to enjoy life. You just have to find a good balance between the two.”
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https://www.marketwatch.com/story/i-lived-in-motels-and-forgot-to-live-im-48-have-almost-900-000-and-want-to-retire-next-year-what-can-i-do-11654659983?rss=1&siteid=rss I lived in motels and “forgot to live”: I’m 48, have almost $900,000, and want to retire next year. What can I do?