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Unhappy retirement conclusion

March 20th, 2016 at 11:17 am

So for a long time I planned to retire at age 60 but transition into retirement by working part-time for at least a few years.

The more I study this particular plan, the more I realize I'd be better off just trying to put in 1 additional year of f/t work at the bank.

Mainly because, when I think about it, there don't seem to be many part-time jobs that would pay more than $15/hr. So based on working a 20 hour work week making $15/hr, I would make more money working full-time for one more year at the bank than I would working part-time for seven years!

Also, I was under the mistaken impression that I could get health insurance at the bank as a part-timer. I learned at some point that no, you have to work at least 30 hours, which is pretty much the same as most other employers.

So the smarter choices would be, after working the expected 3.5 more years til I turn 60:
1. Work 1 more year full time with full benefits.

Or if i absolutely felt i needed a break, I could ask for:

2. Work 1 more year at 30 hours with full benefits.

This would come with a commensurate 25% decrease in salary, I assume, at about $61,500 based on current income. Assuming they even went for it. Assuming they don't lay me off before this time!

8 Responses to “Unhappy retirement conclusion”

  1. ceejay74 Says:

    I've been wondering: what about the unexpected inheritance? Doesn't that enable you to shorten your timeline?

  2. rob62521 Says:

    Is this good or bad? One year instead of transitioning? Granted, part-time jobs are hard to get that pay decently.

  3. PatientSaver Says:

    The inheritance helps, but not as much as you might expect when you're talking about funding a possibly 30-year span. While we're still in probate, i expect it will net out to about $90 or $95K for each of us.

    Rob, in my mind it's "bad" because I so dearly want to quit working now!

  4. creditcardfree Says:

    I can understand your disappointment in the change of plans.

  5. ceejay74 Says:

    I guess my point is that's more than one year of retirement savings -- and you get to put it to work in investments right away -- so it seems like it might take away the need for that last year of work. Unless it's already been worked into your calculations!

  6. AnotherReader Says:

    There's another issue, and that's the cost of medical insurance. If you have employer paid insurance, you are going to be in for an unpleasant surprise when you have to move to ACA insurance. The cost is very high and the co-pays and deductibles make it egregiously expensive. Even if you qualify for subsidies, the deductibles are often as expensive as the insurance itself. If you have not done the calculations for someone aged 60 to 65 with your anticipated MAGI, I would definitely do that.

  7. Dido Says:

    Yes, one more year of full time work would benefit you financially more than several years of part-time work.

    On the other hand, if you are able to keep up the prodigious savings 34K/year savings rate during this time, then if you earn 5%/year, your retirement kitty should be about 985K retiring at 60.

    Switching to a more conservative strategy netting 3% at retirement (you'll note that I am using very conservative numbers here, more conservative than you used), nets you annual withdrawals of 42.5K over *40* years, and more if you adjust your life expectancy downward from 100 to 95 or 90.

    Combined with your Social Security (which has the benefit of built-in inflation adjustments) of at least 24k, that's 66K, more than DOUBLE your current spending of 32K per year. Yes, health care is projected to grow at about 6% per year, but you are concerned primarily with the five years from 60 until Medicare kicks in at 65. Medicare will help significantly with the health care although you will want a Medigap policy as well.

    Social security WILL have some changes, but I think it is unlikely that they will raise the eligibility age further for people over 55 (when they raised it from 65 to 66 back in 1983, it only affected people under age 45, so they gave people 20+ years to prepare for the additional year of work; even though the Republican proposals to raise the age are more aggressive than this, I really think that they would give people at least 10 years to prepare for an additional year increase in the retirement age), and there are a variety of ways they could change the system that would raise more money so that benefits would *not* be decreased. But even if they *did* decrease benefits, the decrease wouldn't be entire, it would be to 75% of benefits and that is currently scheduled to kick in in 2035. I really think you are fretting too much over this. Relax, continue to do that great job saving, and see where you are emotionally, physically, and financially in a couple more years. And don't get caught on "magic numbers" like a million or 4% safe withdrawal rate...those are very, very rough rules of thumb and not comparable to a real retirement plan analysis based on your asset allocation, location, expected longevity, and "burn rate" (spending patterns), which I still suggest you have done in the next year or two by a fee-based Registered Investment Advisor/CFP. (RIAs have a fiduciary duty, but broker/dealers do NOT. If someone's credentials feature their Series 6, 7, 63, &/or 65 licenses and no CFP or CFA certification, inquire seriously into their fees. Those licenses, especially when they are the only financial credentials, tend to be code for "I'm a salesperson" and I will suggest to you those investment options that maximally feather MY OWN next while also nominally meeting your goals."

  8. LivingAlmostLarge Says:

    Are you sure the inheritance doesn't shorten things? What about downsizing your own place? Have you already accounted for downsizing and maybe cashing out equity? Maybe less monthly spending in maintenance/utilities/etc?

    People need less than they think. It's a personal thing to really investigate. Also do you have more in working quarters than taking SS from your spouse? What about taking from spouse, delaying your benefit then claiming your benefit? So much to work around

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