My wife went to college the same year I was in high school. My wife is four years older than me. My family never followed the college path, so that wasn’t an option for me. After high school I joined the army. The same month (before we met) she graduated and went to work, where she started her career in finance.
We met when I was still in the military. While I was in the service, we dated, got married, bought a house and didn’t want to move. So after 8 years I left the army and started my IT career. I completed my studies through night school and now we both have very successful professional careers. Our average career income was about similar, with her earning slightly more overall. Being something of a workaholic, she definitely put in more work hours.
““Our average career income has been about similar, with her making slightly more overall.””
Through good salaries, smart investing, and more than thirty years of diligent 401(k) contributions, we’ve saved enough during retirement and in our stock accounts to countdown to retirement age. We have almost $5 million in savings and retirement accounts, among other investments, so we’re both in a good position to call it quits.
I think we should retire around the same time, her at 62 and me around 58/59. But she says it’s not fair because I’m so much younger. I would also have to work until I was 62. My argument is that we both worked the same amount of time as professionals and should retire around the same time. What are your thoughts? Am I lazy because I want to retire before I’m 60?
Dear young person,
You are different ages, but on the same flight path and in the same time zone. If you can afford to retire at 59 and you want to retire at 59, and it wouldn’t impact your quality of life in retirement, then I say go for it. You do not have to adhere to this decision. You can reevaluate it when you reach that age. I disagree with the reason for your wife’s objections: I would prefer her to object on financial grounds, rather than ‘I worked until I was 62, so you should too’.
The financial argument suggests caution and you should think twice if it forces you to withdraw from Social Security early. Nearly all American workers between the ages of 45 and 62 should wait to collect their Social Security benefits after age 65, according to this working paper from researchers at Boston University and the Federal Reserve Bank of Atlanta. More than 90% of people should wait until they reach age 70, but only 10.2% appear to do so, they said.
To put that into context for your impending retirement, claiming Social Security early reduces household discretionary spending by $182,370 for the average worker nearing retirement, the article concluded. “Optimization would yield a 10.4% increase in employee lifetime spending,” the researchers wrote. “For one in four, lifetime spending gains are more than 17%. One in ten has a profit of more than 26%.”
“I would rather have her object on financial grounds than “I worked until I was 62, so you should too.””
Nearly half of workers (47%) are retiring early, but many cited reasons more serious than yours, according to a report from the Employee Benefit Research Institute, a nonprofit organization based in Washington, DC. Nearly a third cited financial issues, such as a health problem or disability, unrelated to COVID-19, while nearly a quarter said they were retiring due to changes in their business. About 38% said they could afford to retire early.
MarketWatch columnist and contributor Mark Hulbert recently wrote a story about some of the reasons people want to retire early. He cited a study by researchers at Cornell and Duke universities that focused on the “psychological ownership” people have over their retirement accounts. People who agreed or strongly agreed with statements such as “I feel like I have earned these retirement benefits” were more likely to retire early.
That said, your $5 million will allow you to retire at the same time, if not the same age. You are in the top 0.1% of American households. You can travel the world together while you still can, or take cruises while you still can, or join your local golf or country club while you still can, or decide to work part-time after age 59 so that you can both enjoy some to enjoy those things. together, and retire easily. After all, we – or at least most of us – are all temporarily disabled.
With the help of a financial advisor, you can explore your options, what income you would receive from withdrawing 4% (or more) from your portfolio per year, how much you should set aside for an emergency fund and for the long term. care, and whether you should explore options such as an immediate annuity, where you give a fixed amount for a guaranteed income. The bottom line is this: your decision should be based on your budget, not on who had to work the longest.
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