I'm always disappointed when I hear television personality Suze Orman warn callers that they don't have enough money saved for retirement. She often urges people to keep working for as long as possible so they have more money. In order to figure out what my life would look like in retirement, I crunched the numbers for several different retirement scenarios including early retirement. What financial experts sometimes fail to recognize is that not everyone needs an extravagant lifestyle in retirement. I only need money for medical expenses and the basic necessities. I'm also willing to live in a lower middle class to middle middle-class neighborhood.
Retiring at 50
One scenario that I find appealing is to move from full-time to part-time by the time I'm 50. Some of the downsides include the fact that I would have a lower Social Security payment when I'm older. However, I would eliminate some stress in my life. I'd have more flexibility with my time. In order to semi-retire at 50, I'd need to have my house and car paid off. However, I'd have to depend on my husband's income. Also, we would have to use part of his income to fund my Roth IRA.
Retiring at 55
If I waited to retire until I'm 55, I could access my 401(k) without any penalties. I rolled over my 401(k) to a regular IRA after changing companies. However, I did start a new 401(k). I am hoping that if I contribute 10 percent of my income for the next 15 years, I'll have a small nest egg that I can use to live on while I wait to receive Social Security checks.
Retiring at 62
Waiting until I'm 62 to retire doesn't really appeal to me because I wouldn't be that far away from my full retirement age. If I am going to stop working early, I'd rather quit at age 50 or 55. However, if I did wait until I'm 62, I could get a reduce Social Security payout. According to the Social Security website, I'd only get $1,010 a month if I retire at age 62. To me, that's disheartening considering I've worked since I was 16.
Retiring at 67
At my full retirement age, the "my Social Security" site claims I'd earn $1,478 at my current earnings rate. I was somewhat shocked by how low my benefit would be. At the same time, I know the system is tilted so that people who earn substantially less than me get a greater benefit compared to their actual pay. To me, that means I need to save more in my Roth IRA and other retirement accounts.
Retiring at 70
At age 70, I'd get $1,838 a month. I can live on that amount of money even though it wouldn't replace what I earn right now. Also, I'm concerned because some experts say Social Security benefits will be reduced by 30 percent for my Generation X. That means, I could receive as little as $1,287 from Social Security or the equivalent of what I would have received by retiring in my early 60s.
After looking at my different retirement scenarios, I'm committed to working until my full retirement age of 67. I'll also have to save as much as I can in my Roth IRA. Turns out, Suze Orman was right on target.
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- Retirement Issues
- Employment & Career
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