I used to think my full retirement age was 66. When I found out that workers born after 1960 couldn't receive all their Social Security benefits until age 67, I realized I needed to write down my retirement timeline based on accurate information and sensible predictions. Since the oldest members of Generation X were born in 1960, none of us can get our full benefits before turning 67. Some of the members of the slacker generation plan to work until they are 80 or beyond. According to a U.S. News & World Report article, people can take advantage of different retirement "rights of passage." I have written down what I can do at different stages of my life in order to prepare for retirement. I have another 25 years before I will retire, but I can make choices now so I don't outlive my retirement income.
Living on one income in our 40s
We are choosing to live on one income in our 40s so that we can direct most of the money I make into our retirement accounts. My husband contributes to a regular 401(k) account and I contribute to a Roth 401(k) account so that we will have a balance of taxable and tax-free income in retirement. Although we tried to fund Roth IRA plans in our 30s, we ended up using the accounts more as emergency rather than retirement funds.
Making catch-up contributions
In our early 50s, we plan to make catch-up contributions to our retirement accounts. In our 30s and 40s, we had to raise our two children and pay for college tuition. By the time we are in our early 50s, we should be empty-nesters without as many expenses related to the children. We also plan to make one final push to have our home paid off in our 50s. We may send in an extra $500 a month so that our mortgage is paid off by the time we are 52 or 53.
Being forced into early retirement
Although we would like to work until we are 67 or older, we know that job layoffs are always a possibility. If I lose my job in my mid-50s, I am prepared to take penalty-free withdrawals from my 401(k). At age 59 and a half, I can take money out of my Rollover IRA without penalty, but will owe taxes. If we are living on one income, we should be able to afford to pay the taxes. If we are fortunate enough to each have jobs in our late 50s, we will continue to save and invest.
Delaying Social Security
By the time we are in our 60s, we will not have a mortgage payment. Ideally, we will have two jobs. If we take Social Security at 62, our checks will be reduced by at least 25 percent, according to the U.S. News & World Report article. Moreover, experts say members of Generation X can expect a reduction of benefits by 25 to 30 percent due to Social Security crisis. We will delay taking benefits until our full retirement age of 67. My husband says he intends to wait until 70 since Social Security benefits increase by 7 to 8 percent each year between age 67 and 70.
Our retirement timeline is somewhat flexible because we have to account for variables that we can't control. I'm not as worried about having enough money to go on an Alaskan cruise or the New Generation Cane with GPS, Bluetooth and Wi-Fi on the handle. I just want enough money so that I can live comfortably in my home until I'm pushing 100. By having a realistic retirement timeline, I think we will be fine.
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