First Person: Irrational Retirement Choices I’m Confronting

Yahoo Contributor Network

My older friends and relatives get emotional when they talk about their retirement plans. I never realized how important retirement choices can be until some of our senior citizen friends began struggling with credit card debt and bills they couldn't pay. In many cases, they made the impulsive decision to retire early because it "felt right." According to a recent article by Next Avenue, new research indicates senior citizens often use misguided logic when deciding when to claim Social Security. I'm confronting retirement choices now that are based on wishful thinking instead of hardcore logic and facts.

Claiming Social Security too early

It sounds nice to be retired at an early age. Some experts even claim men live longer when they retire early. However, it doesn't make financial sense for me to retire earlier than my full retirement age of 66. Owing a ton of credit card debt can be a stressful situation, which is what happens to most people I know who retire at 62. People who wait to collect Social Security receive so much more. I know some of my relatives who retired early had an irrational fear that the government would steal their money if they didn't claim it as early as possible.

Searching for a better job

Retirement researchers say older people have less tolerance for job searches. I know I'd rather rely on my retirement savings than have to compete in a job market with people who are young enough to be my children. I'm working on my job skills by taking computer classes to stay current and competitive. If I'm laid off in my 50s, I need to be able to get retired as quickly as possible. Being jobless may be a tempting reason to retire early, but it's not practical.

Staying out of debt

I've noticed the older some people get, the more ambivalent they are about debt. I've heard some of my baby boomer friends say they are going to run up as much debt as possible and die broke. I think having debt in retirement symbolizes the desire to live it up or live in the moment, but it can backfire. Researchers with the Urban Institute found older adults with debt are more likely to work in retirement. I know people with mortgage debt are especially worried about being able to make it in retirement. It seems illogical to carry mortgage debt or any other debt into retirement. Most retirees can get the kind of return on their money that they pay out to the credit card companies charging high interest. I'm working to pay off my mortgage. I can't always send as much to the mortgage company but should have my mortgage paid off in between the ages of 48 and 53.

By postponing my retirement, paying off my house and staying current with my job skills, I should be able to retire with enough money. I will realistically need more than $1 million to be able to afford health care and to counteract inflation. It's also realistic for me to expect less money out of Social Security because of the struggling system. I just need to make the prudent choices now so I don't end up like my baby boomer friends who are worried about losing the homes and too broke to ever go out.

More from this contributor:

Planning for a Jobless Future After 50

Un Baby Boom Means Less Social Security Later

Living on Half our Income in Retirement

View Comments