Visiting the Social Security Administration's website to view an estimate of my future benefits was a sobering activity. Faced with a mid-life career crisis, I wanted to figure out if I could still have a happy retirement without working full-time for the next 25 years leading up to my full retirement age of 67. According to a recent article by The Street, it takes a household income of $100,032 during the working years in order to be happy in retirement. Together, my husband and I can pull a 6-figure income. Based on the 2013 Moss National Money and Happiness Study, I need to continue earning a second income until my husband earns more if I we each want to have a happy retirement.
Figuring in our house value
One of the interesting points of the Moss study looked at the house value of unhappy versus happy retirees. The happy retirees had median home values of $300,000 compared to $273,000 for the unhappy retirees. It's only a difference of $27,000. Evidently the people who had their mortgages paid-off, or were at least close to having it paid off, were more likely to be happy in retirement. Thirty-six percent of the happy retirees planned to have their mortgage paid off within 8 years compared to 24 percent of unhappy retirees. If we pay just the minimum on our mortgage, we will have our mortgage paid off by the time we are in our late 50s. It seems a better lifestyle plays a role in how happy people are in retirement, but that doesn't mean we will become move-up buyers before we retire.
Living on half our income
Evidently power savers put aside 20 percent of their income and pay 30 percent in taxes. They essentially live on half their income. In retirement, we want to have at least $50,000 a year coming in. By investing in Roth IRA and Roth 401(k) accounts, we will be spared an income tax bite in retirement since the money can be withdrawn tax free when we are older. According to the Social Security Administration website, I will earn $1,010 a month at age 62, $1,478 a month at full retirement of age 67 and $1,839 a month at age 70. But if I stopped working now, I'd only get $717 a month at age 62. Even with my husband receiving a bigger Social Security check, we'd need to rely heavily on personal retirement savings.
Unhappy retirees make only $73,167 in household income compared to the more than $100,032 household income of the happy retirees. It's a difference of only $26,865 a year or the equivalent of a "second income." Although it would be fun to drop out of the working world in my 40s, it's not worth it to risk retirement misery. I would have thought there would be a great financial divide between the happy and unhappy retirees, but it's really such a small amount of money that makes a huge difference. My challenge is to not only keep working, but pretend that I don't work so I can save my paychecks for the future.
More from this contributor:Fighting Fair About Money
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