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Need opinions/advice, etc

Posted by ReaderPhil (My Page) on
Thu, Jun 26, 03 at 12:54

I will probably be eligible for an early out retirement that my company will be offering. I am really on the fence about this. I know I will lose--for starters-- over $300 a month if I left now as compared to staying till my normal retirement time and age. My health insurance premium would immediately jump to about 4 x what I pay now. I would also lose out on adding to my company investments, IRA, etc. My working expenses are very low so that wouldn't help much. I think I can count on rent, utilities, car maintenance etc going up no matter what I do. However--if I left in Feb 2004, I would be gaining 3 years of freedom. My financial health is saying, "Stay!" but my mental health is saying go (I think it's already retired and the body is just showing up for work!) and the physical health doesn't know what to think. There is also the factor if I wait it out till April 2007 the retirement requirements could change and I would be expected to stay longer--not even a possibility. Any thoughts would be appreciated--there has to be things I haven't considered. Thanks for your help-sorry this is so long.


Follow-Up Postings:

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RE: Need opinions/advice, etc

I'd say go for sticking it out if your health benefits will be picked up with 'full retirement'. If the health benefits terminate no matter when you retire, 'get outta dodge' since mental health tells you to. Seen two people drop dead within 2 weeks of 'hanging in' till they can retire. That's two people too many.


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RE: Need opinions/advice, etc

Phil,
My DH retired early. When he decided to retire at 62, because the stress at work was getting worse and worse, the company offered him a severans (sp?) pay for nine months, with full insurance bennefits during the severans time. He was also able to collect SS during that time. After the severans pay ran out we had to pay all the medical. Getting a policy away from the group policy was a big savings, but That is the one thing that makes our finances difficult now. He is now 63, so in two years he will be on Medicare, that will help a lot. I have always been a Stay-at-Home so I don't have money coming in or bennefits, and it will be another five years before I rec. SS and Medicare.

Money is tight now, and we expect it always will be, but he has never regretted retireing early. If he had it to do over again, he would do it the same.

We are the kind of people that were never able to take big vacations (a big one for us was a week of camping at a lake) and although I was hoping that in retirement we would "See the Country" realistically life is still the same. We are able to go some, just nothing big, but we just aren't "big time" people anyway. We have our house and yard to take care of and that is more fun with more time to do it, but we keep very busy. DH often says the old saying, I don't know how I ever found time to go to work!

If you need it for the mental relief, I think that is worth giving up some $$$. Once you make that decision there will be a load of stress off your mind.
What ever you decide, I hope you have a long pleasant retirement.
Hayjud


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RE: Need opinions/advice, etc

Hi ReaderPhil,

Do either of you have skills or interests that might be marketable, on a part-time basis? Preferably that you could operate when and as long as you choose. Local or possibly via internet. Even so, do you have an inclination to get involved in such activities?

If provided at a distance, it's handy if it can be skills rather than product, for they can be transmitted easily by e-mail. And no necessity to order, pay for, insure, store, suffer losses due to deterioration, changes in style, theft, etc. or pay for shipping, etc.

Some people are less inclined to pay "good dollars" for printed stuff, though, than for a product that they can touch, eat, drive to the store, put on the mantel, etc. They have become more used to it in recent yearss, as we've become used to paying larger proportions of income for services rather than almost entirely for products, as was true in earlier generations.

A few dollars per month reduction in drawing down one's investments means that more is left in the kitty to continue earning against needs on (a) future rainy day(s). Especially important in days when rates of return on investments are low and the investment amounts themselves liable to shrinkage, as we have experienced in recent years, to the surprise of newbies in the investment game.

Good wishes for wisdom as you make your plans.

joyful guy


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RE: Need opinions/advice, etc

I would say it depends on what you will draw if you retire early. If it is enough to live on and pay the health insurance, go for it. If you can't afford the insurance or if you can't live on the income of early retirement...stay.


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RE: Need opinions/advice, etc

Hi again, ReaderPhil,

You need not only enough to cover living needs and health insurance now - but provide some extra current income to add to your nest egg in order to maintain your purchasing power.

As you know - $10,000. now won't buy nearly as much as $10,000. did ten years ago.

Financial Rule of 72 says that if you divide your rate of growth into 72, it will tell you how many years it will take your asset to double. So, if inflation runs at 3%, in 24 years your current asset of $100,000. will have a value of only $50,000. in terms of current dollars' value (assuming that you used all of the returns in the years between).

Some years ago a local psychiatrist, who'd asked me if he could retire early, was less than overjoyed when I reported that not only could he not reire early - it would be difficult for him to retire when the usual time arrived.

In his financial calculations he'd neglected to allow for the ravages that inflation exacts on our assets annually.

Good wishes to you and yours,

joyfyul guy


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