Author Topic: There is a minimum retirement age!  (Read 5641 times)

ThreeWheeler

  • 5 O'Clock Shadow
  • *
  • Posts: 10
There is a minimum retirement age!
« on: April 26, 2019, 08:59:02 AM »
My company is switching between pension plan providers. While exploring the new provider's website I found their 'can you retire' calculator and though why not!

Filled out all the fields, hit submit and... ERROR!

Turns out my target retirement age of 45 is not an acceptable value. Absolute Minimum retirement age? 50

\_(ツ)_/

ysette9

  • Walrus Stache
  • *******
  • Posts: 5985
  • Location: Bay Area, CA
    • Insert Snappy Title Here (Journal)
Re: There is a minimum retirement age!
« Reply #1 on: April 26, 2019, 09:04:19 AM »
Ive run into a lot of online retirement calculators that suffer the same fatal flaw. Another common one is only allowing retirement spending to be some large percentage of pre-retirement income.

EricEng

  • Bristles
  • ***
  • Posts: 304
  • Location: CO
Re: There is a minimum retirement age!
« Reply #2 on: April 26, 2019, 12:13:07 PM »
Mine is same.  Min retirement age is 50.  Min % of pre-retirement income is 50%.  Makes it fairly worthless.

Telecaster

  • Handlebar Stache
  • *****
  • Posts: 2005
  • Location: Seattle, WA
Re: There is a minimum retirement age!
« Reply #3 on: April 26, 2019, 12:24:52 PM »
Ive run into a lot of online retirement calculators that suffer the same fatal flaw. Another common one is only allowing retirement spending to be some large percentage of pre-retirement income.

Or they don't allow savings to be some large part of current income.   

Hunny156

  • Bristles
  • ***
  • Posts: 469
Re: There is a minimum retirement age!
« Reply #4 on: April 26, 2019, 02:42:35 PM »
I work for one of those large financial companies that handles 401k's.  According to their calculators, the lowest default age is 62!  Guess they'll be surprised in a few years when I do it in my mid to late 40's...

ixtap

  • Handlebar Stache
  • *****
  • Posts: 1636
Re: There is a minimum retirement age!
« Reply #5 on: April 26, 2019, 02:48:53 PM »
I work for one of those large financial companies that handles 401k's.  According to their calculators, the lowest default age is 62!  Guess they'll be surprised in a few years when I do it in my mid to late 40's...

Everybody is average!

I wonder if it is ever tied to company policy? The only advantage of retiring from megacorp is that you keep your RSUs on the same vest schedule. But DH would have to work another 15-20 years to be eligible. Maybe if 401ksRus has a similar policy, that is where they set their calculator? Still, isn't 62 average retirement age? Shouldn't we be expecting a few folks to retire before then?

eyesonthehorizon

  • Stubble
  • **
  • Posts: 125
  • Location: Texas
Re: There is a minimum retirement age!
« Reply #6 on: April 30, 2019, 11:44:11 PM »
Mine's like this too. I eventually sent their management a pointedly worded email because in addition to shutting out those of us who budget reasonably (I say this because iirc our lowest-paid eligible participants make 2x minimum wage) they're making planning less accessible for people with eldercare, childcare, or disability-related early retirement needs. Ableism and sexism are more tangible and politically costly than discriminating against rare unicorn savers.

NorthernMonkey

  • 5 O'Clock Shadow
  • *
  • Posts: 85
Re: There is a minimum retirement age!
« Reply #7 on: May 02, 2019, 03:48:47 AM »
The calculator from my pension provider has 3 options for post retirement spending. they are 50%, 60% and 75% of pre-retirement wage.

If I select the 50% option, that assumes my spending will almost double on the day I retire


markbike528CBX

  • Handlebar Stache
  • *****
  • Posts: 1214
  • Location: the Everbrown part of the Evergreen State (WA)
Re: There is a minimum retirement age!
« Reply #8 on: May 02, 2019, 03:54:51 AM »
The calculator from my pension provider has 3 options for post retirement spending. they are 50%, 60% and 75% of pre-retirement wage.

If I select the 50% option, that assumes my spending will almost double on the day I retire.

Ding ding ding, MPP!

ysette9

  • Walrus Stache
  • *******
  • Posts: 5985
  • Location: Bay Area, CA
    • Insert Snappy Title Here (Journal)
Re: There is a minimum retirement age!
« Reply #9 on: May 02, 2019, 09:02:13 AM »
Mine's like this too. I eventually sent their management a pointedly worded email because in addition to shutting out those of us who budget reasonably (I say this because iirc our lowest-paid eligible participants make 2x minimum wage) they're making planning less accessible for people with eldercare, childcare, or disability-related early retirement needs. Ableism and sexism are more tangible and politically costly than discriminating against rare unicorn savers.
I really appreciate that you did that and made it clear why. Things are more likely to change for disadvantaged groups when the majority/advantages group takes up the cause.

NorCal

  • Pencil Stache
  • ****
  • Posts: 780
Re: There is a minimum retirement age!
« Reply #10 on: May 02, 2019, 09:11:04 AM »
These are always fun.  My favorite was my alert from personal capital saying 1% of people in my age cohort had saved more.  Should I save more to catch up to them?

In defense of the pension plan, maybe part of the definition of the pension plan is the earliest age in which you can receive benefits?  I'm sure a number of people would consider it false advertising if they had a calculator that showed a possibility of receiving benefits before the plan would allow payouts.

spartana

  • Pencil Stache
  • ****
  • Posts: 902
  • FIREd at 36? Or maybe it was 42?
Re: There is a minimum retirement age!
« Reply #11 on: May 02, 2019, 10:57:35 AM »
^This. Most pension plans have a minimum age you can start collecting benefits - 50, 55, 60 whatever. That doesn't mean you can't quit your job earlier and retire, just that you won't get paid any benefits until you reach the minimum age. I retired at 42 knowing I wouldn't be able to get my government pension until 50 or later.
« Last Edit: May 02, 2019, 11:00:56 AM by spartana »

Cassie

  • Walrus Stache
  • *******
  • Posts: 6007
Re: There is a minimum retirement age!
« Reply #12 on: May 04, 2019, 11:06:42 AM »
Some states let you retire at any age once you have 30 years of service.

eyesonthehorizon

  • Stubble
  • **
  • Posts: 125
  • Location: Texas
Re: There is a minimum retirement age!
« Reply #13 on: May 09, 2019, 08:03:30 PM »
Although it's true that there's a minimum age when you can receive benefits from most retirement plans, the problem with associating the age of benefit eligibility with the minimum retirement age on the plan calculator is that it then assumes you will keep contributing until that age - which is typically something you can only do so long as you remain employed through that particular employer - so the entire calculation is then thrown off by that erroneous input.

ChpBstrd

  • Handlebar Stache
  • *****
  • Posts: 1689
Re: There is a minimum retirement age!
« Reply #14 on: May 09, 2019, 08:39:17 PM »
One reason is probably what we keep telling ourselves on the investment side of this board. Annual investment performance is easier to predict over long timeframes, like 10 or 15 years, than it is over short timeframes like 2 or 4 years. In the next couple of years, the markets could be up 40% or down 40%. What good does such a calculator do by applying multi-decade average market returns to a short, volatile timeframe? GIGO.

Another reason is the employers who hire these companies might not appreciate them revealing to senior, top-producing employees how they could retire next year by maxing out their 401k instead of spending the next 5 years working and contributing 5%.

spartana

  • Pencil Stache
  • ****
  • Posts: 902
  • FIREd at 36? Or maybe it was 42?
Re: There is a minimum retirement age!
« Reply #15 on: May 10, 2019, 08:18:16 AM »
Although it's true that there's a minimum age when you can receive benefits from most retirement plans, the problem with associating the age of benefit eligibility with the minimum retirement age on the plan calculator is that it then assumes you will keep contributing until that age - which is typically something you can only do so long as you remain employed through that particular employer - so the entire calculation is then thrown off by that erroneous input.
I've only seen that on SS website calculators - and even then you can put in a bunch of zeros for the years (decades?) you don't work or contribute into SS to get a more accurate number. My former government employer pension plan calculator just had a # of years worked times highest paid year and age you plan to retire. There was no assumption you would continue to work more years then you stated in the calculator. Prior to quitting my job at 42, I knew what I'd get if I started my pension at 50, or 55, or whenever based on the years worked and my highest years pay.

eyesonthehorizon

  • Stubble
  • **
  • Posts: 125
  • Location: Texas
Re: There is a minimum retirement age!
« Reply #16 on: May 14, 2019, 11:32:15 PM »
I've only seen that on SS website calculators - and even then you can put in a bunch of zeros for the years (decades?) you don't work or contribute into SS to get a more accurate number. ...
What you've seen is then quite different from most retirement calculators I've seen aimed at the mass market, perhaps partly because it's a government pension. Just running the numbers on the assumed plan value using my own employer's (private 401k, as others had discussed upthread) plan calculator makes it very clear that it anticipates employees will
1. not retire until, at minimum, age 50
2. continue contributing at the same percentage of the same income until that date, with no option to add years of non-contribution between the present and age 50 (no exploring other jobs, let alone take time off to raise kids, take care of elders, travel, or be unwell; mush, doggies!! grind until you drop!!)
and, aside from this
3. that you would retire to withdraw each year a percentage of your current income not less than 50% (recently amended to allow dollar amounts, an unexpected step in the right direction!)

... Another reason is the employers who hire these companies might not appreciate them revealing to senior, top-producing employees how they could retire next year by maxing out their 401k instead of spending the next 5 years working and contributing 5%.
Oh, man, I truly wish I didn't find this so plausible. They are on the employer's payroll, after all.

NorCal

  • Pencil Stache
  • ****
  • Posts: 780
Re: There is a minimum retirement age!
« Reply #17 on: May 15, 2019, 08:26:16 AM »
One reason is probably what we keep telling ourselves on the investment side of this board. Annual investment performance is easier to predict over long timeframes, like 10 or 15 years, than it is over short timeframes like 2 or 4 years. In the next couple of years, the markets could be up 40% or down 40%. What good does such a calculator do by applying multi-decade average market returns to a short, volatile timeframe? GIGO.

Another reason is the employers who hire these companies might not appreciate them revealing to senior, top-producing employees how they could retire next year by maxing out their 401k instead of spending the next 5 years working and contributing 5%.

Honestly, the most likely reason is they hired some web developer at the lowest rate possible while giving them an unrealistic deadline and minimal guidance on what the end product should look like.  That's the corporate America I know.


martyconlonontherun

  • Stubble
  • **
  • Posts: 229
Re: There is a minimum retirement age!
« Reply #18 on: June 25, 2019, 09:08:44 AM »
Yeah, just came on here to say that Well's Fargo is at 60% of pre-retirement income. I'll need less than that now and I'm still paying off student loans, car loans, and a mortgage. in 10 years, I won't have 2 for sure (Mortgage and student loans) and the car loan will be only temporary for the first 3-5 years of a car i plan to keep for 8.