Author Topic: Early retirement or just wait till 55?  (Read 3422 times)

Canuck44

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Early retirement or just wait till 55?
« on: May 18, 2015, 08:36:19 PM »
I am 40 and can retire at 55 with a company pension (which gets better if I stay to 60 or 65 but I've already decided age 55 is the longest I'll stay).

I can otherwise aim for early retirement, but even then, it may take 10 years or so.

Anyone else in the same relative situation? Is extreme frugality for the next 10 years the way to go if it only will shave off 5 working years?

What about the reduced pension value if I leave at 50? Do you take that into account when planning on retiring early?

kpd905

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Re: Early retirement or just wait till 55?
« Reply #1 on: May 18, 2015, 08:42:27 PM »
How much of your expenses will the pension cover at 50 vs. 55?

Canuck44

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Re: Early retirement or just wait till 55?
« Reply #2 on: May 18, 2015, 08:53:59 PM »
How much of your expenses will the pension cover at 50 vs. 55?

Without going into detail of the exact amounts, the pension at 50 will be able to cover my expenses, IF, I continue to live frugal lifestyle that allows for retirement at 50.

The pension at 55 however, will allow for a less strict frugal lifestyle...and by that, I can/will spend less time 'counting every dollar' so to speak.


KungfuRabbit

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Re: Early retirement or just wait till 55?
« Reply #3 on: May 18, 2015, 09:25:45 PM »
Hard to say without $$s.

But, what will make you happier, retiring earlier or more spending money?

There is also C) part time work.  Cover the smaller pension by working 15 hrs / week...at least until SS kicks in.

frugaldrummer

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Re: Early retirement or just wait till 55?
« Reply #4 on: May 18, 2015, 09:36:32 PM »
I'd say, be very frugal for the next ten years, THEN decide.  Either you'll find you've adjusted nicely to a frugal lifestyle and want to go ahead and retire at 50, or you'll decide you're fine working another five years and will splurge some of your extra savings on travel, or, God forbid, you'll find yourself at fifty with health problems that make retirement a necessity and be glad you saved enough to afford it.


Ziggurat

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Re: Early retirement or just wait till 55?
« Reply #5 on: May 19, 2015, 05:47:50 AM »
I'm ten years ahead of you ... my plan is to continue working for around two more years, then ER but live off our own savings, part-time income etc. for as long as possible. If we need to, I can take the pension at 55.  If we don't need it, I can keep deferring it and get larger monthly payments for life when I eventually do take it.

We can withdraw our stash at much higher than the usual 4%, as it only has to last a few years.

Since you have ten years, you have time to build up some money to live on, then quit but defer taking the pension to a more normal retirement age with less reduction.  Of course you won't have as many years contribution into the pension, so you have to adjust the numbers your pension statements tell you.  They always assume that you work until the moment you take the pension.

Remember too that you can take a little more risk in your own investments, because the pension is very low-risk.  With a relatively short time horizon I would not go all stocks, but you can certainly have a higher ratio than normally recommended when 5-10 years away from using the money.

catccc

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Re: Early retirement or just wait till 55?
« Reply #6 on: May 19, 2015, 07:30:54 AM »
Ten years is a long way away, a lot can be saved in 10 years.  I say just live a life you are comfortably frugal with, and re-evaluate in a few years.

teacherwithamustache

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Re: Early retirement or just wait till 55?
« Reply #7 on: May 19, 2015, 02:28:06 PM »
I am a bit in the same boat.  15 years from now the house will be paid for, the kids out of college, and the wife and I will be eligible for 9K a month total pension for the rest of our lives.  So do we save 40-60% now to retire 6 years earlier and miss out on the security of the pension that is just 6 more years away?  Or save 15-20 % a year wait all of the 15 years and collect the pension?

In your specific case I would decrease the savings rate and live more now.  Then when 55 comes live off of Pension and whatever part time/contract work you could find.  While letting your retirement account continue to compound.  Then hopefully have your IRA double in the additional 10 years of compounding.