I'm asking this on behalf of my mom. She is 62, will be 63 this year. She has always seemed like a person who wanted to work until she couldn't anymore, which seemed reasonable to me since her job is fairly low stress, close to home, and she has been there for ~30 years now (wow!). She recently expressed interest in either fully retiring or at least cutting back her hours in the next 3-7 years (yay!). I've been working with her to slowly cut spending and increase savings (very resistant to big changes, but getting more malleable, so we go at her pace). We've actually made a ton of progress over the last couple years
Not sure if any of this is useful information, but:
Single
She currently makes ~$46,000/year gross.
2014 Taxable Income = $36,000
No state income tax
Trad 401(k) balance = $94,000 (currently working at this company)
Contributes 11% gross income = ~$5000/year (+ 4% employer match) to traditional 401(k)
Trad IRA = $11,000
Roth IRA = $18,000
Cash (money market) = $33,000 (yes, working on getting more of this invested)
Home equity = $120,000
No debt
Net worth (including home equity) = $295,000
Take-home pay (less 11% to 401(k), health/dental, taxes) = $1370/check (biweekly)
Monthly expenses = $1400-$1600/month
Big outflows of money in 2014 - she paid off her car ($16,000) and house ($15,000) balances. Most of that should be easily redirected toward savings this year. My (our?) goal for the year for her is to drastically increase 401(k) and/or IRA contributions (401k has great expense ratios [0.04, 0.03 for her current investments] and Vanguard funds available). Both Trad and Roth IRAs transferred to Vanguard last year.
My biggest question is: if she were to take Social Security now, she would get $1,300/month; at 66, $1660; and 70, $2200.
1) If she took it now, could she put the equivalent amount of money ($15,600) in her traditional 401(k) and/or trad IRA and avoid taxes on that (for now)?
2) Do you forsee any tax issues (ie bumping to higher bracket) once she hits RMD age? I'm assuming she would be done working by then, but possibly working part-time.
3) Other (better?) options for her to stop working? Expenses are a work in progress.
Feel free to ask other questions, and I can also provide more information if needed.
Thanks!!
Edited to add:
She has been married twice, divorced both times (last time in 1994)
She is in good health, aside from breast cancer (6 years remission), and high blood pressure (controlled with lifestyle/medications). She stays active on a regular basis. One of those people that everyone thinks is at least 10 years younger than she is. Her dad is still alive at 96 years old, her mom passed after a bad fall when she was maybe 85? All siblings are alive and healthy, she is the middle of 7.