Retire now or a few years down the road? A not very mustachian quandry

[ChrisLansing]

In about a year I'll be 62 and elligible for SS, albeit at reduced rate.   My wife already draws SS (full) and is about 10 years older than me.   I would like to spend some time with her, rather than work until 66yrs, 4months, which is my "full" retirement age.   At that time she'll be 76 and while she's in good health now who knows what the future holds?   It seems sensible to retire at 62 and enjoy our golden years while still in good health.   

This is a not very Mustachian quandry because we came late to financial management after a lifetime of doing what so many people do -piling up debt.    No debts now, but not much in the way of a "nest egg" either.   I'll provide numbers later.   62 would be "early retirement" to me.  I won't (didn't) fire at 33 like so many of you.    House is paid for, cars are paid for.  CC is used only so I don't carry cash and is paid off every month.     

At 62 my pension (good old fashioned defined benefit pension) and SS will be about $50 more, per month, than my current take home.    So, one thing that keeps going trough my mind is that if we can live now (and we can) then we'll be able to live on my retirement (pension/ss) at 62. 

Some numbers, rounded off;     

-Total "fixed" expenses per month (utilites/car ins./ property tax/ etc.)  = $1,200 per month  Groceries and Household items car repairs and gasoline are not included.   Currently we allow about 800 to 1000 for these items (I think we could tighten up on this)

-Total income, $3,000 per month. 

So, about 800/mo "surplus" though we really only manage to save about $5k per year.   So we have some money going out that we have not really accounted for.     (Some of it surely is going to operate two cars.   We'd go to one car immediately when I retire).

403b (I set this up in addition to my pension) is currently about $20K.    Vangaurd/roth IRAs about $15K  Wife's 401K about $45K    Obviously our retirement will be mostly pension/SS with the retirement plans mainly there to cushion unexpected expenses - though we will have to take minimum distributions.   

My wife and I both have lifetime health insurance coverage after retirement, courtesy her employer.     

What concerns me is I can't predict future rises in expenses.   There's some margin between income and expenses but not a big margin.  If I wait untl 66yrs/4mos, my pension and SS will, together, increase a total of $700/mo. which gives a better cushionn against rising expenses.   

Complicating the matter is the fact that I like my work.   I'm not "counting down" the years/months until retirement.  In fact I'm kind of afraid of the whole idea.   

I've thought about working PT if I retire at 62.   That would give me some cushion and allow us to sock away some savings.   As I said our income would be about the same (actuallly slightly more) at retirement at age 62.  Anything I could earn (staying under the Threshold so I don't get SS reduced) would be an income gain.    But I'm not sure there's that much opportunity at my age.   

I know you can't make the decision for me, but I wonder if I've missed something?   What am I not seeing ?   Am I just afraid of change? 
 

[Gimesalot]

For me there are too many parts to understand.  Perhaps if you were more clear:

My Pension monthly: $XX
My Wife's Pension: $XX
My Wife's SS: $XX
Actual (not guestimate) monthly expanses: $XX

Total Savings: $XX
My SS @ 62: $XX
My SS @ 66: $XX

[dandarc]

Since you've got a year until you're planning on retiring, you should spend some of that time really figuring out where your money is going.

Agree with Gimesalot - break down the income, expected SS, and all of your expenses and see where you're at.  Also try to figure out what income / expenses would look like if one of you passes earlier than expected - if it is more than 12 months from your first SS check, you're pretty well stuck with your election, assuming I'm reading this correctly (https://www.ssa.gov/planners/retire/withdrawal.html).

[SwordGuy]

I turn 60 in a couple of months.  My wife is 10 years older, also.

I'm retiring in the spring for the exact same reason.

If you can work part time or seasonally at need and make $10,000, you could probably make it work for awhile.

One thing I NEVER see discussed in FI articles or blogs is what happens when one spouse dies? 

You'll go from 2 Social security checks to 1.   What happens to your budget then?   If you're still in good shape, go for it.
If not, get some cushion asap and then go FI!

[BDWW]

I turn 60 in a couple of months.  My wife is 10 years older, also.

I'm retiring in the spring for the exact same reason.

If you can work part time or seasonally at need and make $10,000, you could probably make it work for awhile.

One thing I NEVER see discussed in FI articles or blogs is what happens when one spouse dies? 

You'll go from 2 Social security checks to 1.   What happens to your budget then?   If you're still in good shape, go for it.
If not, get some cushion asap and then go FI!

I haven't really looked into it(SS, way too young yet), but I was under the impression there was a survivor's benefit? Something where you received a portion of your spouses SS?

[ChrisLansing]

OK, I can break down pension/SS

Wife's SS = 906.   

No pension.   

401 = 45k, no distributions as of yet (for technical reasons that aren't reallly relevant to the retirement decision)   Not planning to spend the distributions for the next several years.   We look at this as more of an emergency fund rather than a source of retirement income.    Once the 401 distributions start the taxes will be taken out.  We are not obligated to actually spend the $.

My ss/pension
SS @ 62 = $1011
SS @ 66 = $1458

Pension @ 62 = 829
Pension @ 66 = 1082

Retire @ 62 (ss + Pension) = 1840
Retire @ 66 (ss + Pension) = 2540

My current take home = 1790

Since my wifes ss isn't affected, our total income if I retire at 62 is $2746   at 66 it would be $3446  So the question boils down to this - do I work 4 more years for an extra $700 month?  This is the way I'm leaning. 

No need, that I can see, for more exact figures on monthly billls.  I could list each individually and give an accurate number  (I keep running totals and dividing a years worth of bills by 12)  but to what advantage?  In sum, the monthy bills round off to $1200  It's not a guess in the dark.   The decison doesn't hinge on whether the bills are $1200 or $1177.43   The expenses go up over time of course.   (both home ins. and car ins. went up significantly over the past year)
 
Admitedly we are not keeping close track of discressionary spending.    It will take time to be able to track these accurately -more time than the life of this thread.    We do need to get a handle on where this money is going, I agree.   As we begin to track this more accurately we may find someplace to cut spendiing.    We know however that we are saving, on avg. $416/mo (5K per year)   We also know that we must eat and buy gas etc. so while tracking our spending will help determine where our money is going it seems unlikely we'd find more than a few hundred dollars per month to save.   Instinctively I feel that a good portion of this goes to car operation.  Time and tracking will tell.

The decision is indeed rather final.   If I retire "early" I am forever stuck with a lower ss payment.   

[JoJo]

Just because you retire doesn't mean you have to take your SS now.  Can you get by on the wife's SS + your pension for a few years to boost your SS amount?   That might be a good middle ground.

[ChrisLansing]

I turn 60 in a couple of months.  My wife is 10 years older, also.

I'm retiring in the spring for the exact same reason.

If you can work part time or seasonally at need and make $10,000, you could probably make it work for awhile.

One thing I NEVER see discussed in FI articles or blogs is what happens when one spouse dies? 

You'll go from 2 Social security checks to 1.   What happens to your budget then?   If you're still in good shape, go for it.
If not, get some cushion asap and then go FI!

My understanding is that if both spouses are collecting SS,  then if one dies the other gets the dead spouses benefit.    If I haven't misunderstood then income won't change once I'm retired. 

If you don't mind my asking, can you retire at 60?   My understanding is 62 in the minimum age to collect ss.   Perhaps you don't need the SS immediately.     

[The Fake Cheap]

Since my wifes ss isn't affected, our total income if I retire at 62 is $2746   at 66 it would be $3446  So the question boils down to this - do I work 4 more years for an extra $700 month?  This is the way I'm leaning. 

The decision is indeed rather final.   If I retire "early" I am forever stuck with a lower ss payment.   

I'm not sure I would put in 4 more years, for the extra $700/mth, maybe if you were 32, it may be worth sticking it out a few more years, but not at your age (no offense intended).  Both you and your wife have your health now, I would enjoy this time, and cut back a little, it sounds like you should be able to find somewhere to cut back  if you aren't tracking expenses closely.  Perhaps split the difference and maybe work 1 or 2 more years?  Just my 2 cents.

[ChrisLansing]

Just because you retire doesn't mean you have to take your SS now.  Can you get by on the wife's SS + your pension for a few years to boost your SS amount?   That might be a good middle ground.

It's an interesting thought.   In round numbers I'd do without about $1K per month by not filing for SS.  We probably could get by but it would be tight w/o much margin for error.   I could make up the difference with a PT job, at least in theory.    I like the idea of retiring at 62 and working PT -in my situation that actually increases my total income, but I don't llike the idea of counting on a PT job at my age - could be very hard to find.  Employers don't like gray hair.         

[ChrisLansing]

Since my wifes ss isn't affected, our total income if I retire at 62 is $2746   at 66 it would be $3446  So the question boils down to this - do I work 4 more years for an extra $700 month?  This is the way I'm leaning. 

The decision is indeed rather final.   If I retire "early" I am forever stuck with a lower ss payment.   

I'm not sure I would put in 4 more years, for the extra $700/mth, maybe if you were 32, it may be worth sticking it out a few more years, but not at your age (no offense intended).  Both you and your wife have your health now, I would enjoy this time, and cut back a little, it sounds like you should be able to find somewhere to cut back  if you aren't tracking expenses closely.  Perhaps split the difference and maybe work 1 or 2 more years?  Just my 2 cents.

No offense taken.  Splitting the difference may be the thing to do.   I have not run the numbers on retiring at say 64.   My pension would go up a little by working another couple years.    I will look at the SS website and Pension web site and see what splitting the difference would do.     Good idea.

[Norsky]

I am sure that when a spouse dies, the survivor gets either their own benefit or the deceased spouse's benefit, whichever is higher. They do not get both. Also, when thinking of a surviving spouse, be sure to pick the appropriate survivor benefit for the pension.

[Laura33]

OK, I can break down pension/SS

Wife's SS = 906.   

. . . .

My ss/pension
SS @ 62 = $1011
SS @ 66 = $1458

Pension @ 62 = 829
Pension @ 66 = 1082

Retire @ 62 (ss + Pension) = 1840
Retire @ 66 (ss + Pension) = 2540

My current take home = 1790

Since my wifes ss isn't affected, our total income if I retire at 62 is $2746   at 66 it would be $3446  So the question boils down to this - do I work 4 more years for an extra $700 month?  This is the way I'm leaning. 

No need, that I can see, for more exact figures on monthly billls. I could list each individually and give an accurate number  (I keep running totals and dividing a years worth of bills by 12)  but to what advantage?  In sum, the monthy bills round off to $1200 . . . .
Admitedly we are not keeping close track of discressionary spending.    It will take time to be able to track these accurately . . . .    We know however that we are saving, on avg. $416/mo (5K per year). . . .   

The reason to track in more detail is that you first reported $2000-2200 in total monthly costs, with a potential retirement income of $3000.  But your savings suggests that your monthly costs are more like $2600, and your income at 62 would be closer to $2700.  There is a pretty significant difference between those two scenarios.

I am generally in favor of enjoying your time together while you can.  But this is way close.  And what happens when one of you dies?*  Seems like you need both SS to make ends meet; how will you or she get buy for years, or even decades, with one SS and your pension (or whatever survivor rights your pension gives her)?

I think I would look seriously at those expenses to see what you can cut.  Every $100/mo. you can cut is $30k less you need saved to cover your expenses forever.  And also look seriously at part-time work -- yes, if you retire before your full retirement age and earn more than a certain amount you lose some of your SS benefits, but you get those back as an increased payment later on down the road.  See https://www.ssa.gov/pubs/EN-05-10069.pdf.  So that is one way to "retire" now, earn some money while still using SS to supplement your earnings, AND increase the size of your checks after you reach full retirement age.  What about asking your current employer for a part-time schedule -- would they be amenable to that?

*Norsky is correct.  I am 100% sure that when one spouse dies, the other receives either his/her own benefit, or the deceased spouse's benefit (the survivor benefit), whichever is higher.

[dandarc]

One thing I NEVER see discussed in FI articles or blogs is what happens when one spouse dies? 

Yeah - that definitely is something to consider.  I suspect the reason is that mostly in the FI blogosphere, you're usually talking about very early retirement - usually the target retirement age is between 30 and 50.  Since social security, and many pensions are so far off, the planning tends to ignore those things.  If you've got a 'stache that will most likely support 2 people indefinitely, surely it will support one person similarly.  Social Security is a margin of safety and not a huge part of the primary retirement plan for the target audience.  For planning for truly early death, you'll usually something on the spectrum between "my spouse is a badass - will be fine if I die (MMM)" or some flavor of term life insurance (I'm more in this camp).

But the OP is retiring at a more normal age, with a closer to normal financial situation.  So as you pointed out - planning for a surviving spouse scenario is very important in addition to the "does retiring work at all right now?" question.  Looks like a surviving spouse will have to deal with around 1/3 of their income going away - that is a big deal and needs to be considered.

Should have mentioned upthread - if I were OP, I'd be inclined to pull the plug now for the reasons stated.  But I also think OP would do well to really look at spending in detail, because it appears it is pretty close on the projected budget.

[mcneally]

I am sure that when a spouse dies, the survivor gets either their own benefit or the deceased spouse's benefit, whichever is higher. They do not get both. Also, when thinking of a surviving spouse, be sure to pick the appropriate survivor benefit for the pension.

This is correct. (I hate that this forum doesn't have up/downvotes requiring this type of comment).

[SwordGuy]

I turn 60 in a couple of months.  My wife is 10 years older, also.

I'm retiring in the spring for the exact same reason.

If you can work part time or seasonally at need and make $10,000, you could probably make it work for awhile.

One thing I NEVER see discussed in FI articles or blogs is what happens when one spouse dies? 

You'll go from 2 Social security checks to 1.   What happens to your budget then?   If you're still in good shape, go for it.
If not, get some cushion asap and then go FI!

My understanding is that if both spouses are collecting SS,  then if one dies the other gets the dead spouses benefit.    If I haven't misunderstood then income won't change once I'm retired. 

If you don't mind my asking, can you retire at 60?   My understanding is 62 in the minimum age to collect ss.   Perhaps you don't need the SS immediately.   

Source that shows you get the greater of your benefit and your spouse's benefit if one of you dies, not both benefits:

https://www.nasi.org/learn/socialsecurity/widowed-spouses

I can retire at 60 because I do not need to collect SS to be able to afford to do so. :)    I'll start collecting from somewhere between age 62 and 70, depending on ... whatever.   Most importantly, whether my disabled step daughter will be able to switch to my SS from her dad's and whether my check would be larger.

[Catbert]

I am sure that when a spouse dies, the survivor gets either their own benefit or the deceased spouse's benefit, whichever is higher. They do not get both. Also, when thinking of a surviving spouse, be sure to pick the appropriate survivor benefit for the pension.

This is correct with regard to SS.

[Kay-Ell]

Your current household income is $906 (wife's SS) + $1790 (your take home pay) = $2696/month.  Based on your $5k/year savings rate, I extrapolate that your monthly expenses average out to $2279.33.month.  If you retire now, you're household income will go up by $50, and your expenses may lower by $100 or $150 due to the cost of owning and operating a second car.  That could in theory bump your savings from $5000/year to $7,400.  In addition, you'll make some money from selling your second car.  Now perhaps other expenses will go up.  For instance, will you want to travel more?  Where will your health insurance come from prior to 65?

Now if you keep working until 66, you'd almost triple your annual savings (from $5000 to $14000 if my calculations are correct).  That's definitely some insurance against inflation, and if true savings can go toward replacing one spouses income when one dies (hopefully not for many, many years).

Question: can you begin drawing on your pension while working part time for the same company?  If yes, here's what I'd do.  I'd answer the health insurance question, and if I was still secure in my ability to retire on current SS/Pension income I'd go to my boss ready and willing to retire outright, and let them know I needed to go down to working part time.  If you can draw on your pension at the $829 rate, you'd only need about 1/2 of your current take home pay to maintain your current budget and savings rate.  You keep socking away your $5k/year into savings.  In 4 years, of having 1/2 of your time back to spend with your wife, you can retire fully with a 403b/IRA/401k balance of $100k.  Your monthly income will go up to $906 + 829 + 1450 = $3185 which would afford you almost another 6k in savings should you choose not to spend it enjoying your retirement.  If you do choose to save 10k per year, even with a conservative portfolio with 5% gains, your $100k could grow to $275 in 10 years.  Which is enough to replace the lower of your and your wife's SS benefit on a 4% SWR in the even that either of you were to die.  To me this sounds like a pretty good survivor strategy to me (in addition to your life insurance, of course).

My fingers are crossed for you.  I really hope you find a way to enjoy more time with your wife right now.

[ChrisLansing]

Thank you everyone, you've given some really good insights - which is no surprise on this forum.   

"...But your savings suggests that your monthly costs are more like $2600, ..."  Well, spending yes, costs no.  IOWs I'm not tracking my spending as closely as I should, but I know it's discresionary.    In essense we are spending money we should be saving. 

The deciding factor, for now, is that I misunderstood the SS surviors benefit.    We'll need all the margin we can get in case one of us dies early in retirement.   

For now I continue to work.   I'll look at the option of retiring at say 64 rather than 62. 

Kay-Ell,  thanks for some really useful thoughts.    As to health ins., I'm already covered for life, now, under my wifes retirement benefits.   Essentially my wife has coverage and I have dual coverage.   Neither of us desire any travel in retirement.

I'm a public sector employee, and I don't think I can draw my pension and still work part time.  I'll double check, but I'm pretty sure the answer is no, though that would be a very clever thing to do.    I could, at least in theory, work part time somewhere else and draw my pension, but at my age I don't like to count on the labor market.   I could also go back to practicing a former trade (painting). 

For now I think the best choice is to continue to work. 

[BTDretire]

I would add, that $5,000 in yearly savings is very important.
You must continue saving at least that after retirement because of
large intermitent expenses. Such as a roof replacement, a car replacement
and/or a costly repair, furnace/air conditioner replacement, etc.

[Laura33]

If you are a public sector employee, will your pension offset your SS benefits?  See https://www.ssa.gov/planners/retire/gpo.html and https://www.ssa.gov/pubs/EN-05-10045.pdf.

FYI, even the SS folks don't always get this right on the first try.  My stepdad was working for the government when they transitioned to the new system, and he specifically chose the option to continue to pay SS taxes and have the pension.  But when he died and my mom claimed survivor's benefits, they began paying them out for a few months, then sent her a letter saying they had overpaid and were stopping benefits immediately.  It took us months of back-and-forth, visits to different offices, calls to interminable phone trees (with everyone we spoke to telling us "gee, they shouldn't have done that," but not being able to fix it), and ultimately an appeal with massive documentation to get them to resume payments.  Luckily, she had plenty of assets -- but if you're relying on that monthly check to cover monthly bills, that kind of screwup would be hard to manage.  So it is worth doing some research into this issue in advance and having all of your ducks in a row before you pull the trigger.

[dandarc]

I'm a public sector employee, and I don't think I can draw my pension and still work part time.  I'll double check, but I'm pretty sure the answer is no, though that would be a very clever thing to do.    I could, at least in theory, work part time somewhere else and draw my pension, but at my age I don't like to count on the labor market.   I could also go back to practicing a former trade (painting). 

A lot of former state employees where I work retire and come back to work part time or as a contractor.  Sometimes after a while off, sometimes more or less immediately.  So worth checking into the rules around that.