I spent the afternoon in an annual meeting with my financical advisor. The first thing we always do is update paperwork to be sure that goals have not changed. From surfing the waves on the California beaches to riding the growth index of investments, our goals have taken new shape with retirement looming on the distant horizon. I was more interested in what the future might look like rather than the mundane paperwork my advisor insisted we go through point by point.
It occured to me, as we began to calculate the "experience" status, that our investments had been with the same company for about 15 years. The experience status lets the company know how long you have been a customer so they can track the growth of your portfolio. Fifteen years! In all those years we had been slowly (very slowly) accumulating for a time when we would retire. Like most of us in 2008, our retirement account took a big hit. The question quickly came to mind, "Are we there yet?"
Recently, I was part of a discussion with a couple of single women friends who were determining what direction they should take with their financial lives. Both turning 62 this year, one is currently retired from teaching and the other working part time. The question of drawing early Social Security was definitely on the table. Another friend has been fighting lymphoma for the past 8 years and although she is in remission, she fights graft/host disease on a regular basis. She works long hard hours as a respitory therapist and her doctors have long argued with her about the toll it is taking on her health. She will turn 60 in the next month.
The truth is none of us can afford to retire and as the age creeps up as to retirement age (holding at 66, up from 65), Boomers want to enjoy the golden years, rather than work through the best of them. Our generation has a great work ethic, we just want to enjoy the work we do at this stage of the game. My Dad said that if you love what you do, you will never work a day in your life. I think Boomers have reached a place in life where that truly reverberates, especially as most of us begin to take care of our aging parents.
Here are a few points to consider when considering early Social Security.
• Your benefits depend on when you were born. If born 1929 or later you need 40 credits (10 years of work) to qualify.
• Your benefit payment depends on how much you earned during that time and the age at which you retire.
• Retiring at age 62 will mean your benefit will be 25% lower than at full retirement.
• Delaying retirement will mean your benefit will increase automatically until age 70. Born after 1943 that increase is 8%.
• Experts believe you will need 70-80% of your preretirement income when you retire. Social Security benefits are about 40%.
• Contact Social Security in advance of retirement to know exactly what to expect. This is another crucial piece in your financial planning and should be a part of other investment resources.
There are arguments to be made about taking the money early and enjoying it longer and in good health. If, in the case of my friend in remission, there is a health issue to be considered in early retirement, be sure to do your research in Social Security Disability. This may be a better option for your health care and financial needs.
As with most big decisions in our lives, being prepared is the best advice any financial advisor will offer. Do your research with Social Security. They have informational publications that are very helpful. Filing early is important. Knowing what your bucket list holds is a good way to measure what plans you need to make for the financial freedom to accomplish them. The question then becomes "What's in your wallet?"
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