When to flip the switch on retirement age?

Submitted by srekai t3_10onkvz in personalfinance

This might seem like a dark question, but dying is inevitable. And no one really knows how long they're going to live. And we do all this work to save up money so we can retire, but you also can't spend money when you're dead.

This might be more of a subjective rather than objective question. But how do you all decide around retirement planning for life expectancy. For example, you can get more SSN benefits per month if you wait a few years between retiring at 67 vs 70. However, if you're not going to live much longer beyond 70, then taking the benefit earlier is always better. And the same conundrum follows. You might need hundreds of thousands of dollars to live through your 70s, but you could also die in your 60s which is not unlikely.

With how the pandemic, I've sort of felt time has become an even more valuable commodity to me, and I want to make sure I'm maximizing my time and life for that reason.

Of course you don't want to end up in a situation where you don't have any money when you're extremely old and unable to work anymore.

But it really does beg the question how do you decide what is optimal? Or are we all just planning for the worst/longest case scenario?

4

Comments

You must log in or register to comment.

Sigurlion t1_j6fqszb wrote

My wife and I are operating under the assumption we will live to 100. We probably won't, but we are going to prepare as if we will. Our goals are to live a comfortable, fulfilling life the whole way, including now. Anything unused at the end will go to the kids or grandkids, which is fine with us.

7

dlwowns t1_j6fsjs2 wrote

>But it really does beg the question how do you decide what is optimal? Or are we all just planning for the worst/longest case scenario?

the best way to go about this is to reverse engineer your life.

figure out your life expectancy based on published science literature (i.e. your current health ,medical history, etc etc)

then estimate how much you need per year during retirement and work backwards to how much you have to contribute per year to get to that final future value +/- 3% or some other margin of error

its not the most accurate, but its the best way to estimate retirement needs.

2

srekai OP t1_j6ftj9q wrote

Replying to [deleted] (#1,596,625)

It's not about relying on social security but rather if you were never going to live past 70, why would you wait until then to take it, when you can start receiving it earlier at 67? If you die at 69 years and 364 days, you would never receive a single cent.

It's a binary sort of thing.

4

Sigurlion t1_j6fxsih wrote

Replying to srekai (#1,598,090)

I have kids, but I'm far off from having grandkids. But I know how life works, and if I make it to old age, I assume I'll have grandkids. Humans are, mostly, following the same playbook, so it makes sense to me to project my life out a ways and plan ahead.

2

booboo_bear t1_j6fy7xb wrote

Replying to srekai (#1,597,234)

Correct. Do your have family, mom / dad / grandparents/ uncles / aunts. Is there a range they lived to? Are there “known” issues for your family, heart disease. Are you living a healthy lifestyle. Take all this info, and you’ll get an approximate range . For me, I expect 80 -85. I could go sooner, or go longer. But I doubt I’ll make it to 90.

1

Webercooker t1_j6gp5t4 wrote

Full Retirement Age is when you can collect benefits with no limit on earnings, so I'm shooting for that for Social Security. Dying between 67 and 70 would leave money on the table if you wait.

Since I plan on earning income until around age 70, it doesn't make sense to start before 67 due to benefit reductions.

Note that you should apply for Medicare as soon as you are eligible at age 65. Do not wait until you start collecting Social Security. The older you are when you sign up, the higher your premiums are for supplemental plans. FOR THE REST OF YOUR LIFE.

1

Still-Music-5515 t1_j6hgb34 wrote

I looked at health of my grand parents and their siblings. Health of my parents and siblings. Health of my own siblings. Average age when they started having more serious health issues ?Average Ages when they died. If most had poor health or died at younger age then it's possible the same could happen to me. In that case I would plan to retire early as possible to be able to enjoy retirement before it to late healthwise

1

creepyfart4u t1_j6hv9r3 wrote

Look at the age your known relatives have died at as along as they were non accidental.

Do an honest review of your own health. Do you exercise, Eat relatively healthy, and maintain a healthy weight? If you don’t do any of these things deduct at least a decade. Smoke/vape(weed or tobacco) deduct another decade.

Go to the Dr for a checkup. If they read you the riot act either shape up or plan to retire early.

There’s no guarantees. I almost bit the dust at 28 when I was at my healthiest. But once I made it past that the second 28 has been gravy.

My family is all over the map. So I’m planning on lasting to 95. IMHO it’s better to have some extra cash left over at 95 and not need it then be broke and have no way of making enough to live on or sponging off my kids.

1