Mortgage balance 81,655.09 @ 4.75 % with 22 years left.
Monthly expenses. Housing 910.00 (piti +condo fee) 380.00 health care (part B premium, plan N and part D)… 600.00 personal (groceries, gasoline, clothes etc.) …400.00 utilities (electric, cable, internet etc.) 105.00 car insurance.
Thinking part time job 18-20 hours a week @ 16-17 an hour.
Emergency fund 685.00 adding 10.00 a week.
20K Heloc if needed (0 balance)
Doesn’t travel much, condo has nice amenities like pool, fitness center, park like area with benches etc.
If the projected SS number of $1927 comes from the SS statement, expect it to be less if they retire now because the estimate assumes they will continue to contribute to SS until their full retirement age. Quit working before FRA, get less. Draw early, get even less.
At age 65, I would assume the OP already has their 35 years in for SS calculations. At this point they would simply be replacing any lower income years.
Another point of consideration is that if the OP is drawing Social Security then they don’t want to earn more than $24k or else it gets reduced.
Current monthly nut is $2,400 from the detailed expenses, which means roughly $500 shortfall from SS income. The 401k could easily produce a safe income stream of $8-10k to help cover the income shortfall without touching the principal. I would like to see at least a couple of months Emergency Fund before going part-time.
Yes. I know because I am doing it. I have been retired 7 years (I took SS at 62) I am very similar, although I have a small pension from work that basically covers my mortgage. I live comfortably on Social Security alone and will not need to draw anything of significance from my IRA until I am required to. I do not have a part time job - I ride a bicycle with my cycling group and this is where the bulk of my spending goes to. If anything, I would suggest that you look more at what to do socially.
Bear in mind, I don’t travel much at all. I’ve never cared for it. But you need to define “much” because with that limited income, ANY travel is going to require you to take money out of your IRA.
As for the part time job - it will be the quickest way to take you from the 12% tax bracket to the 22% tax bracket. Currently, the taxable part of my social security is $6.600 and my total income tax due is $498. I used a tool and added $15,000 to my income (for a part time job), and if I did that, over $19,000 of my Social Security would be taxable and my total tax due would be $3,680.
But it is possible to live frugally but comfortably in retirement with the numbers you gave.
Some questions. Estimation of health status? Is the projected S.S. figure for age 65 ? What are future possible major expenses- replacement vehicle, condominium special assessment etc.? What are the eventual plans for the condominium equity?
The SS would be now (65) of course increases each month of wait. Not collecting now but on Medicare.
Working full time now bringing home about 850.00 + a week after taxes (4 day week, 39-41 hours) expenses pro rate to about 550.00 a week, so have about 300.00 + a week to play with, didn’t mention but have 3300.00 in checking account. The job is getting the better of me though.
By not traveling much I mean hardly at all, once in a while my brother and I take a 3 or 4 day road trip, our last one was to the FDR library in 2025, the one before that in 2022 took the USS Badger ferry across Lake Michigan, both were fun and relatively inexpensive.
Not much on the social front so figure a part time job could give me that.
Health status good but I know that could change on a dime, would hope Medicare would cover any costs.
Have a 7 year old car (33K miles) which I’m going to keep, I think I did post about buying a new one here but was thankfully talked out of it. I have maintained it well.
As for special assessments I would take out of emergency fund if I had a enough or tap the open heloc, with a current balance of zero, we did get a special assessment this year of 511.00 for excess snow removal.
As far as the condo equity I’m not sure what you mean, like what would I do with it, like a reverse mortgage ? cash out refi ?
That’s a big reason why I retired at 62. The stress of a job was such that I’m not sure I would have lived another year. And it’s not so simple as to say well just get another job… The job market ain’t all that good for someone who’s close to retirement age. They can talk all they want about how much more I can make if I waited till 67 or 70, but all I know is I’ve had the time of my life for the past seven years.
I think that line about the job getting the better of you stands out more than anything else. Numbers are important, but so is your quality of life. From what you’ve shared, it sounds like you’ve kept your expenses under control, your car is paid for and well maintained, you have Medicare, and you don’t seem to have an expensive lifestyle. A part-time job could be a nice middle ground if it covers some of your day-to-day expenses while giving you a little more free time.
Only you know what your comfort level is financially, but if going to work every day is making you miserable, that’s something to take seriously. Semi-retirement doesn’t have to be an all-or-nothing decision, it can be a good way to ease into retirement while still keeping some income coming in.
My experience is to Keep in mind that you are either making money or you are spending money. The tragedy for many is that they now, for the first time in their lives, have time to do things without having the money to do things! This guys situation is a tight rope to navigate. Not much to play with for unforseen circumstances. I wouldn’t count on income going forward as mother nature has a way of surprising even the healthyest 65 year old with unforseen issues (that’s reality!). The mortgage is troubling to me, as is the limited amount of savings for emergencies. I would advise not giving up 8% of social security a year to go early (65 versus 67).
If you can work part time till age 70, at age 65 consider pruchasing a Single Premium Insurance Annuity and delay Social Security to age 70. The following figures are estimates and do not include income tax considerations. You could roll over the 401k to, for example, a Vanguard Qualified Annuity. A $200,000 rollover would give an estimated income of $1200 to $1300/month with no COLA. Waiting till age 70 you would receive about 43% higher S.S payments about $2700/month with subsequent COLA increases based on the higher amounts. I look forward to comments about this including whether I am off base. An hourly only financial planner could run the numbers and compare total lifetime expected income without and with the annuity option.
I think that a reverse mortgage would be a last option if other major financial hardships occur
Reading the book How to Die with Zero by Bill Perkins might motivate you to prioritize fun experiences.
If his job situation is like mine - I wouldn’t have seen 63 if I had stayed at that job. So waiting until 70 may actually leave him worse off.
I have a little more in SS income, and a small pension that basically covers my mortgage. I live comfortably and am able to “blow” about $600 per month with my cycling group. So maybe he needs the part time job for a while to be “comfortable”, but to expect someone to stay 5 years at a job that is pressuring him might end up killing him, and changing jobs at 65 while pulling a similar salary ain’t always easy. It wouldn’t have been for me.
If he has $250,000 and gets a conservative 3% return, he could pull $1.000 per month to pay his housing and live on his SS payments, and have $126.000 left after 20 years, when he’d be 85. While that’s cutting it close, “you can’t take it with you” is what I’ve heard. And if he takes a part time job, that may cover his housing costs, so he wouldn’t really need to touch savings. So IMHO, it can be done.
correct, but I wanted something extremely conservative. One thing about all these retirement shows is you are led to believe you’re gonna have to have $1 trillion in order to retire. You don’t have to, right now anyways. But I get it… My job would’ve killed me had I stayed working. Taking any reduced Social Security was well worth the money. If he’s in a similar situation, I don’t want him to feel hopeless. He doesn’t seem to be extravagant, and he seems to accept that travel to Europe every other month isn’t gonna happen.
And then there is advice to pay off the condo.If he owns a home/condo, one thing about a mortgage -it isn’t really affected by inflation.If he rented, yes, that could go up quite a bit. But with the mortgage, not so much. It’s certainly nice to not have a house payment in retirement, but it shouldn’t mean he can’t retire.
He seems to understand that he might need to do a part-time job for a while in retirement no longer he works at part-time job the less need he will have to draw down on his IRA.
It’s kind of funny. I retired at 61 and took Social Security at 62. I’m pretty active in retirement, but despite that I can still feel the effects of aging. I wonder if I would’ve been as active if I had waited to retire.