We didn’t know that your SS benefit is reduced if you quit contributing before your full retirement age, regardless of when you start drawing. The estimates SS gives you assumes you continue to contribute all the way to your FRA. Retire at 60 and draw at 67 and you’ll still get less. And we didn’t know we can’t pay health insurance with pre-tax dollars during retirement. Never heard anyone else say that. For us, it won’t make much difference because our premiums are low, but for some, it will hurt.
Social Security uses the highest 35 years of index adjusted income to determine your benefit. If there are years not worked, the amount used is 0. Typically, as you get older, your income level rises due to promotions, etc., and lower numbers drop out of the calculation.
Yes you want 35 years of real career work under your belt, and check that it was recorded properly at SSA
The way I think about it is the longer I live the less I need for income for the rest of my life since the remaining time is getting shorter day by day. As you save the money you have continues to grow. At some point the amount you have is more than you need and you can stop working and start enjoying your free time. So keep saving you won’t have to work forever!
If you can live on 30% to 40% on your income now, you can likely do so when you retire.
So if you are enjoying life now and doing all the things you want to do while still saving up to 70% of your income, then keep doing what your doing… if not, make appropriate adjustments.
The only want to estimate if you are over or under savings is to have an accurate retirement planning model. Rules of thumb don’t fit everyone. The model has to incorporate all aspects of your financial condition.
Reaching a goal like financial security for retirement is a lot like sailing from a known current location to a distant port. You know that things like adverse winds and currents will invariably push you off course, so you make course corrections long the way to compensate for those things. .
A Monte Carlo simulation will give you a fair idea of what to expect, but it is based on historical facts and data and is not much better than a modern weather forecast.
And like next year’s weather, the long-range financial future is impossible to accurately predict. Predicting tomorrow’s weather is fairly easy, it’s like the last course correction you make just as you enter your destination port entrance.
That’s exactly right @H200h I do a detailed plan every year at Fidelity… Used to be at Schwab, but they did something weird to the planner. It’s exactly the same math problem as navigation! The course corrections have been not large over the years.
That’s just like long-distance navigation. Small corrections along the way make for fewer emergency and potentially costly events later