With only $192,000 saved, should I retire or not?
I have been putting away $100 a week for 40 years in a safe. I have now $192,000 saved. I have worked the same job for 40 years but now I am being forced to retire. I am only 54 years old. With only $192,000 saved, should I retire or not? I was thinking I was doing good saving that much every payday for so long, but my friends said it is not near enough.
Ultimately this is a math question: is your savings large enough to provide you with sufficient income if you retired today? With $192,000 saved, a skilled adviser could provide you with a monthly income of between $500 to $750. (Some advisers may promise you more but be careful of falling for an attractive but unlikely sales pitch.) Although I don't know your budget, most likely you are accustomed to a lifestyle of a much larger income. Based on this and the fact your Social Security won't kick in for another 8 years, it is unlikely you will be able to retire now.
While the $500 to $750 per month might seem like a tiny amount, keep in mind your money will need to last for a retirement of 40 or more years considering you are 54 right now. Due to advances in medical science, I usually plan for my clients at your age to live to be at least 100 so they don't run out of money. To give you some perspective, assume you die 'young' at age 84, $500 per month X 12 months X 30 years is $180,000. And this is before we factor in inflation. A financial adviser will help you invest the money so the funds will not only keep up with inflation but also last more than 30 years.
Look for Enjoyable Work
At this stage, you will want to do two things. First, you will need to begin looking for work again. This may or may not be in the same field you were in. If you were a client, we would start by exploring anything you always wished you could do. Although not a traditional retirement, using this as an opportunity to transition into a passion you both love and get paid for can feel very much like retirement.
Get Personal Professional Advice
The second thing to do is to consult with a financial planner now to help you prepare for and do well in your actual retirement. We offer a Retirement Readiness report which will tell you where you are on your retirement journey and what you will need to do to get to your desired destination. Most skilled financial planners should be able to do the same thing. Make sure, though, that you are paying for them to provide you this service, and that they are not using this service as the basis for a sales pitch to get you to purchase a financial product from them.
The planner will also help you to invest the $192,000 you have saved so it can grow. Part of any Retirement Readiness report should include an analysis of how the funds are projected to grow over the years based on your retiring at age 62, 65, 67, and 70. These numbers are key Social Security ages for most people and are important to know when looking at your entire retirement picture.
I know the thought of investing the money may sound scary, especially with the recent market volatility. A good adviser will not only help guide you in the process (it's our job) but should also be able to educate you on why investing the money will benefit you, even if there is a market crash.
Seek Education and Beware Slick Sales Pitches
Keep in mind, I am talking about education and not slick sales pitches. A slick sales pitch will have you coming out of the meeting thinking the adviser is really smart and they will be able to handle the investments even though you don't understand what they are doing.
Education will have you feeling confident you understand the basics and the principles of what they are doing, and although you don't understand the details, you still can see how they will go about investing your funds. Stick with an adviser with an education focus and not a sales pitch focus.