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.
Don't retire. Find another job doing what you like to do and be productive. Remember, "happy" beats "money" although it takes at least some money to be happy. You have to eat and live. 54-year-olds in retirement will burn through money pretty fast unless they live in a cold-water shack and don't eat. Your friends are right, 192k in our day won't go far.
Wow working the same job since age 14!
The short answer to your question is there is no way an online answer to your question will be accurate since we do not know: if you own a home or rent, is the mortgage paid off, your debts, your cash flow needs, your health and health insurance status, do you have dependents and for how much longer, are you married, is the spouse working and for what time frame, what your social security benefits might be in the future, will you have a pension and on and on.
You may have made a better choice than by putting the money in the safe. It did not earn any interest and has lost purchasing power. For example, the $100 that you put in the safe in 1978 has the purchasing power of $24.70 in today’s dollars, so you would need nearly $400 in today’s dollars to by what $100 bought in 1978. Inflation has averaged 3.55% over that 40 years.
The best money you could spend right now would be to have a complete financial plan designed by a Certified Financial Planner that does not sell any products. To find one near you can Google
“CFP” Fee-only” “your city” and be sure to use the multiple quotation marks. Another option is to search for such an advisor on the NAPFA site. https://www.napfa.org
To add to what has been said by my financial planning colleagues:
You should take some time to think about the next chapter of your life. Too often, we define ourselves by our work roles. We are much more than that.
It probably will take about six weeks after you stop working for it to feel like it is "real." So, plan on taking six weeks off without making any major decisions. Read a book, take a trip, clean out the garage - do something that you now have the luxury of time to do.
After your six-week break, start thinking about two things:
1) Can you afford to retire? and
2) Do you want to retire?
Can you afford to retire? How much income do you need? Do you have a pension? How much Social Security would you receive? How much income could your nest egg of $192,000 generate if invested wisely (and safely)? You may be able to afford to retire now. Talk to a financial planner to help you work out these numbers. Getting the right answer to this question is very important.
Do you want to retire? Would you enjoy working in another job? Are there aspects of your job that you enjoy more than others? Could the skills you developed (maybe with some additional education) be employed in another job? Would you miss the social aspects of the friends you have made at work? It is human nature to feel a little uncomfortable about the unknown. Just realize that your cash cushion has given you the luxury of time to make good decisions for your next chapter.
We advise people to retire "to" something rather than retiring "from" something. In your case, the decision of leaving your current job has been made by your employer. Hopefully, that turns out to be a blessing in disguise.
Good luck with your next chapter.
Hi! Thanks so much for writing to us. My colleagues have offered great advice and concrete steps for you to take. I’d like to offer one more. I’m concerned about the cash money you’ve got in the safe and especially the fact that others know about. I’m with you on being suspicious and wary of institutions, corporations, and big entities in general. I totally understand, and I worry a lot, too. However, the fact is that once cash is stolen or lost, it’s gone and usually cannot be recovered. That’s the main reason I carry and use credit cards instead of cash because if I’ve got $300 in my purse and someone steals my purse or I lose my purse, that $300 is gone. If my credit card is stolen and someone buys a $300 TV with my card, Capital One will reimburse that charge, and I’m not out a penny.
I trust your friends, but sometimes friends have acquaintance and relatives who are not as trustworthy and who may be desperate for cash. For example, once someone is in the grip of prescription drugs or hard street drugs, they are no longer really themselves, and their pain and addiction may drive them to steal from anyone (even including their own mothers!). They don’t mean to have to steal, and they may be sorry afterward, but the fact is that if they get into your safe or carry away your whole safe, you could be out $192,000. It’s also true that a bank could maybe go bankrupt or steal your money, but that occurrence is less likely, at least in 2018, than a home robbery. If you put the money in a bank account, you will not lose the “principal” (the amount you’ve saved) – it’s not like the stock market or a brokerage where you invest in stocks where you could lose your initial amount. A bank account or Certificate of Deposit in a bank ensures that you will always have your $192,000; you will earn a small amount of interest, but the important thing is that it won’t be stolen.
It would be so good if you could get your money in a bank so that it doesn’t get stolen. I’d also like to add my congratulations for a lifetime of regular saving that’s resulted in your accumulating so much money. That is really impressive. You are right in thinking that you were doing good in saving that much. It would probably be best if you could get another job and then keep saving, and then you will be able to retire and enjoy your retirement. Best wishes to you!
A lot of factors come into play when deciding to retire or not. I would first ask yourself the following questions:
1) What debt do you have and is it sustainable in retirement? Do you have a mortgage? What are your monthly fixed living expenses?
2) How much will your Social Security Benefit be? Is it enough to cover your living expenses?
3) Do you have any other income sources like Pension, 401k, or IRAs?
In this scenario, I would highly recommend speaking with someone who does financial planning to assist you. We have tools and resources that may be able to assist you in providing a better picture of your retirement and provide you with a Retirement Snapshot.