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Thinking about retirement

© August 2009 Anthony Lawrence

I'm not retired. I'm not even old enough to draw Social Security quite yet - I won't be 62 for another six months. In reality, I may never "retire" fully. First off, it's unlikely that I'll be able to afford to in the near future, especially after what happened to our investment accounts in 2008. Aside from that, I really don't want to stop working completely if I have any choice in the matter.


What I do like is the state of being PMR - "Pretty much retired". That's where you work pretty much when you want to, take time off pretty much when you want, and generally try to lead a relaxed and stress free life. I've been "pretty much" in that state for five years or more and I have to say I like it - a lot.

Things aren't in perfect balance, though. Sometimes I have too much work and feel too stressed. Other times I have too little and feel financially pinched. Perfection is an elusive goal, isn't it?

I turn down quite a bit of work now. If it involves more than a few hours of travel by car, I don't want it. If it would require an overnight stay, I demur. If it's just stressful for my tired old brain to deal with, I also turn it down, even when I really could use the money. I've been working full time for 45 years now; I'm tired and I've had enough stress, thank you. I'll take the easy stuff now.

That sounds a bit wimpy, but there it is - I don't think I was ever very good at handling stress and every day I age makes me less capable. It's just reality: I can't handle the things I used to be able to do. Large programming projects? Not a chance. After hours work where a mistype could destroy a system? If it can't wait til morning, I'll pass.

Retirement Planning

The question I am wrestling with now is whether or not to start drawing Social Security at age 62. If business were brisk or if I could handle stress better, this would be a simple decision - I'd wait until I'm 65 or even 70. But business is off, and while a grand economic recovery may come someday, most of the economists seem to think that things will remain flat or barely inclined upward for some time. We could cut back - move to a cheaper place, even a cheaper State, but neither of us wants to do that, so we need some supplemental income. Not a lot - something around $10,000 a year should cover us.

So the question becomes simple: is it better to pull $30,000 or so out of retirement funds so that I can delay Social Security until age 65? A simple graph that examines some possibilities shows that part of the answer is how long I expect to live: Cumulative Social Security Benefits at Various Life Expectancies . However, it's actually also affected by how well my investments would do if I left them alone. The results are quite different for different assumptions:

Pension Balance with an 8% Tax-Deferred Return
Pension Balance with a 5% Tax-Deferred Return
Pension Balance with a 2% Tax-Deferred Return
(All from Retirement at 62: Is Receiving Social Security Early Worth It? By Thomas M Dalton)

You may also be interested in my How to retire early without having millions of dollars and my When to Take Early Social Security Benefits..

One way to help is to cut back on expense. While I would never take it this far, you could learn a bit from living a minimalist life style.

Unfortunately, these are unanswerable questions. Many of my relatives lived into their 90's, so I should probably not expect to be dropping off soon. But what about that stock market? 2%, 5%, 8%? Who knows?

How much money will I be able to earn as I age? Because I work for myself, I have more control over that than someone who is an employee, but there's also the matter of being able to work - wanting to is not enough.

I am fortunate to have those choices. I have sufficient retirement funds to defer Social Security if that makes sense. I could even defer it to age 70 if necessary, though that might leave us too short for emergencies. Many, many people can't consider this at all: their investments have been crippled and were too small to start with, they have been laid off from their jobs and have little prospect of finding another - taking early Social Security may be a bleak choice but it might forestall complete disaster.

While these people suffer, and I worry about my choices, remember that a bunch of greedy Wall Street bankers were paid millions of dollars in bonuses while they destroyed other people's lives. As their own firms hit danger, we taxpayers stepped in to bail them out and they survived, kept their jobs, and have been paid millions yet again.

I just like remembering that as I try to plan my retirement.

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More Articles by © Anthony Lawrence

Mon Aug 10 21:32:33 2009: 6738   TonyLawrence

Speaking of GWB (Greedy Wall Street Bankers): (link)

Wed Feb 2 20:53:29 2011: 9270   anonymous


I would draw social security for as long as you can because by 2032 it will be no longer.

Wed Feb 2 21:08:11 2011: 9271   TonyLawrence


I doubt that. All that is needed to fix SSN is to collect a very small amount more than we collect now. The nonsense about failure is, well, nonsense.

What WILL probably happen is some changes to payments. It is grossly unfair that people who make large amounts of taxable income are not penalized on withdrawals after age 65. That age will probably be raised alomg with the full retirement age - and it should be!

Thu Feb 3 16:31:52 2011: 9274   BigDumbDinosaur


I would draw social security for as long as you can because by 2032 it will be no longer.

Gee, I thought it was 2037. :-)

Social Security will still be around come 2032 or 2037. The problem that is looming is, based upon current best estimates, payouts will at that time (2037) start to exceed the incoming revenue. The projection is partially based upon the number of post-WWII boomers who will have retired, as well the increased longevity of that population relative to our parents' generation. Further complicating the picture is that Americans are going to start experiencing a decline in income due to the loss of our manufacturing base to other countries. Most service jobs pay, on average, about 60-70 percent of what is paid for skilled manufacturing positions. So the average American is going to see a smaller income and hence Social Security will see reduced revenue.

Further muddying the waters is the fact that a lot of money gets paid out by Social Security to people who have paid little or nothing into it. For example, there are those who receive disability payments but have never worked and earned an income. This aspect of Social Security tilts the cash flow problem in the wrong direction, and has gotten worse due to the increase in population, which produces a corresponding increase in the number of "disabled" beneficiaries.

As Tony has alluded, either the retirement age has to be raised (which is already in the works), payouts to future retirees have to be lower, payouts to well-off retirees lower yet, the FICA rate increased, or all of the above. Like all other government-funded entitlements, there's no free lunch. Social Security has to take in more than it pays out, or it will go broke.


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