Take Back Retirement
Episode 19
You Want to Retire Before Age 65? Here’s What You Need to Know
Retiring “early” is a process that contains many more moving pieces than most people think. In this episode, we tackle these factors one-by-one and offer some advice on how to cover all your bases before taking the plunge into retirement.
The first question we have to address is, why 65? It’s true that, historically, Social Security kicked in once you turned 65 and so did a number of pension plans (you know, the ones your grandparents might have had). But today’s realities are different to what they were decades ago.
Listen in and learn how to determine what your lifestyle is going to cost upon retiring and what you need to understand about Medicare, Social Security, and other programs going into retirement. We also touch on the three key assets and how to prepare them in covering your short- and long-term goals: your retirement accounts, your non-retirement assets, and your illiquid assets.
Click here -> Sofia Personal Inventory Sheet for the Personal Financial Inventory sheet mentioned at 20:23 of the episode.
Read the article on the EBRI study mentioned by Stephanie.
“Retirees are overly optimistic about their financial future” on MarketWatch
Learn what is considered the full retirement age by birth year at
https://www.ssa.gov/oact/progdata/nra.html
Check out our previous episodes for more information on this topic.
Thinking Beyond Retirement:
04: Give Yourself Permission to Plan Your Next Chapter, with Randi Levin
08: Retirement is More than Money with Autumn Nessler
Retirement Spending:
05: A Simple Framework for Thinking About Retirement Expenses
Social Security Basics:
15: What Women Need to Know About Social Security
Since we chatted about Kevin’s dogs in the episode, we thought we’d include a couple photos:
Please listen and share with your friends who are in the same situation!
Key Topics
First of all, why 65? (1:26)
The first question we ask any of our clients who want to retire at 65 (2:38)
What to know about Medicare eligibility and retirement (04:22)
Why 65 is no longer the magic age for claiming Social Security benefits (6:33)
Know your assets and expenses (8:24)
“What is the least amount that I have to do until I can figure out what I can do?” (10:08)
Why you shouldn’t rely on your savings or Social Security checks (11:58)
What people often miss when it comes to their retirement assets (14:24)
Utilizing your taxable savings (17:48)
What to do to retire before 59 1/2 (19:04)
Addressing your short- and long-term needs around with your investments (21:05)
Are your savings enough for what you want to do upon retirement? (24:36)
What could go wrong with your plan? (28:18)
Stephanie McCullough: (00:07)
Welcome to Take Back Retirement, the show for women 50 and better, facing a financial future on their own. I’m Stephanie McCullough. Along with my fellow financial planner, Kevin Gaines, we’re going to tackle the myths and mysteries of “retirement,” so you can make wise decisions toward a sustainable financial future. Through conversations and interviews, you’ll get the information and motivation you need to move forward with confidence. We’ll be sure to have some fun along the way. We’re so glad you’re here. Let’s dive in.
Stephanie McCullough: (00:35)
Coming to you semi live from the beautiful Westlakes Office Park in suburban Philadelphia, this is Stephanie McCullough and Kevin Gaines of Sofia Financial and American Financial Management Group. Say hello, Kevin.
Kevin Gaines: (00:50)
Hello, Kevin.
Stephanie McCullough: (00:52)
Today we’ve decided to talk about a question we get asked fairly often, which is what should I think about if I want to retire before age 65? It occurred to me, there’s this common misperception that financial advisors, financial planners, they really only do your investments. This is a perfect example of a financial planning question. There’s a lot more moving pieces involved, a lot more implications for your money when you’re talking about when to retire.
Kevin Gaines: (01:23)
Well, Stephanie, let me ask you a question. Why 65?
Stephanie McCullough: (01:27)
Yeah.
Kevin Gaines: (01:28)
Why do people always ask age 65?
Stephanie McCullough: (01:31)
It’s so interesting. It’s definitely embedded in our cultural thinking that that’s when retirement happens. Partly because for a long time, that was the retirement age for social security, although that has changed. We’re going to talk about that. Also, a lot of pension plans, the old-fashioned things that maybe our grandparents had, they often started at age 65. It’s kind of just become assumed that 65 is retirement age.
Kevin Gaines: (01:57)
And it’s not adjusted, like you said, it’s in our mindset so even as life expectancy continues to go up, it’s still 65. Government programs that form the bedrock of any retirement strategy, they’ve changed, but yet we still say that number 65 because it’s what we know.
Stephanie McCullough: (02:14)
Exactly. It’s fascinating – when social security first came out and the retirement age was 65, life expectancy was below 65, on average. Now it’s up in the 80s and 90s. It is kind of unrealistic, but that’s what we still think about. When people come to us and they say, “Hey, I want to retire early, or I want to retire before 65,” what’s the first question we ask back at them, Kevin?
Kevin Gaines: (02:39)
What do you want to do?
Stephanie McCullough: (02:40)
Yeah.
Kevin Gaines: (02:41)
It seems a little off center because everybody comes in with this question and they expect a number or a binary answer, yes or no. Or, I forget what insurance company says “what’s my number,” one of those kind of things. But we can’t say yes or no unless we know what the question is. The question is never, can I retire? The question is, can I do X?
Stephanie McCullough: (03:12)
That’s important because that’s really going to determine how much life will cost you. In the end, it does get back to numbers and dollars, but we firmly believe that the decisions shouldn’t be made based on the dollars. They should be made based on the life you’re trying to create and what’s most important to you, but then that feeds back into the dollars, right? That informs us what you think life is going to cost.
Kevin Gaines: (03:35)
Right. Like the old song, that movie, It’s All About the Benjamins. But you don’t know how many Benjamins you need until you know what you want to do with them.
Stephanie McCullough: (03:44)
Exactly. That’s always step zero in our financial planning process is get super clear on what it is you want to do. Now, there’s lots of reasons people might retire “early,” right? Perhaps it is by choice or perhaps not. It could be health issues, caregiving, or just this desire to quit the rat race. You might want to pursue a passion project. If you’re having trouble thinking about it, we’ll refer you back to episode four with Randi Levin, and/or episode eight with Autumn Nessler. They are both retirement coaches and work with people a lot on figuring out what they want to do. But we’ll assume you have that in mind.
Even though 65 is this artificial number, it actually is still an important number. Kevin, what is it about age 65 that is still very relevant?
Kevin Gaines: (04:33)
The big M, Medicare. Take into account, your health expenses are what, like one third, a quarter or a third of your total expenses. It’s a big number. Medicare is a big government program that doesn’t start until 65. If you step away from work, assuming you have healthcare through your employer, and you step away before 65, you’re going to have to figure out something until then.
Stephanie McCullough: (05:00)
Yep.
Kevin Gaines: (05:01)
That’s the number to pay attention to.
Stephanie McCullough: (05:04)
We have some financial planning software. It’s one of the industry leaders. The estimate that they use for buying your own private health insurance before Medicare eligibility, there’s two different pieces of it. Now, this will, of course, vary depending on your situation, family size, state, all that stuff. But the estimate they use is about $8,000 per person per year for the health insurance plus about $3,300 a year out of pocket costs. Another thing to note, remember inflation is a reality we have to deal with, especially in retirement because things go up in cost every year. That’s a big deal over time. The average inflation rate that the program uses for everyday expenses is two and a quarter percent (2.25%). But for healthcare costs it’s 5%, actually a little over 5%. $11,000 a year, but going up quicker than regular expenses. That’s a real number.
Kevin Gaines: (06:04)
Especially if you’re retiring more because you have to than because you want to, that number is going to be probably even higher.
Stephanie McCullough: (06:12)
That’s possibly true, right? If it’s a medical situation.
Kevin Gaines: (06:15)
Right.
Stephanie McCullough: (06:16)
Or somebody in your family. Keep an eye on Medicare eligibility. Keep an eye on health insurance costs. Do your homework, right? Try to get some estimates. If this is a by-choice arrangement and you’re planning ahead, try to get some estimates for what it might cost you.
Then the next piece is this other government program we mentioned before, Social Security. Everybody, in my experience, still seems to think that 65 is the magic age, but it’s not. A bunch of years ago, as a cost saving measure, the government changed the date for what they call “full retirement age” when you can get your unreduced benefit. If you’re born 1937 or before, your age was 65. However, anybody born after 1937, it’s actually higher. If you’re born like me and Kevin in 1960 or later, your full retirement age is 67.
Kevin Gaines: (07:10)
A year or two may not sound like a whole lot, but it’s a big number when you consider this is going to be your number the rest of your life. If the rest of your life takes you to 90, 95, or even and it’s not improbable, triple digits, that’s, having seen a reduced benefit of even just a few hundred dollars a month, it’s going to be a big difference for you.
Stephanie McCullough: (07:35)
What Kevin’s alluding to is as we talked about in episode 15 on Social Security, is that you can claim before your full retirement age but you get a reduced benefit. Then even your cost-of-living adjustments after that, they kind of key off of that reduced benefit. For most people, it’s 62, sometimes it’s 60, but that’s a topic for another episode. Like I said, episode 15. Before that lifetime income kicks in, you still have bills to pay, right? If you have retired, we’re presuming that you have taken a drop in income either to zero, or maybe you’re working in some fashion. But you’re going to have this gap of you got to pay your bills. So, if you are doing that before you claim social security, your savings, your assets have a heavier burden in those intervening years.
Kevin Gaines: (08:23)
Right. The pool that you have to draw from. Let’s put it that way. Think of them as three different sources. You have your retirement assets: IRAs, 401(k)s, pensions.
Stephanie McCullough: (08:38)
403(b)s.
Kevin Gaines: (08:39)
403(b)s, 457(g)s, and all the alphabet, the alphanumeric soup that is retirement programs. Then you have your non-retirement assets. Just think of your basic individual or joint account that you’re using to save money with. But then the third one, which is overlooked a lot of times is illiquid assets. Your home, ownership in a private business, stuff that you can’t turn into cash in 24, 48 hours in most situations. But they are definitely worth considering and being aware of when you’re trying to figure out “how am I going to do what I want to do or need to do?” So, don’t overlook it.
Stephanie McCullough: (09:26)
There’s no way to get around the exercise of running the numbers of what life does cost you. You really do have to try to figure that out, right? High-income can cover a multitude of things and disguise the fact that maybe you’re paying a lot for cable or whatever your indulgences are. When the income goes away, you want to get super clear on not only what am I spending, but what’s my bare bones? What could I live on if I absolutely had to, even if it wouldn’t be pleasant? What are my nice-to-haves? Because you want to have that awareness and potential flexibility if things change.
Kevin Gaines: (10:07)
Right. Especially if we’re talking about, you’re leaving the rat race because you want to start your own business. Things are probably going to be lean as you’re dealing with that and you’re going to want to cut expenses, or you’re being forced to because of health reasons, either your own or somebody else’s. You may not have a whole lot of time to prepare so you want to, I think we’ve made this illusion before of, break-the-glass scenario. Got an emergency, “break the glass and let’s just grab it and run until we can get our arms around things.” This is that question of, “what is the least amount I have to do until I can figure out what I can do?”
Stephanie McCullough: (10:47)
When you say do, you mean spend?
Kevin Gaines: (10:50)
Spend.
Stephanie McCullough: (10:51)
Right? That’s what we’re talking about, numbers. Because we’re looking at dollars in and dollars out. You’ve got to be clear on the dollars out. Many people do assume that they’re going to work in some capacity and earn some money after whatever their “retirement date” might be. Interestingly, there’s this group called the Employee Benefit Research Institute, EBRI in the industry lingo. They do a survey every year, their Retirement Confidence Survey. Even though most people expect to retire at 65, the actual median retirement age is 62. Kevin’s point about involuntary early retirement, this happens a lot. But the other interesting stat that they’d mentioned is that a full 75% of people expect to work for money in some way in retirement, and yet only three out of 10 retirees are actually working and earning money. It pays to be realistic about what might you make if you’re going to do something. If you’re starting something new, is it going to take time to ramp up your income? You have to sharpen your pencil and look at these pretty clearly.
Kevin Gaines: (11:59)
Anything can happen. You retire in January of 2020, “hey, I’m going to go, I’ve had this dream of being a bartender. Hey, there’s a bar down the street. I like to hang out there, so I’ll go there and I’ll just work. It’ll be fun.” Yeah, that was fun for probably at best, 10 weeks. Then all of a sudden, boom. As we talk about, the beginning of your retirement plan is the most stressful time because you have your longest life expectancy, but you have all these expenses and you’re kind of cut off. Having to draw on your savings more in the beginning does make it harder down the road. It’s just simple. It’s math how it works out. They’re nothing mysterious.
Stephanie McCullough: (12:48)
We’re talking about drawing on your savings, for most people, even when they get to Social Security. Let’s be clear. Social security was never designed to be 100% of people’s retirement income. A very sad, large number of people are living on only social security. That’s not really a big number, right? We’ll remind you again, go to www.socialsecurity.gov. Create your account, log in, and look at your estimated benefits. Know that if you retire early, your actual benefit is going to be lower than that estimate because that estimate assumes you continue working until your full retirement age. It’s your current income level increased by inflation.
Kevin Gaines: (13:23)
Yeah. Everybody has this dream or this image, not necessarily a dream, but this image of relying on just having this monthly check and they’re never going to have to worry about anything ever again. That this monthly income is going to come in. Many people have this idea that it’s made up of Social Security and pension. I mean, it’s the image we all grew up watching TV or talking to our grandparents about, but that image doesn’t work because, well, you don’t have the pension and Social Security. I think the maximum benefit is maybe 2,800 a month.
Stephanie McCullough: (14:01)
I’ve seen a couple in the 3,000s, but not very much higher than that.
Kevin Gaines: (14:05)
That’s some high-income for many years to get to that number. It’s not easy to reach that. Be aware that Social Security is going to do what it’s going to do. It’s great that it doesn’t run out, most likely. It’s great that it keeps up with inflation, but it’s not 100% replacement.
Stephanie McCullough: (14:24)
Yes. You’re going to have to pull from your assets, right? You’re going to have to be growing some assets. At some point you’re going to have to tap them. Kevin, you mentioned these three categories of assets that people have. Retirement stuff – stuff in some kind of retirement account. Non-retirement assets, savings, CDs, bank accounts, investment accounts that don’t have the word retirement in them anywhere. Then other stuff like illiquid stuff, like maybe your home. That’s the thing that people often miss when they’re thinking about their retirement assets.
Kevin Gaines: (14:56)
The problem that we run into a lot is “I need $10,000 a month.” Just picking a number out of the air to make the math easy. I do the math and it’s like, “yeah, I can take 10,000 a month out of my retirement account and I’ll be fine.” The problem is you’re not living on $10,000 a month. You’re living on $7,500 a month. Or maybe you have to take out 12,500 a month. Why not 10? Taxes. In this example, that’s just federal taxes. That’s not even including state and local.
Stephanie McCullough: (15:33)
Yep. You got to keep an eye on those state and local taxes. There are states that do not tax retirement distributions. There are states with no income tax at all. Pennsylvania does not tax IRA withdrawals. There are a couple other states that don’t, but a lot of other states, they have high income taxes. So, $10,000 out of your IRA is not $10,000 in your pocket.
Kevin Gaines: (15:55)
Going back to when we were talking about the idea of what is your minimum expense and how much do you actually want to spend, guess what gets factored into that minimum expense number? Uncle Sam is going to make damn sure he’s in the equation.
Stephanie McCullough: (16:11)
Yeah. You can’t get around the taxes.
Kevin Gaines: (16:13)
When you’re trying to figure out when you’re looking at that, please don’t forget taxes. Many people do.
Stephanie McCullough: (16:20)
Just to plug again for one of our favorite things, the Roth retirement account. Kevin, we should do a whole episode on Roth.
Kevin Gaines: (16:27)
I think we can do a couple, but anyway.
Stephanie McCullough: (16:29)
Right? If you have an account that has the word Roth in it, that means you already paid your taxes. $10,000 out of that one actually is $10,000. But in my experience, most of our clients, most of the people I know, the majority of their assets are traditional retirement, not Roth. That’s something to think about.
Kevin Gaines: (16:46)
Then the other thing to take into account on the retirement account for your retirement accounts is, in most cases you’re not allowed to, or you shouldn’t be touching that money until you’re at least 59½. You can touch it earlier, but then you’re going to pay a 10% penalty. In most cases, there’s some exceptions. Now instead of 25 or 30% tax, or maybe even more, now there’s another 10% on top of that. Next thing you know, you could easily see 40-50% of your withdrawal going out to the tax man. That’s a quick way to overspend your savings that has taken you decades to build up.
Stephanie McCullough: (17:29)
That’s one of the key things to build in, right? If your early retirement is before 59½, and if most of your money is in an IRA or a 401(k) that has that 59½ restriction on it, you’ve got to think real hard about, “okay, where am I going to pull money to pay my bills?” Remember that magic 59½ number.
Kevin Gaines: (17:49)
Now we go to the next source of money, which is your taxable savings. You’ve already paid tax on this money. Maybe if they’re in investments, you may have some capital gains tax when you sell. It is a number, but it’s not necessarily going to be a huge hindrance to your planning.
Stephanie McCullough: (18:09)
This is regular old brokerage accounts, bank accounts, right?
Kevin Gaines: (18:12)
Yeah. Your emergency savings, all of this money that we say, just put aside, you’re not going to have nearly as big, most likely, most cases, you’re not going to have nearly the size of a tax bill that you would taking out of retirement accounts. There’s definitely not a 10% restriction or anything along those lines.
Stephanie McCullough: (18:28)
Right. The nice part is you don’t get any kind of tax break or tax deferral on those accounts, which is why in the industry, we call them taxable. Every year you own them, you might get a 1099, saying you had a little bit of income. You have to pay tax on that. That’s a bummer. You don’t like paying taxes, but the good part is there’s no 59½ rules. You can take that money whenever you want.
Kevin Gaines: (18:48)
Right. It gives you a lot more flexibility, which is really at the end of the day, that’s what we’re talking about here is understanding the rules, understanding your options. The more flexible you can be, the more reactive you can be to however the situation plays itself out.
Stephanie McCullough: (19:04)
So, scaling back a little bit. If someone’s listening who’s in their 40s who has the idea that “yes, I would like to retire before that 59½ age.” They’re thinking, “do I stuff as much as possible into my traditional 401(k)?” Maybe the answer for them is, yeah, make sure you get that full employer match. But then you also want to have some dollars that don’t have the 59½ restriction on them. Maybe that means doing the Roth IRA if you’re eligible or just having a regular investment account. There ain’t nothing wrong with a regular old taxable investment account growing for the retirement purpose, but not with the retirement restriction.
Kevin Gaines: (19:41)
We talk about diversification of investments all the time. Arguably more important is diversification of your investment accounts, using investment as a much broader term than it only applies to. Having stuff that you’ve already paid tax on, stuff that you can defer taxes on for a time when you might be paying lower taxes, maybe. Money that’s easier to get to, money that’s harder to get to. There’s pros and cons with each of these accounts.
Stephanie McCullough: (20:08)
Exactly.
Kevin Gaines: (20:09)
Putting them together allows you to, on any given day, there’s going to be one account that’s going to be working better for you than another. Why not have as many as you can to give you that flexibility?
Stephanie McCullough: (20:23)
When you’re looking at your assets, it’s not enough to just add up the dollar figure. We actually have an inventory sheet that we can link to in the show notes that asks the question about each individual account, right? How is it taxed? When are you able to access it? How liquid is it? That’s a really useful exercise to go through if you’re planning, “okay, when I retire before Social Security, before Medicare, where am I going to pull money from?” You’ve got to think that through. Then Kevin, the other piece of it is, all right, how do you invest those various buckets? Because as we’ve said before, once you transition from investing for retirement to actually being an investor in retirement, the factors change.
Kevin Gaines: (21:05)
They change. Again, we’re dealing with the problem of perception or collective memory or the proverbial “everybody knows.” Probably one of the more dangerous phrases out there because “everybody knows as soon as you retire, you should put 100% of your money in bonds because you can’t afford to lose anything.” Well, there’s merit to that because yes, you’re starting drawing your income. You don’t need to see 40-50% decreases in your savings because the stock market did this, that, or the other. But at the same time, remember, you’re going to be living most likely another 30, 40, or 50 years. You do still need that growth that bonds traditionally don’t provide. The key part is don’t over-adjust just because some arbitrary date comes up, age 65 or retirement. Understand that this is still, I guess you could say like a dynamic situation. It’s always changing. As things come up, you have to prepare for multiple occurrences, such as taking a check next month and needing a check in 20 years.
Stephanie McCullough: (22:27)
You’ve got two objectives for this pot of money for retirement, right? You’ve got short-term needs where you’re going to be pulling money out of here on a monthly basis. You’ve got the long-term needs. Like Kevin said, in 20, 25, 30 years, you still want to be able to pay your bills. And then inflation has come in the meantime. You’ve got the safety need for the short-term money and the growth need for the long-term money. That’s when it’s helpful, we believe, and we’re not going to get too deep in the weeds here, but when you’re doing your inventory of your various accounts, thinking about, “all right, which ones are going to serve as my short-term sources? Maybe I adjust and get it more, a little bit more conservative with those, and which ones are going to be my long-term? I really want to stay well-diversified and going for growth with the long-term ones.”
Kevin Gaines: (23:14)
Right. The answer for every one of us is different. There is no one size fits all solution here because everybody’s going to have different spending needs in the beginning versus later. Everybody’s going to have different life expectancies and different goals. Just because your neighbor said, “oh, I did this and we’re great,” doesn’t necessarily mean it’s right.
Stephanie McCullough: (23:35)
We’ve said this, but just to make it explicit again, the amount you’re going to need to fund from your own assets does go down a bit once you move from paying for your own health insurance on the private market to Medicare. Medicare still has costs, but they’re usually less expensive than buying your own insurance. Then when Social Security starts for you whenever that might be, then that might reduce the amount you need to take out.
Then another point that again, might be super obvious, but just to say it, retiring early actually gives your pot of assets two different hits. One is that you’re going to be drawing down on it sooner and longer. But the other is, you’re probably not going to be adding to it anymore. If I decide to retire at 55 instead of 65, that could be potentially 10 years of ongoing contributions and maybe employer match to my retirement plan that I’m not going to have. So there really are those two pieces happening.
Kevin Gaines: (24:34)
Right. But trying to tie these extraneous things together, think back to what we were talking about earlier about understanding your bare bones spending budget. If you decide to retire, guess what’s not part of that bare bone spending? Savings. If you retire, you’re drawing on your savings. You’re not going to be saving that money anymore. When you’re doing these calculations and say, “well, I need to have at least X amount of dollars,” maybe you don’t, which is again, which is one of the early steps we take in our planning process is understanding the spending to know how that’s going to impact what we need.
Stephanie McCullough: (25:11)
Yep. I’ve had that conversation with lots of clients. “I really, I’m sick of this high stress job. Here’s a passion thing that I love to do, but I’m only going to make, I don’t know, half of what I used to. Is that okay?” One of the things we look at is, all right, the assets you’ve saved to retirement thus far, if you add no more dollars to them but you don’t draw on them for the next 10 years, is that going to be enough? Of course, it all depends on what you need to spend. That’s one of the pieces to think about. Then the other is, maybe this is a smaller feature, but you don’t want to forget to look at whatever other workplace benefits you were getting through work. For many people, they have life insurance through work.
Stephanie McCullough: (25:54)
I’ve written blog posts on; do you really need life insurance in retirement? Well, it could be. For example, if you still have young kids, if you’ve got people that need to go through college, for whatever reason, you might still want life insurance. If your only life insurance is through work and you’re leaving the job, oops, you need to think about that.
Kevin Gaines: (26:09)
It’s not just life insurance, disability. Now you’re less likely to need it if you are retired and just living the life of leisure. But if you intend to, especially if you want to start your own business, chances are in the beginning, zero benefits. What happens if you get hurt? You still may want some sort of protection at least for the first few years. Be aware of your options on that. Is it a portable policy? You’ve got to go shop and see what you’ll be dealing with to cover yourself.
Stephanie McCullough: (26:41)
Quite honestly, as a licensed insurance agent, I’m going to tell you, it’s easier to buy disability insurance when you’re an employee than when you’re self-employed, because they want to see a track record of earnings before they’ll give disability insurance to a self-employed person. Get your policy when you’re still an employee, a supplemental policy that lets you increase the benefit when you leave and lose your group benefits.
There’s other stuff too you might get through work, right? Does work pay for your cell phone, gym membership? There could be other stuff that you have to take into account.
Kevin Gaines: (27:10)
Especially if you’re lucky enough that, senior executive, let’s play up the stereotype. The company pays for the country club membership, those things aren’t cheap. Now all of a sudden, it’s out of pocket and you may want to keep that. Be aware of that. There’s another benefit I can speak to specifically, pet insurance. Actually, the last job my wife left, they offered pet insurance. We’re big dog owners. Not only are we really enthusiastic about owning dogs, we own big dogs. We have Mastiffs. Their healthcare, it is not much cheaper than what it is for a human. When she left the job, fortunately this policy was portable. Meaning we could take it over. It wasn’t just to the company. Again, really minor thing that 99 out of 100 people won’t even think of. But again, this speaks to the little benefits that you don’t always think about that once it’s not there, then you realize it’s not there.
Stephanie McCullough: (28:10)
Ideally, you can plan ahead, look at all these line items and really understand that first question of what life is going to cost. Then as always, I feel like part of our job is to be the downer. We have to ask, what could go wrong? What could go wrong with this plan? Like Kevin said, you quit your job. You become a bartender. Pandemic hits. There’s plenty of scenarios. I’m sure many of you have lived through them or seen people live through them, right? How do you keep your options open just in case this whole early retirement thing doesn’t work out for you? Any thoughts on that, Kevin?
Kevin Gaines: (28:44)
Well, you were lucky enough to find the exit door out of the rat race. Make sure you know where the entry door is. Keep your contacts. Keep your professional contacts. This day and age with LinkedIn and these other networking things on the internet, it actually is a lot easier than it used to be. Also, the other big thing that you hear a lot is stay on top of your skills. It doesn’t necessarily mean training and continuing ed programs, but staying engaged and read. Know what the latest trends are. If things go wrong and you’ve got to go back to a job that you don’t want to do but you know the job, make sure you can still do the job and that you don’t become unhireable.
Stephanie McCullough: (29:23)
Here’s another piece. If you have professional licenses. I have a client who’s a teacher. She’s a substitute teacher. She’s thinking about letting it go, but her licenses were up for her authorizations or some such. She decided to go ahead and do them even though she’s pretty sure she’s going to retire next year. She didn’t want them to lapse just in case she’s got to go back and do some more substituting to supplement her retirement income. Thinking about for you, what does that look like, keeping your options open?
Kevin Gaines: (29:51)
Going back to our first episode, the pilot episode, if you will. I think we covered it there. When we start talking about retirement planning, it could have been the second episode. Anyway, we talk about the 18 risks of retirement planning, meaning, 18 things that could go wrong that covers a wide range of actual events. This forms part of the basis of how we help clients with their retirement planning. We’re talking about this episode retiring earlier. It’s not an entirely different event. All of the issues and concerns that you have when you retire at 75 and 80, we have retiring at 55 or 60. It’s just your options are different. Some might be better. Some might be worse, but they’re different and different things to consider. But at the end of the day, a lot of these risks don’t go away. They just might change a little.
Stephanie McCullough: (30:44)
That is true. We hope you find this helpful. Please share your stories. Are you planning on retiring early? Are you thinking about a reinvention? Do you know someone who was forced to retire early? We would love to hear your experience. As always, we’re looking for more people for our real retirement stories series. If you know someone or if you yourself would like to be a guest on the podcast and share your story with others, please reach out. We love hearing these stories. Obviously, we geek out on this stuff all day long and we’re happy to share it with you.
Kevin Gaines: (31:13)
Yeah. Don’t be shy about asking questions, either. Please reach out to us. It’s like, “you said this, I don’t understand, or what about this?” Because ultimately, a podcast episode I’d love to do at some point is just like a Q&A of listeners’ questions. Because we’re talking about what is important to talk about, but it doesn’t necessarily mean we’re covering issues that are specific to your situation. We can’t maybe go into a whole lot of detail, but we can at least touch on it.
Stephanie McCullough: (31:41)
Maybe we’ll do a mailbag episode in our future.
Kevin Gaines: (31:43)
I like it.
Stephanie McCullough: (31:44)
All right. Thanks for being with us. We’ll talk to you next time. It’s goodbye from me.
Kevin Gaines: (31:48)
And it’s goodbye from her.
Stephanie McCullough: (31:52)
Be sure to subscribe to the show and please share it with your friends. Show notes and more information available at takebackretirement.com. Huge thanks for the original music by the one and only, Raymond Loewy through New Math in New York. See you next time.
Disclaimer: (32:06)
Investment advice offered through Private Advisor Group LLC, a registered investment advisor. Private Advisor Group, American Financial Management Group, and Sofia Financial are separate entities. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. This information is not intended to be substitute for individualized tax advice. Please consult your tax advisor regarding your specific situation.