I don’t think a lot of people have control over when they retire. It’s helpful to set a target retirement age, but no one can predict when they might become too ill to work or too burned out. Many of my colleagues in their 50s have been essentially forced into early retirement, while others freelance or replace their higher salaried incomes with several part-time jobs or gigs. According to a recent article by 24/7 Wall Street, the average American is retiring at age 62. Even though I consider that “early retirement,” it’s actually the highest age since Gallup started reporting on the question in 1991. Meanwhile, near retirees and others still predict they will retire by age 66. In 2002, most people expected to retire by age 63. My full retirement age is 67, but I will receive more in benefits by waiting until I’m 70. Even though I’d ideally like to retire at 70, I am planning for a more realistic retirement target date that assumes I’ll be burned out or laid off by age 62. In order to retire early, I have to plan and save aggressively in my 40s.
Relying on my home
According to 24/7 Wallstreet, people used to rely on the equity of their homes to help finance their retirement. The buzzword for retirees used to be “downsize.” When I purchased my first home at age 30, I took out a 30-year mortgage so it would be paid off by age 60. When we refinanced a few years ago, I insisted on a 15-year mortgage so that we wouldn’t still be paying on a mortgage in our old age. I don’t even think about how much equity I have in my home. Instead, I consider my future retirement home that will be paid off.
Securing a 6-figure income
I would like to have a 6-figure income in retirement, which may be a bit ambitious considering I won’t have as much time for my money to grow. Through the years, I have picked up a lot of valuable knowledge about trading and investing. I have learned the importance of diversifying. I rely on dividend-paying stocks and funds instead of chasing after speculative stocks. Even though I don’t contribute as much to retirement now as I did when I was younger, I budget as much as I can. I plan to make catch-up contributions when I’m older since I won’t have as many financial obligations when my children are financially independent.
Most retirement experts suggest a person have 8 times their income saved by the time they retire. I have made it my goal to have 3 times my income saved by age 45; 5 times my income saved by age 50; 6 times my income saved by age 60. By the time I reach 62, I should be edging closer to having 8 times my salary saved. If not, I can continue to work and hope that my Social Security benefits increase as well. Perhaps the so-called “Social Security crisis” will be resolved in another 20 years. To be safe, I’m not counting Social Security in my retirement income calculations since it’s more like “social insecurity” to me.
More from this contributor:
Retiring on a Different Timeline Than my Husband
I’m Not Retiring Until I’m 80
My Mid-Life Plan to Save for Retirement