Help Me Retire: We’re 57, and our work is unpleasant and tiresome. We have $800,000 in 401(k) plans and $1.15 million in a pension. Can we just retire already?


Dear MarketWatch, 

My wife and I are both 57. We had always planned on working well into our 60s, but the past few years, with COVID and changes at work, have us both considering retiring in three years, when we are 60. 

We could work longer, but our work has become unpleasant and tiresome. The house and cars will be paid off. However, our daughter, who we had later in life, will only be 13. We currently have about $60,000 saved for her college but would like to have more. My retirement income will be about $60,000 from a government pension and I have about $160,000 in a 401(k). My wife has about $650,000 in her 401(k), which has fared poorly in the last few years. I am entitled to about $25,000 per year from Social Security and my wife to $30,000 per year, but who knows if the federal government will pay what it has promised. 

Estimates of how much you should have saved to retire vary wildly. My pension is supposedly worth about $1.15 million, but that depends on how long I live. Once the house is paid off, our expenses will run about $3,000 per month, excluding hobbies and travel. I have inexpensive hobbies, but my wife likes to travel, which gets pricey. The other big variable is health insurance. We are relatively healthy, but we don’t qualify for Medicare until, I think, age 63. 

Does this sound like we have enough saved to be thinking of retiring at 60, or are we fooling ourselves?

See: I’m 49, have $1.2 million in savings and just lost my job — can I trust the retirement calculators telling me it’s OK to retire?

Dear reader, 

I can’t tell you if you’re safe to retire or not. That’s a job for a qualified financial planner who can look over all of your information and have a one-on-one conversation with you. I can, however, point you toward a few resources and give you a couple of thoughts to consider. 

You’ve saved a lot of money, and your pension is definitely a plus, but you may still want to proceed with caution. You’ve already pointed out one major expense after you retire — healthcare — and that alone could have you spending down much more of your retirement assets than you’d like until you reach Medicare age. By the way, that age is 65, not 63, so that means two years more than you may have anticipated. 

A 65-year-old retiring in 2023 can expect to spend $157,500 on medical expenses in retirement, and a couple can expect to spend $315,000, according to a Fidelity Investments estimate, which assumes the retiree has Medicare Parts A, B and D. That estimate does not include long-term-care costs, nor does it incorporate private health insurance. 

Healthcare coverage from the marketplace, which is where you may turn if you and your wife retired early, depends on where you live and the type of plan you choose. The cost also varies. For example, an early retiree could spend an average of $1,075 for monthly premiums in a silver plan (with an average of $4,553 for a deductible and a $7,805 average for maximum out-of-pocket costs), or they might spend $1,309 on monthly premiums in a platinum plan with an average $319 deductible and $3,550 out-of-pocket maximum, according to an analysis from MoneyGeek. I know you said you’re relatively healthy, but you’ll want to strike a balance between the premiums and deductibles if you have regular checkups, or if you expect you will be visiting doctors more often in the following year. That’s the key — you’ll need to consider not just how you’re feeling now, but what medical expenses you anticipate having in the year ahead. 

There’s no one answer when it comes to how much you need to save for retirement. No one can really know for sure. But it is always better to be conservative in your math, especially when you’re thinking about no longer working and therefore no longer bringing in that income. The top regret older Americans have is not having saved more for retirement, according to a poll of 1,700 Americans ages 50 and older. 

Instead of quitting, full stop, would you and your wife consider part-time work? You may even be able to find a job with healthcare benefits, which is a great perk until you’re 65. And if you’re earning money, you might not need to tap into your retirement assets, which will let that money continue to grow and preserve it for when you’re older and no longer able to work. 

The job you choose wouldn’t have to be in the same field you’re already in. You’re already considering retiring fully, so taking some time to find another job in a profession you’re interested in, or that loosely uses the skills and knowledge you’ve already acquired in your careers, could be an option. 

You mentioned Social Security annual estimates, but that figure depends on when you begin claiming. For example, the youngest either of you could begin receiving Social Security is at age 62. The earlier you claim before your full retirement age, the less you’ll receive in monthly benefits — and that’s a permanent reduction. Anyone born in 1960 or later has a full retirement age of 67, so if you claim at 62, you’d get only 70% of the monthly benefit you’d have gotten at age 67 as the primary wage earner. If you waited until 65, you would get 86.7% of your full benefits. Your benefit continues to go up the longer you wait past your full retirement age, up to age 70, although you may not want to or be able to delay that long. 

Also see: I’m 50 and divorced with no kids. I have an MBA but am afraid I’ll still be working when I’m 70.

As for your daughter’s college education, it is absolutely wonderful how much you’ve already saved and that you want to keep going, but you may need to balance that goal with your own needs. Advisers say it all of the time: You can take out a loan for college, but you can’t take one out for your retirement. As amazing as it would be to keep saving for her future, first ensure that you’re covering your bases for your own — especially since you are considering retiring early. 

One of the greatest gifts you can give your child is financial literacy. Beyond saving for her education, teach her about money. For example, if she does end up taking out student loans, look through the various options she has for schools, majors or potential scholarships, calculate how much student debt she’d have and her possible monthly payments with various interest-rate estimates, and explain the impact those loans will have after graduation. So many students are not armed with the knowledge of how their college choices and the loans they take out will affect their futures when school is over, but having those talks and doing some of the math with her could make a huge difference well after she graduates.  

I highly encourage you to seek out a qualified financial planner, who can talk to you more specifically about your personal finances and give you some clear paths to take to help you achieve all of your goals. 

Readers: Do you have suggestions for this reader? Add them in the comments below.

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