Is Early Retirement an Option for Me?

Added: 2026-06-03

[00:00:00][music] >> Welcome to the Jill on Money Show. It's Tuesday, June 2nd, and we are here answering your financial questions. If you have one, all you need to do is go to our website, jillonmoney.com. In the upper right-hand corner, there is a contact us button. Click that button, write us a note, and if you'd like to come on the air live, check the box, Mark will do everything else. While you're on the website, subscribe to our free weekly newsletter, comes out on Fridays, and you also should check out our subscription service called Jill on Money Live. Now, this is where you plunk down a whopping $45. Probably it's like the same as filling your tank right now.

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[00:01:33]Now, let's get to you. We are joined by Marie from Western New York. Hello, Marie. How are you? Hi, Jill. I'm doing well. Thank you for taking my call. Of course. What's going on? So, I am looking at early retirement, and it would be a modest retirement. I think I know what you're going to say, but I'm going to run the numbers by you anyways, if I may. How old are you? I am 58.

[00:01:57]Okay, married, single, partnered?

[00:01:59]Single. Okay, kids, no kids? Uh no kids.

[00:02:03]Are you, when you think about your early retirement, are you entitled to a pension? A small and I'm actually starting it now. Uh it's actually I actually forgot about that till you asked. It'll be $200 a month. Okay, so is that like your your cappuccino budget or something? Like, [laughter] right?

[00:02:20]>> Exactly. Okay. So, um are you thinking about retirement because you feel kind of burnt out? Like, I'm always interested in the why. So, tell us a little bit about what's been going on for you. I want more control over my time. Uh there's other things that I want to do that work is just interfering in it.

[00:02:42]I like a woman with a lot of things to do. I got to tell you. I mean, I really do. Um okay. So, how much are you earning right now? I earn 90 to 100. Do you have a retirement plan at your current employer? Oh, I do, but it's There Okay, there's 1,400 in there. I I just began with them recently. Okay.

[00:03:01]Okay, so tell us about the money you have saved already.

[00:03:04]>> Okay. Every everything I'm telling you right now is traditional IRA. Okay?

[00:03:10]>> So, there's 365,300 in traditional, 67 in an inherited HSA >> When did the person Wait wait wait when did that person when did that person pass away in the inherited?

[00:03:20]>> Um 16, so I don't have to liquidate it.

[00:03:23]I can take Like, I'm already getting money. They have to give me a certain percentage every year.

[00:03:28]So, 365,300 and 67 in the inherited IRA. Correct.

[00:03:34]HSA 7,000, brokerage 60K, Okay.

[00:03:39]emergency fund uh 35-ish.

[00:03:43]Okay, great. I went on the Social Security um site. If I were to take Social Security early, which I'm looking at doing, it would be 1,700, but I would only factor in 1,400 because of Medicare. So, I want to be conservative and just say 1,400 a month, but that wouldn't be until 62. Do you happen to have the number for age 67? I don't have that. I mean, I did >> Cuz I'm never going to convince you to do that. Well, you're not >> Just asking. I mean, I just I want to know if I this is like you There are certain hills I'm not going to die on. If you're like, I'm taking it at 62, no matter what. Could you be convinced, potentially? Oh, I I'm absolutely open to being convinced. Um Okay, great. All right, that's good.

[00:04:27]Let's keep going. Okay. So, what about your home? Do you rent or do you own? I own my home. There's approximately 16,000 left on the mortgage, but it's such a low interest rate. That's why I don't want to liquid I was going to liquidate from the brokerage to pay it off. No.

[00:04:43]Yeah, it's What's the rate? 3.62. 3.625, yeah.

[00:04:47]>> Not doing that. Okay, what's the house worth? 300. Do you want to stay there? I do. Okay, good. Great.

[00:04:54]Um okay, and are there any other um assets that we have not talked about?

[00:05:00]No.

[00:05:01]Okay. No.

[00:05:02]>> Fine. All right. You're single, you're no kids. You got yourself to take care of. How much money do we need to generate for you every month, not like it's a struggle, but you just want to be able to spend? I was looking at 2,500 a month. What my What my original plan was.

[00:05:22]Oh, I think I missed something. Did I tell you about the 401k money?

[00:05:25]>> You mean that 1,400? The 1,400 is in my current employer's 401k. That's correct. I do have other money in another 401k. That amount is 125,000.

[00:05:38]I'm leaving it there.

[00:05:39]>> over 125,000.

[00:05:41]>> Oh, just just some pocket change, right?

[00:05:43]No, no problem. I wanted to leave it there because I wanted to exercise and and I'm able to do it with this plan. I wanted to exercise the rule of 55. So, my plan was between 55 and 62 to use that 125. Are you going to make any money in those interim years? If I looked at your, you know, you're 58 years old, right? Yeah. And if you exercise the rule of 55 in the old 401k, so are you intending to say that you need the whole $2,500 a month from that old 401k from age your current age 58 to 62 or will you have other money to consider? Like other income. Are you going to do something part-time? You're going to have some fun? Just, you know, wondering.

[00:06:31]>> I think I am. Um, minimally. Um, like maybe to the tune of 16 16,000 a year.

[00:06:37]Um >> All right, let's say a thousand a month.

[00:06:39]Would that be okay? From employment?

[00:06:40]Would that be okay?

[00:06:41]>> Yeah, that'd be fine.

[00:06:42]>> Yeah. Like if you said, "I'm going to spend $2,500 a month, but I'll figure out a way to make $1,000 a month at least from age 58 to 62." Is that fair?

[00:06:54]>> Yeah, no, that's totally fair.

[00:06:55]>> You feel comfortable with that?

[00:06:56]>> I do.

[00:06:57]Okay. So, now from the old 401k, the $125,000 account, you would take money out every year, right?

[00:07:08]And maybe you'd take out like $2,500 bucks a month, $3,000 a month. We'll see.

[00:07:15]You'd pay tax on it. You live in a high tax state, New York, so we know you have to pay taxes, but you live on whatever that is, that thousand of income plus whatever you take from the 401k until age 62 when you would would potentially claim social security. Does that seem like the sort of general game plan? Does it seem okay? That That was my plan. And then at 62, Yeah.

[00:07:37]>> presuming social security is probably not not to be enough at 1,400. At that point I would then access the um >> Yeah. Yeah. Yeah. Yeah.

[00:07:45]>> Traditional. Okay. Let me ask you a couple questions. Okay. How's your health? Right now it's good, but I have I I've had some setbacks recently. Okay.

[00:07:54]The reason I ask that is not like to be coy. It's because if your life expectancy is not great because of either your health history or your current health, then drawing at 62 might make sense. For real. Do you have health care? Like what's going to happen if you said you know you you called it quits right now, how are we paying for health care from age 58 to 65? I I do have that covered.

[00:08:19]Oh, okay.

[00:08:19]>> Yeah. So that's covered even in the $2500 a month, right?

[00:08:23]>> Yes, that's covered. Okay. Okay. So game plan, let's go back.

[00:08:29]$1000 a month of some income from age for the next 4 years.

[00:08:33]Plus you take a distribution from your old 401k. That 125,000. Maybe it's going to be like I said, maybe it's three grand a month so that you have 36,000 bucks plus your 48 that you have like 48,000 of gross income. You pay your taxes, you boil it down, you have plenty you got your $2500 a month. No problem.

[00:08:52]Good, right? Right. You feel good about that? I do, but I I don't know how I could do it based on the numbers you said. Like if I if I took out 3000 from the 401k We're going to get rid of that 401k. That's going to be drained by the time you get to be 62.

[00:09:08]>> 62. Right. Right. That's done. Okay.

[00:09:11]Yes. I'm cool with that.

[00:09:12]>> Okay. Now, what's left? You're 62 years old, right? And at 62, maybe you don't want to work at at that $1000 a month or should we What do you think? I would like to be conservative and say, yeah, I don't want to work at it. And if I do want to work then I have extra money.

[00:09:28]Okay. So then we have 62 onward, we have I'm just saying 1700 cuz that's the gross amount. I know you have to pay for health care, but I just let me let me do 1,700 a month for for your social security. Okay. And then we basically need to come up with more money coming out of your accounts to kind of make it work. There's two ways to think about this, okay? Depending on like really how you feel.

[00:09:55]And that is one, hey, I keep working.

[00:09:58]Let me put some more money away in the old 401k. Then I don't have to start drawing down, but I want to get towards, you know, I need a few You need a few more years, okay? Partially because not because you spend so much money, but we just want to keep pushing some more money into savings and also shorten the time. I would like you to find out what the benefit at social security would be at age 67. See, the problem with 62 is I I again and I I I really does depend on your health, so I don't want to like get in your head about this. If odds are you're not going to live past 80, then you should you should claim whenever you decide to call it quits at work. So, 62, 63, 64 is fine, right? But if you really are overstating that and you think you're going to You know what? I talked to my doctor. So, I'm I'm probably going to live till I'm 80. I'm going to live till I'm 85. Okay.

[00:10:51]If that's the case, then I'd rather you I'd rather see what the number is at 67.

[00:10:55]Put it this way. If you worked for even just a couple more years, it would prevent you from pulling money out of the 401k. You'd save a little bit more money and then you could do the same scenario and then see if it works. You know, hey, if I work two more years, what would happen? 60 I'd make the same $1,000 a month from 60 to 62 or 63 and then now we're going to starting to talk. I need a little bit more of a cushion. That's what I think. It doesn't mean you have to spend less, but I think if the the only way to really change the calculation here is to really focus on what you can control. When do I retire, right? And what do I spend? If you really think that your $2,500 is the $2,500, that's that, then you've got to make a decision about whether you say, "Hey, am I going to work longer full-time, or am I going to commit to saying whenever I stop working, I need to work not just till I'm 62, I need to work till I'm 65." Those are the kinds of things that you can control. How much more do I need? It's a a little bit of a moving target. Where we are today, I think you need a I think you need two more years of work.

[00:12:04]And then I still think you need to commit to kind of create a $1,000 a month of income.

[00:12:09]You should look at maybe what would your Social Security payment be say at 65, and then 67. And I think you'd be surprised that the numbers start to go up pretty dramatically. Okay, I can do that. I can do that. Do you have your estate documents? You got a will?

[00:12:24]>> I do not, and I'm I will be getting that done in the next few months.

[00:12:28]I know. I liked you all the sudden and I liked you, [laughter] and then I turned on you viciously. Um get that done. Do you have a legal service benefit through work? We don't.

[00:12:39]No. No. I'll go to an attorney. I know it's old. Yeah, I'm going to I'm going to do it that way. Good.

[00:12:45]Okay, Marie, uh go off and um get ready for football season. I know that you're probably a Buffalo Bills fan cuz you're Western New York, so I'm just going to assume that. For everyone else listening, are you thinking about calling it quits? Do you need a little guidance? Do you not trust the calculator that you're seeing on the website? [music] I know. We are good like that. We're like the set of eyes and ears that work on your behalf. Get in touch with us by going to jillonmoney.com, click the contact us button, write us a note, [music] and if you would like to join us live, check the box, Mark will do everything else.

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[00:13:35]Thank you for listening and we'll talk to you tomorrow.