By Alessandra Malito
‘We have no debt’
“We are buying long term-care insurance for a total cost over 10 years of $90,000.” (Photo subjects are models.)
Dear Help Me Retire,
I am 56, and my wife is 50. We plan to retire at age 62. We each earn $100,000 per year.
We have $973,500 in Edward Jones investments, $46,600 in our Robinhood (HOOD) account, $72,800 in high-yield savings accounts and CDs, and $15,900 in savings and checking accounts. I also have a life insurance policy with a cash value of $9,600.
My Social Security benefit would be $2,200 per month if I take it at age 62. My wife’s Social Security benefit would be $2,500 per month if she takes it at age 62. We are purchasing long-term care insurance with a $90,000 benefit for 10 years. It is a hybrid plan, so if we do not use it, the premium will go to our survivors.
My wife will receive a pension of $2,600 per month when she retires. When I retire at age 62, I will receive health insurance through my wife’s employer until she retires. We have no debt. Do you think we would have enough savings to retire earlier?
Ready for Early Retirement
See: I’m 57 with $400K in retirement savings and $94K in debt. How do I restructure my loan payments?
Dear Ready,
You’ve clearly been planning well. However, you’re currently focused more on estimated retirement income than on what your spending will look like in retirement. That distinction matters, because whether you’ve saved enough ultimately depends on how much you spend. For some people, $1 million is more than sufficient, while for high spenders it could be depleted in just a few years. With all of your income sources – your savings, your wife’s pension and combined Social Security – you have $87,600 annually before tax. That’s a solid start, assuming your expenses don’t exceed that.
I often hear from readers wondering whether they’ve saved enough for retirement, especially if they hope to retire early. The 4% rule is a good starting point. Under this rule, a retiree withdraws 4% of their savings in the first year of retirement and adjusts that amount for inflation each year thereafter, with the goal of making the portfolio last about 30 years. A $1 million nest egg would mean withdrawing $40,000 in the first year and adjusting for inflation going forward.
While the 4% rule offers a helpful starting point, the actual answer depends on several factors, including annual spending, additional retirement income, asset allocation, market returns, and inflation. Some of these variables, such as when you claim Social Security, are within your control, while others are not. In your case, your wife’s monthly pension may mean a 4% withdrawal is more than necessary, allowing more of your savings to remain invested and continue growing over time.
Retiring at 62 is the earliest age at which retirement benefits are available. However, claiming early results in a permanent reduction in benefits compared with waiting until Full Retirement Age. At FRA, you receive 100% of your benefit, but individuals can claim earlier or later. Social Security incentivizes delaying benefits up to age 70 by offering delayed retirement credits, which increase benefits by about 8% per year after Full Retirement Age.
Do you have questions about retirement, Social Security, where to live or how to afford it at all? We want to hear from you. Join the conversation in our Facebook community: Retire Better with MarketWatch.
Depending on how much income you need each month or year, and how that need compares with what you plan to withdraw from your retirement savings, you may find that you don’t need to claim Social Security as early as 62. You might also decide that only one of you should claim early. For example, your wife appears to have a slightly higher Social Security benefit. You could choose to claim early to bring in additional income, while she delays claiming so her monthly benefit continues to grow.
There is no single right answer when it comes to claiming Social Security. Some people need to claim as soon as possible, while others expect to live well into retirement and choose to wait in exchange for a higher monthly benefit. You still have time before you both retire, so start planning what your ideal retirement looks like now. Consider where you’ll live, how you’ll spend your time – including hobbies, volunteer work, and travel – and what those choices will cost.
Healthcare will be a significant expense, but if you remain covered under your wife’s employer-sponsored insurance until she retires, you’ll be on Medicare by then and will only need to budget for private insurance for her for a few years. Long-term care insurance can also play a valuable role later on, and it’s wise to account for potential home improvement projects that make your home more age-friendly.
Once you’ve outlined these expenses – home repairs, transportation needs, utilities, travel, gifts, large purchases, and a reserve for the unexpected – you’ll have a clearer picture of how much income you’ll need. Start by subtracting your guaranteed income sources, such as your wife’s pension, from your projected expenses. Afterwards, you can determine how much you’re comfortable withdrawing from your retirement savings and when it makes the most sense to claim Social Security.
You’ve done a great job planning so far. Use the next six years to refine and fine-tune your strategy.
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Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com
-Alessandra Malito
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01-17-26 0812ET
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