I’ll be 60, have $95,000 in cash and no debts — I think I can retire, but financial seminars ‘say otherwise’

I would like to start taking my Social Security at 62, (around $1,100 per month) and maybe still work part time. The job is very physical and not something I would be able to do for more than a few more years. At 64, I will have a pension of $1,900 per month. I don’t spend on anything unless it’s really needed. For example, a new roof last year.

I have a potential inheritance of $300,000, but I know not to count on it as a sure thing.

I think I will be fine financially, but have been to a couple financial seminars that say otherwise.  Are they truthful or just looking for a customer? 

Curious George

See: ‘Is my financial planner crazy?’ We’re 55 and 60, five years from retirement and were told we should invest more aggressively

Dear Curious George, 

Financial seminars can be a really great starting point to vet for yourself where you are in your journey to retirement, so kudos to you for attending multiple! 

Just like those financial seminars, I have limited information on your financial situation so I can’t say for sure whether or not you’re set for retirement in a couple of years. For example, you mention having $95,000 in cash and savings in a 401(k) but I don’t know for sure how much is in that 401(k). I can, however, tell you that if they’re saying you should hold off on retirement, it’s definitely worth considering why. 

For example, in retirement, you’ll have your pension and Social Security, which is great — not a lot of Americans have a pension anymore — but will those be the heavy drivers of your retirement income? If the $95,000 you have is the primary nest egg for your retirement, maybe not. Think of it this way: let’s say you were to retire at 64 when you get that pension, you could live another 10, 20 or even 30 or more years. That approximately $100,000 likely won’t stretch that long.  

If you have more stored away in your 401(k), ask yourself the same question — is what you have invested enough, based on a few factors like cost of living, life expectancy, expected and unexpected expenses and so on? Here’s a retirement calculator that can help you crunch a few figures to get an idea. A note on this — financial calculators are just like a drawing board. They’ll give you an idea of what you may need, but you shouldn’t base your retirement on one. 

A qualified financial planner is a much more reliable choice, and if you can afford to see one even once for a financial check-up, it may be worth it for you. They’ll look over all of your information, unlike a financial seminar, and if they’re a certified financial planner, they’re required to work in your best interest. Here are a few questions you can ask a professional to see if he or she is a good fit for you.

Check out MarketWatch’s column “Retirement Hacks” for actionable pieces of advice for your own retirement savings journey 

People do retire with that much money, some even retire with less if they have to, but if you’re in a situation where you can continue to generate an income — is it worth giving that up? 

I know you mentioned maybe continuing to work part-time if you were to claim Social Security at 62, and that you have a physically demanding job. Instead, is there a way for you to find another type of job utilizing your skills and experience? You could probably translate what you know and do now to something that’s less strenuous, such as staying in your field but taking on a teaching or consulting role. If you do that, you may make the same amount of money — or more — and could potentially live off of that while letting your Social Security benefits (and 401(k) assets) continue to grow. 

When you claim Social Security at 62, you’re getting a reduced amount, and that amount will remain reduced for the rest of your life. If you wait until your full retirement age, you’d get 100% of the benefits you’re owed. The longer you delay until age 70, the more you get in your benefit. I’m not suggesting you wait until age 70, but just know if you can keep bringing in an income and enjoy your life all the same, it’s worth thinking about holding off on Social Security as long as you can. (This decision depends on numerous other factors, though… not just if you’re able to afford delaying your benefit, but if you think you’ll live long enough to enjoy it after you begin claiming. Longevity is a key component when deciding when to claim Social Security). 

Also, depending on how much you earn as a part-time worker after you claim, the Social Security Administration may withhold a portion of your benefit. You’d eventually get that money back when you reach full retirement age, but it’s something to keep in mind. 

Also see: ‘I don’t think I can wait until 70’: I’m still working at 66. Should I wait or claim Social Security now? 

Healthcare is very important. It’s also very expensive. Working a job that offers that benefit would save you a lot of money until you’re eligible for Medicare at age 65.

One more note on your spending. It’s great that you’re able to live comfortably without spending so much, and that you live in an area where the cost-of-living is manageable. Still, you did highlight a very real possibility of an emergency situation. A new roof probably costs a pretty penny, and situations like that can arise well into your retirement. It could be a home or auto repair, a health expense or anything else really. If you’d have to tap heavily into the amount you have saved, that could easily derail your plans and make you much less comfortable in retirement. 

You’re also right not to rely on an inheritance. Anything can happen until you expect it, and while it would be a nice inflow of cash to use in your old age, it’s definitely not something to bank on. Make a Plan B or Plan C that incorporates that money in your financial plans, but don’t make it Plan A. 

I hope this helps. It makes absolute sense why you wouldn’t want to jump on something you see in a financial seminar, because it’s true — sometimes, these sessions really are a sales pitch — but it doesn’t hurt to do a bit more reviewing before you start your retirement. And it’s great that you have clearly already started!

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