I celebrated my 50th birthday last summer. With a planned retirement date of Aug. 1, 2029, it was time I scheduled what I have been dreading for years: a meeting with a financial planner. Just as some people avoid the dentist out of fear, I’ve avoided talking to any financial planner or advisor for the same reason.
Seeing headlines like “How Long One Million Dollars Will Last in Your State” scared me, especially — I have nowhere near that. In all honesty, my savings are pathetically low. I started to wonder if I had created a future for myself where I depend on my kids’ generosity.
I spent money foolishly in my 20s and 30s. Whatever my family wanted, we bought. I drove new cars, which I traded in way too often. We traveled. I didn’t plan for retirement because I was married to someone in the military. My retirement plan was to enjoy his military retirement.
Then, in my 40th year, everything happened at once: we separated and eventually divorced, and I walked away from a house purchased at the height of the real estate bubble by entering into a deed instead of foreclosure. I’d hit rock bottom. With little savings, I didn’t want to go through the process of finding a financial planner and meeting them, only to have them shake their head at my foolishness.
But, I did it. I bit the bullet and sat down with the financial planner. And, you know what? It turns out that I’m going to be fine.
I made a really wise decision back in 2002 by working for local government. I moved to San Antonio in 2006 but returned to North Carolina in 2008, and I hadn’t cashed out of my North Carolina State Employees’ pension plan. I’m one of the lucky people who can count on a decent pension check as long as I work for the state until Aug. 1, 2029. And, considering that I absolutely love my job, that won’t be a problem.
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Though my pension will exceed my projected Social Security benefits, it won’t afford me a comfortable living. I can start receiving Social Security benefits at age 62, but my planner recommended not accessing them until at least age 67. He explained that for every year after 67 which I delayed the benefits, the amount would increase by 8 percent. Fortunately, I still have time to decide how long after age 67 I want to wait to tap into those funds. The combination of my pension and social security should be sufficient for me to live comfortably, though not luxuriously.
Since calculations for retirement are now made with a life expectancy of 95 (crazy, right?), my financial planner explained that I needed only enough money in my accounts (401K, IRA, Roth-IRA and savings) to substitute the Social Security benefits that I will not be collecting during years 61-67. Phew! That seems a lot more manageable than the million dollars or more people suggest.
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I was glad to find out that I made some wise decisions without realizing it. At this point, it feels more manageable to think of saving money for retirement to cover only a short period, to survive rising healthcare costs as I get older and for the extras, like travel, which I want to keep doing in retirement. Last month, for instance, I went to Belize for the second time because I might retire there. With a lower cost of living, good medical care and easy travel back to the U.S. to see my grandchildren (eventually), living abroad is a good option for me.
Meeting with my financial planner turned out to be a boon to my self-esteem. I know where I need to focus my efforts, too. I have homework: I need to learn how my money is invested, what my healthcare options are and more about the Social Security benefits I might lose if I decide to remarry. But, knowing the questions to ask is better than the big “what ifs” I had in my head.
If you haven’t met with a financial planner yet, I recommend doing it sooner rather than later. I wish I had done it throughout my life.
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