Pre-Retirement Anxiety
Building your nest egg is only the first step.
I’ve always had an almost crippling fear of unemployment. My parents may never have showered me with hugs and kisses but they certainly drilled in a work ethic and a fear of job loss. My Dad was an electrician by trade. Finding a job was a challenge at times. I mean anything that could incent you to move to Detroit in the late 60’s had to be desperate circumstances. Yes, they moved into Detroit with two infants just as the riots started. My Dad was also laid off a couple of times during my childhood. Running a household of six on a tight budget left an impression — likely too deep of an impression.
I was instilled with an end-all, be-all regard for work that has meant that I’ve gritted through jobs where I was emotionally, verbally, and sexually harassed. I stayed in each case — simply because it was a really great paying job. I knew the value of money and I knew how to pinch a penny. And, I began saving for retirement from my very first paycheck. With each pay raise, I continued to live as close as possible to my prior salary and pushed the increased earnings into a savings account. Life, marriage, kids, and a house meant my expenses expanded but I’ve lived well beneath my means for my entire life.
A strong work ethic combined with a health amount of frugality and savings discipline has resulted in the distinct possibility that I could retire anytime now. I am only 48 years old. And, all I feel is fear rather than joy for what I’ve accomplished.
If I tell my parents I am going to retire at 50, I guarantee they will go through the roof with worry. I may need to pretend to still be employed so as not to send them to their graves early. My husband is an accountant and assures me the numbers are there.
In the decision to retire early the ultimate calculation is to determine if you have a large enough retirement fund to support you for the rest of your life. You are fundamentally looking for that sweet spot between life and death.
Let’s look a little deeper at those two items
1. When will I die?
2. How much money do I need?
When will I die is easier to answer than ever. Data science and genetic testing are providing significantly more accurate estimates. Beware of sites with detailed quizzes that are followed by ads pushing you to use their retirement planning tools. I’d say they might be bias toward the highest life expectancy in order to gain your greatest interest in their services. I’d consider those sites to be offering the most optimistic number. For a simple answer, the government is happy enough to calculate life expectancy for you at the Social Security Website.
How much money do I need? This is also an easy calculation that can be done in a pretty straightforward way. You can find lots of calculators online or mobile apps. I’m a bit of a junky when it comes to these calculators and my favorite is fncalculator.com which offers both a Web and mobile app version of their tools. As a simple alternative, you can just go with what my 82 year old parents told me last weekend. You need as much money as you are earning now, minus any monthly savings. The types of expenses have changed for my parents, but have not reduced. As they near the end of their lives they eat out less, but need more medical supplies. They don’t travel, but they do have hospital bills. Ok, that’s overly sad. But it is simple and true. And, it makes the calculation easy. You need as much money as you are earning now.
After plugging through my own calculations, my husband is correct. When our nest egg is aligned with my predicted years until death, the money is there, I can retire when ready. The anxiety for my generation is much larger than in the past — for the most part there are no pensions waiting for us. Most of my generation is entirely dependent upon their own savings which are largely invested in the stock market. This nearly 10 year bull market run scares me. What goes up, must come down and all that. How many of us will be running right into the bear in next five years? What then? Back to work in a down economy. I already watched that horror show in 2008 when many people on the verge of retirement had to suddenly defer until later. I am a hopeless case of financial insecurity. Regrettably, my worrying will likely keep me working, stealing early retirement from me.
