Planning Around a Forced Retirement
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At Robert half, they know talent. Visit Robert half dot com today. Welcome to the drill on money show. It's sunday, november third, and we are here answering financial questions.

And we do that seven days a week, but not for long because at the end of this year, gang, we are taking your vice. We are no longer going to be broadcasting on the weekends. You know why? Because it's exhAusting.

We need a break. So thank you for all of you who have actually helped make this decision. We are still going to be broadcasting five days a week and also on the weekends for the remainder of this year at least. If you've got a financial question, go to our website com, click the contact button and let know how we can help you out. Today we are talking to Michelle, who's underline from new jersey.

okay? So my husband is forced to retire at the age of fifty five. Since he is forced to retire at fifty five, we are beginning to talk about possibly leaving new jersey.

Want he retires. I am forty eight years old. He is forty eight years old. And we, would you like me to go right into?

So first all to have kids.

Yes, we have four children.

Boy, okay, I will do okay.

I have a seventeen year old. I have a sixteen year old, and then I have thirteen year old twins.

Oh my god, you're telling us with the everything. okay? So he's going to be forced to retire at fifty five. Will he have a pension when he retires?

Yes, approximately the sixty five hundred dollars a month.

And does that start immediately? Or does he have to wait to start .

the clock on that? That starts immediately. And the way that IT looks right now, he will have health insurance as well covered for him.

And for you guys, just go, okay, god, okay. Plus health insurance, will he be entitled to social security in addition to his pension?

No, he will not.

How much is he earn right now?

occurrences? He is earning about one hundred twenty thousand dollars.

And what about you? You working in out of the home.

what you doing? Yes, I do renting. I am a practice, and I make about sixty thousand dollars a year.

How's your cash flow on the sixty plus? The one twenty, the one eighty, how you guys doing, you feel like you you're doing okay.

I I do I do I would say about a month for retirement since listening to you. Thank you so much. Um i've really improved my structure and how I how I budget my money. So currently in retirement in a four fifty seven, my husband has approximately three fifty thousand, i'm sorry, five hundred thousand dollars.

thank you. Dollars o in a traditional .

four fifty seven, he has approximately fifty thousand dollars in a rough or may I have a hundred fifty thousand in a traditional? I have about sixteen thousand in a step and I have twenty thousand in a rough.

So those are your retirement assets. You have non retirement assets as well.

All we have is thirty two thousand in an emergency and that is all we have.

Okay, that's okay.

Um do you guys owe your home? Yes, we um you know where older or forty eight, our house is paid off and that is worth approximately twenty six hundred thousand dollars, I would say.

What's the game plan when he retires at fifty five? Would he work in something else in some other job?

What do you think that is? I'm sure he will do something part time OK OK.

And what about you? Do you think you would continue working, making your, you know, you're sixty?

Yes, absolutely.

How long do you think you work?

Oh, my goodness. I would say till i'm about sixty.

by the time you guys are both fifty five, then you work until you're sixty. So we got five more years then and and then what do you think is the need in terms of your splendid like your income needs like right now, how much you putting away into retirement each month?

We are putting about three thousand a month into retirement.

And are you putting any money away for college or anything? Or you're just going to pay that out of cashless?

What's the game plan on that? My plan is cash flow. You know, I live in southern new jersey, and I had to pick a lot of bluebook ries and pack a lot of blueberries to get myself through college.

So i'm sorry, if you want to go to college, if there is a will, there is a way we will help you. But, you know, we did things on. My husband and I had to do things on our own will, of course, help our children. But of course, they have to show that they are putting in the effort as well.

So I ve okay. So if if you're saving three grand a month and you got your home is already paid off, do you have an idea of what your expenses are?

Our expenses monthly or about seven thousand dollars.

So I mean, it's pretty amazing because if you look at you the pension that he'll receive, you said sixty five hundred a months. I know that's pre tax. Does IT have a cost of living adjustment associated with that pensioner is IT a flat pension amount.

is a flat pension amount.

But I mean, obviously from fifty five to sixty guys are golden because he he gets the pension. You're continuing to work, you're fine. Everything you're paying for, everything that's cool, not a problem.

So from age sixty until so let me just look at this. So sixty until your full retirement age, since he doesn't get social security, you are full retirement age of sixty seven. yes. okay. What's the amount that you would receive in social security at age sixty seven?

About twenty five hundred dollars.

So then your social security, plus his pension is, you know, IT kind of gets you there right of about ish. You know, when you do of this other money that saved, I think IT from sixty to sixty seven is what i'm concerned about. Not concerned that that's a period of time where we know you have a gap.

We have a gap between what you need in terms of your expenses. You're real after tax expenses of seven grain a month and what's coming in, which is his pension, which is a pretax sixty five hundred a month. So here's my question to you.

What do you think from sixty to sixty seven, do you think you guys are both basically done completely and you want to be done because we can figure this out? I think you could do IT. And just I just want to make sure we're using the right presumptions.

Yes, I would like to be finished.

okay? You say the houses paid off is the game plan that once the kids, the twins are done with school, you sell and you go someplace else? Or what? What do you think the game plan is?

Yes, thinking about a state with lower taxes.

give like a florida.

florida tennant's.

See what's in tennis. Ping sely.

The lakes are absolutely beautiful there. The mountains are beautiful market .

I just pissed off everybody in tennessee ah but she's says supposedly I suggest a visitor to I love IT so let's just have you done any of this like fantasy land stuff like well I word moved to tennesee and move into delhi parkin's old house. What I would cost you another would, do you think you could size and put a couple hundred grand away in today's dollars? absolutely.

Then you're golden. You're golden, right? Mark, is that right? Because essentially, even if they just said let's do IT in today, we sell off for six hundred. We buy four hundred.

We have two hundred liquid to get us through sixty to sixty seven, which is a really only funding a few thousand, let's call a thirty or forty gRandy year. And I can do that for seven years. There is one thing i'd like to just wonder about, and that is i'm taking building up some of your liquid assets, meaning your non retirement assets.

I love the rough. I love the pretext. I love all that. But I think just because we have a nice amount of time here in the next dozen years, instead of, say, three grand a months in retirement, maybe I would be two thousand, and we would take that twelve thousand dollars a year and start creating a plain boring broker account.

The reason I would like that is that I don't want you to be under the gun to have to sell this house because I don't know where the things happened. Like, and you have this feeling that maybe you will come to me someday and you'll say, those kids, they were so great, they put themselves through college. They are all settling within ten miles of where I am, and i'm not moving anywhere because I want to be near them.

And if you want to have that flexibility, you're going to have to save some money outside of retirement accounts. And I think that that's fine. I mean, you can totally do that in your husband's plan in his four fifty seven.

Is there any matching or contribution from the employer? no. And yours, is there? no? okay. So in this case, I think that would be well worth your tax hit to really say a, you know what, i'm going to have a little extra money around because it'll give you some more flexibility.

I just don't want you to be in this moment where it's like from sixty to sixty seven, you hit a magic. You like all we have to move, otherwise this won't work. And I don't love the half to us.

I'd like if you want to. great. But I think that if we have this as your working game plan, you got a little extra money on hand to do this. great. Are you self employ because you do have a your a step?

Yes, I am.

If you wanted to work a little bit more or reduce your hours from, you know, fifty five to sixty, keep working. But like sixty to sixty five you feel like okay, or sixty to sixty, like if you needed to do little more work, could you IT on and off at at decadents.

that would work for you? absolutely. I could do that.

So then I think you're great. You're in great shape.

fantastic. How much would you recommend us having in cash?

When I look at you, if you look at your expenses of seven thousand dollars a month, you can say to yourself, well, six months of those expenses is what I have to have the base amount, six months. So six times seven, you got that you're a little bit underfunded in your emergency. But I D say you like to have you have maybe fifty grand in the emergency reserve fund that would be good for me. And that means that maybe when we start pulling back on your retirement contributions, that you start with pulling some money back and just beefing up the emergency reserve on to fifty and then want to get to fifty, then we can start with a broken age account.

Okay, where should we back off with the retirement? His four, fifty seven or my sap?

Where's the four fifty seven account held?

They just switched companies. IT was held with potential.

Where's your step held? delity. Okay, pull back on the with his and use yours because you're going to have Better and cheaper options.

Do you have some life insurance? Yes, we do.

We have term great. And a state documents are done .

that is all set well.

listen, IT has been a delight, Michelle, or anything else we can do for you.

Thank you very much.

If you have something going on, if you need our assistance, just give us a hoor. Go to our website, jill, on money to com, and click the contact us button and we will get your note. You can subscribe to us on the odessa APP or wherever you find your favorite podcast.

And as always, we encourage you to lift someone up, change your work, change your wealth, change your life. Thank you for listening. We'll talk you tomorrow.

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