Which Retirement Scenario Would You Choose? Why?

[Bassn Blvd]

You're a 50yr old male.

Good health

Married

10 yr old child (college paid for)

Mortgage on house (can't sell for what you owe)

No CC debt

No other debt

150k savings

Option 1.

Retire with 90K a year for your life and lump sum of 400k. Spouse continues to collect your 90k for 10 years after your death. Spouse gets whatever is left of the 400k.

Option 2.

Retire with 120k a year for your life and zero lump sum. Spouse continues to collect your 120k for 10 years after your death.

You have to purchase (if you want coverage) medical/dental insurance for you and family out of you retirement money from either option.

Continuing to work for same company is not an option because you'd be working for only 10% of your annual pay plus medical benefits.

P.S. Spouse will continue working until she is able to collect SS or hits the lottery because she makes very little. Plus her staying home would interfere with your fishing excursions.

[NorcalBassin]

Lucky man... option 1 at a quick glance is a no brainer for me. It would take 14 years to "break even" with option 2, and with no outside debt you can live a very comfortable life on 90k/year (not to mention the $550,000 in the bank). Enjoy that retirement... the way things look now days many of us will probably be working until we're in our 70's.

[SirSnookalot]

Not being a financial planner I would't give on line advice, quite often free advice is worth what you pay for it. What I would say is, medical coverage is a major concern, good heath today is no guarantee for the future, not only for you but your family too.

[A-Jay]

Not being a financial planner I would't give on line advice, quite often free advice is worth what you pay for it. What I would say is, medical coverage is a major concern, good heath today is no guarantee for the future, not only for you but your family too.

X2 ~

A-Jay

[grimlin]

Lucky man... option 1 at a quick glance is a no brainer for me. It would take 14 years to "break even" with option 2, and with no outside debt you can live a very comfortable life on 90k/year (not to mention the $550,000 in the bank). Enjoy that retirement... the way things look now days many of us will probably be working until we're in our 70's.

If he still lives @ 80 years old,he would benefit from option 2. So would his wife. I'd pick option 2 and get medical insurance as well....

[Jigfishn10]

What's left to pay on the house and at what interest? How many more years are left?

That's a tough one, either way health and dental are expensive and premiums are becoming out of reach for the average citizen.

Why only 10% of your pay if you continue to work? I guess I may be reading that one wrong?

[Bassn Blvd]

What's left to pay on the house and at what interest? How many more years are left?

That's a tough one, either way health and dental are expensive and premiums are becoming out of reach for the average citizen.

Why only 10% of your pay if you continue to work? I guess I may be reading that one wrong?

I get 3% of my salary for every year worked. I'd get 90% of my salary at 30 yrs so if I continue working i'd only be working for 10% of my salary.

[Bassn Blvd]

Not being a financial planner I would't give on line advice, quite often free advice is worth what you pay for it. What I would say is, medical coverage is a major concern, good heath today is no guarantee for the future, not only for you but your family too.

I was hoping there would be a few peeps with simular options that could post their experience. What's the average monthly cost of medical/dental insurance for family these days? And you're correct, medical insurance is going to be my biggest expence and has me worried. I might have to keep working just to afford the insurance.

[Lund Explorer]

I was hoping there would be a few peeps with simular options that could post their experience. What's the average monthly cost of medical/dental insurance for family these days? And you're correct, medical insurance is going to be my biggest expence and has me worried. I might have to keep working just to afford the insurance.

I'm afraid I don't qualify. When I hit 50 the kids were all gone, no debts including the house, and the wife's job provides our health insurance which is the only reason she is still at work.

She has 3 more years before her retirement kicks in with insurance included. The cost of her insurance, which is top of the line - $1450 per/month for the two of us. It goes up 10-15 % every year so do the math from 50 to age 65, if medicare is going to be available.

So how many more years before the mortgage is paid off? IMHO, 50 is old enough to change jobs if you have maxed out the current pension, but too young to not look at another career. Like others have said, take all your finances into a qualified advisor near you and have them lay out the options you have both short and long term.

[Root beer]

I don't know the terms left on your mortgage, size of your household, size of your house, nor standard of living in your area but bear with me here.

What if you took option 1, pay off as much mortgage as possible with the 150k in savings.(maybe even all of it?) Then you can have 90k a year with no debt, plus 400k in reserve money. (It be nice to be retired with no debt obligation.) Pretty soon you qualify for medicare, but I no nothing about coverages and price of that (your wife should be able to get it when she gets S.S.). Then, depending on size of your household and current house you and your wife could sell the house with no debt on it at a later date and move into something smaller with that money and if anything left it will increase your reserve money. 90k a year be pretty good to live off of depending on the standard of living in your area.

It be much more beneficial if you set up a retirement budget of things you expect to spend on remaining of your retirement. Start with the necessity then explore other options that are/could be cheaper. Spend an entire week calling every insurance agent in your area gathering every information possible about best coverages for the price. After you do that you can start exploring wants and cost of those wants.(fishing trips, yearly vacations, etc) Use both options to see how much money would remain and how much cash you can have on reserve for if something comes up.

Another thought, if you choose option 1, you get 90k a year you could withdraw 20k from the 400k pool which equal to 110k a year for the next 20 years. Which is 10k less than option 2 per year. This assume you stick to a budget and plan/spend carefully. Then when your wife retires you can add her S.S. into current budget which will increase by whatever amount she gets. I think it will just boil down to your lifestyle and how much you need and want to spend per year.

[Dwight Hottle]

Talk to an accountant. Option 2 sounds like the best deal.

[K_Mac]

I think the advice to ask a qualified professional (or two) is the best you will get. I can tell you from hard experience medical expenses can bury you in a hurry. The problem with medical coverage/expense is it is not fixed, or even predictable. What is affordable today may be unobtainable in the future. Good luck.

[SirSnookalot]

See an expert, on line quarterbacking isn't the way to go.

Government index regarding inflation is anything but accurate, it never has and never will be. 90K today could be 45k in 10 years and 22k in 20 years, as far as purchasing power. The question for any retiree is " Am I going to outlive my money"?

I had a group plan for my wife and I that I started in 1996, cost was $338 per month, 7 years later when I had to terminate the plan ( retirees no longer qualified) my rate had jumped to $1200 per month, very good plan, but no dental or optical, Michigan B/x. Moving to Florida we discovered the rates are significantly higher here and the coverage is poor in comparison to the Michigan plan we had.

I'm on medicare, my wife gets on next year......ask anyone who is on it. Medicare is great, but even now some changes are taking place.

[Sfritr]

Option 3

Get rid of wife, buy new bass rig, move to Mexico and live like a rockstar while fishing ElSalto until ticker gives out. Leave remaining money to dog.......

Old joke: Put dog and wife in trunk of car and leave for an hour. Then, open the trunk and see which one is still happy to see you.

[NorcalBassin]

Does your wife have the option of getting benefits? Are you able to get your "retirement" and still work elsewhere so you could make quite a bit of additional money and qualify for benefits? Out of the two options, option 1 still seems close to a no brainer since no one has any idea how long they'll be alive.

Option 1: 90k/year + 400,000 cash out

Option 2: 120k/year + 0

I cannot think of any scenario where option (2) is better outside of if this was something like an inheritance for an 18 year old kid. Even if you live to be 100 you're still looking at 90,000/year for the rest of your life. Only an idiot couldn't "survive" on 90,000/year.