I'm A Single 57-Year-Old With No Debt, $1.3 Million In Savings, And $65,000 Pension – Can I Retire Early?

A recent post on the Bogleheads Forum illuminated a common dilemma for those nearing retirement: deciding whether to retire early.

A 57-year-old user, currently single and living in a low-cost-of-living area with no debt and a paid-off home, is contemplating retirement. With a current net worth of approximately $1.3 million, the user is trying to determine the right time to retire.

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Financial Overview

The user's financial situation includes:

• $750K in a 457(b) plan

• $275K in a Roth IRA

• $275K in after-tax accounts

• $30K in savings

All investments, except savings, are allocated in a 60/40 portfolio. The user plans to rely on a pension of $65K annually starting at age 60, which includes a 3% cost-of-living adjustment after the first four years. Social Security benefits of $6K annually are expected to begin at age 70.

The current spending is around $60K per year, though the user only spends $40K and is looking to add some extra cash for more enjoyable activities.

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Key Concerns:

• Health care Costs: The user will need to secure health care through the ACA exchange, estimated to cost about $500 per month.

• Daily Activities: The user is uncertain about how to fill the next 30 years and plans to start volunteering while pursuing interests like playing in bands.

• Decision to Retire: The user is seeking reassurance about the decision to retire now rather than work another year to slightly improve financial security.

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The Bogleheads forum responses offered various perspectives and reassurances:

Forum members assured the user that their financial situation is secure enough to support early retirement. The pension, despite its lack of inflation adjustment in the initial years, along with existing investments, should comfortably cover expenses.

Regarding boredom, suggestions ranged from finding fulfilling activities and hobbies to maintaining flexible plans. Volunteering and other hobbies like playing guitar were noted as great ways to stay engaged.

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Several users emphasized that retiring is deeply personal and not purely financial. They advised considering whether the current work is enjoyable or a source of stress. The consensus was that if financial concerns are minimal and personal fulfillment is prioritized, retiring now could be a wise choice.

Overall, the majority agreed that the user is financially prepared to retire and should focus on what will bring personal satisfaction. 

Retiring is as much about personal readiness and happiness as it is about finances. As one forum member aptly noted, "The only thing you can't buy is more time, so would you rather spend it working or doing whatever YOU want?"

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