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June 28, 2010

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averagejoe

You're just finding this out now?

Jonathan Pond, beloved PBS retirement guru has been vehemently against early retirement always, as one of his writings declare:
http://www.jonathanpond.com/retirement.earlyretirement.htm

According to Pond, he says it is almost always impossible for anyone to support and maintain an early retirement. His predictions, given out long ago, was that eventually early retirees would be forced back to work. Not a good thing when you may find yourself too old to work.

Taking time off in your 30's and 40's to travel and experience life, and then return back to the work environment may deem to be more attainable, justifiable and beneficial to ones bottom financial line.

Jonathan Pond also appeared in a new, recent PBS Q&A called 'ready to retire?' Again, Pond joked and reiterated that it was nearly impossible for anyone to retire early. 50's were out. 40's unthinkable. But good luck. What does Jonathan Pond know, right? Prove him wrong. We'll be waiting for your results.

Retired Syd

@averagejoe: Indeed, this study should be good news for those that find they need to return to work for financial reasons as well.

Steve

Jonathon Pond crunches numbers and addresses longevity probabilities. What I never here him talk about is quality of life. Often he talks about preparing to live into your 90's. I'm not sacrificing living a good life now to ensure I'll have money to pay someone to change my diaper, feed me, wheel me around and remind me what my name is for the last years of my life!

Bridget

@Steve-I hear you!! I'm pro early retirement all the way, while I can enjoy it with few aches and pains.

deegee

Pond's study includes some bad generalizations. The big one is the "percent of income one needs to maintain" in order to retire early. If I had still been working full-time, I'd be earning about $100k per year. My current expenses in ER, including the costly health insurance, are about $22k, or 22% of my previous full-time gross pay. (I worked part-time for 7 years so I saw my pay drop to 30% of its full-time level.) One's ER expenses are not related to one's current income, as my expenses would be $22k even if my annual full-time gross pay were $40k, $50k, or $75k.

I am concerned about health insurance only until I become eligible for Medicare. At that time, my health insurance premiums will drop a lot, greatly offsetting inflationary increases in any other expenses.

If you save a lot and LBYM, you will be able to retire early and get to age 60/65 intact. After that, you get what I call "reinforcements" such as beng able to tap into one's IRA (at age 59.5), a pension if you have one, SS, and Medicare.

Being debt-free and childfree are also two good ways to retire early.

Retired Syd

@deegee: That's an interesting point, I've never looked at that until you just mentioned it. I always knew that in my first year of retirement we only spent 75% of what we had spent the year before I retired, so I wasn't thinking those recommendations were that far off. But if you're not spending all that you make, those standard generalizations are way off. I just looked and we spend less than half of what I earned in my final year of working.

It's much better to project out what you'll really be spending rather than making a blanket assumption based on how much money you earned while working.

Steve

@degee, excellent comment. You should be addressing the masses rather than Pond. I've always thought he does a disservice to those who rely on hearing from the "experts" because of their own limited understanding of finances. It should be about a wide array of scenarios, options and choices and not basing needs on broad generalizations.

deegee

Steve, I once had a dream about going back to my high school and telling the atudent body how I retired at age 45, coincidentally the approximate age of the parents of many of the students I was addressing.

The only problem with that is I would tell them all never to have kids if they wanted to retire at 45. No kids, no debts. Then I'd get thrown out of the auditorium LOL! Then I woke up. :p

Yes, one should work his or her retirement expenses from the bottom up, not from the top (i.e. income) down. I never had the mindset of spending more simply because I earned more (while I was working full-time).

Retired Syd

@deegee: Ok, that one made me laugh too! Reminds me of a baby shower I went to recently. The hostess put together a little book for the soon-to-be mom that we were all supposed to write our advice in for the new parents. Not only did I feel unqualified to deliver such advice, I told her "it's too late for my advice!"

Janette

I think the report is a bit off. As soon as immigration reforms happens- there will be plenty of bodies for jobs.

Retired Syd

@Janette: You make a good point. Not only that, if we do indeed open up our borders a bit to more immigration, we will help alleviate the strains on our Social Security system by increasing the pool of folks paying in (supporting those like me that will be drawing on SSI when it's expected to be operating in the red!)

But I'm not holding my breath--there's such an anti-immigration bias right now, I just don't see the numbers changing in any meaningful numbers.

We'll see.

fred doe

shore people are going to work longer but at what they want, when they want, and for whom they want. if like your blog and related posts say there will be plenty of jobs to go around, boomers will be a commodity. i still work but on call ( if i'm going somewhere they just go to the next guy on the list) no fault no foul. and i don't do bad,about one third of my yearly pension worth and i don't even try. this is what puzzles me with er's and retired boomers out there with real talents (i'm more of a blue collar guy)why hasn't someone started a employment agency or head hunter firm to tap into some of it. i mean if you could get some one with true talents at a discount price to come in one or two days a week they'd probably get more done then the regulars in the office. i don't know.

Jordans 5

Though the problems constantly scream for attention and the conflicts appear to rage ever stronger,the goodness of life grows stronger still,quietly,peacefully,with more purpose and meaning than ever before. By Jordans 5

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