Thinking about retirement

I'm not retired. I'm not even old enough to draw Social Security quite yet - I won't be 62 for another six months. In reality, I may never "retire" fully. First off, it's unlikely that I'll be able to afford to in the near future, especially after what happened to our investment accounts in 2008. Aside from that, I really don't want to stop working completely if I have any choice in the matter.

PMR

What I do like is the state of being PMR - "Pretty much retired". That's where you work pretty much when you want to, take time off pretty much when you want, and generally try to lead a relaxed and stress free life. I've been "pretty much" in that state for five years or more and I have to say I like it - a lot.

Things aren't in perfect balance, though. Sometimes I have too much work and feel too stressed. Other times I have too little and feel financially pinched. Perfection is an elusive goal, isn't it?

I turn down quite a bit of work now. If it involves more than a few hours of travel by car, I don't want it. If it would require an overnight stay, I demur. If it's just stressful for my tired old brain to deal with, I also turn it down, even when I really could use the money. I've been working full time for 45 years now; I'm tired and I've had enough stress, thank you. I'll take the easy stuff now.

That sounds a bit wimpy, but there it is - I don't think I was ever very good at handling stress and every day I age makes me less capable. It's just reality: I can't handle the things I used to be able to do. Large programming projects? Not a chance. After hours work where a mistype could destroy a system? If it can't wait til morning, I'll pass.

Retirement Planning

The question I am wrestling with now is whether or not to start drawing Social Security at age 62. If business were brisk or if I could handle stress better, this would be a simple decision - I'd wait until I'm 65 or even 70. But business is off, and while a grand economic recovery may come someday, most of the economists seem to think that things will remain flat or barely inclined upward for some time. We could cut back - move to a cheaper place, even a cheaper State, but neither of us wants to do that, so we need some supplemental income. Not a lot - something around $10,000 a year should cover us.

So the question becomes simple: is it better to pull $30,000 or so out of retirement funds so that I can delay Social Security until age 65? A simple graph that examines some possibilities shows that part of the answer is how long I expect to live: Cumulative Social Security Benefits at Various Life Expectancies . However, it's actually also affected by how well my investments would do if I left them alone. The results are quite different for different assumptions:

Pension Balance with an 8% Tax-Deferred Return
Pension Balance with a 5% Tax-Deferred Return
Pension Balance with a 2% Tax-Deferred Return
(All from Retirement at 62: Is Receiving Social Security Early Worth It? By Thomas M Dalton)

Unfortunately, these are unanswerable questions. Many of my relatives lived into their 90's, so I should probably not expect to be dropping off soon. But what about that stock market? 2%, 5%, 8%? Who knows?

How much money will I be able to earn as I age? Because I work for myself, I have more control over that than someone who is an employee, but there's also the matter of being able to work - wanting to is not enough.

I am fortunate to have those choices. I have sufficient retirement funds to defer Social Security if that makes sense. I could even defer it to age 70 if necessary, though that might leave us too short for emergencies. Many, many people can't consider this at all: their investments have been crippled and were too small to start with, they have been laid off from their jobs and have little prospect of finding another - taking early Social Security may be a bleak choice but it might forestall complete disaster.

While these people suffer, and I worry about my choices, remember that a bunch of greedy Wall Street bankers were paid millions of dollars in bonuses while they destroyed other people's lives. As their own firms hit danger, we taxpayers stepped in to bail them out and they survived, kept their jobs, and have been paid millions yet again.

I just like remembering that as I try to plan my retirement.