Tuesday, January 11, 2011

Transition to retirement: That first Social Security check arrives this month

Drum roll, please!
This month I officially become retired by completing the transition from being a full-time wage earner to something I'd call a semi-retired hybrid living off a combination of Social Security benefits, 401(k) nest egg investments, a bit of income from farming and from freelance writing assignments.
Even though I quit the big job last spring, until now, I've been paying my bills using a combination of "early retirement" severance package money and savings. I needed the breathing room.
Planning my retirement has been something of a full-time job in itself. You just can't do it when you're working full time. So when I jumped off the high board last spring, I had a lot of homework to do, questions to answer and investments to tinker with. Ten months later, many of the pieces are falling into place although I still haven't decided what I'm doing with my closet-full of dress-for-success work clothes. (I love those suits, darn it!)
A four-year transition
This process really began four years ago when my long-time marriage ended and I found myself 60 and single with a mortgage to pay, along with all the additional expenses of living on my own. It was a scary time, but I had a good job and my retirement savings seemed headed in the right direction. With the encouragement of a CPA friend of mine, I penciled out a monthly household budget, cut back my retirement withholding and knuckled down. By the time I'd paid an attorney, paid off my ex-husband for his half of our assets, I was down about $40,000 at a time when I should have been chucking ever dime into savings. But c'est la guerre.
Now I've done it. I've retired. Well sort of.
I get my first Social Security check next week. I have begun the process of setting up a monthly withdrawal from my retirement savings. The rest will come from a mix of freelance and retirement workshop opportunities. It can be done I say to myself.
Full disclosure: I've remarried. I have Ken, my wonderful new husband, in my life. Friends introduced us. He shares in the household expenses. But if Ken weren't around I'd have found a roommate who would be helping split those same basic costs. I have to say getting married after age 60 is a beautiful thing.
At 64, I am not at "full-retirement" age as the Social Security Administration defines it. Baby boomers like me don't hit full retirement until age 66. That means I've opted to start taking Social Security at a lessor amount than I would receive if I had waited to 66. My long-term strategy is to pay back the money I've received from Social Security, which is allowed under the rules. My slate is then wiped clean and I can restart monthly payments at the higher full-retirement rate. That's unless Congress changes the rules in the next two years.
What's ahead for the S&P?
The other unknown is how well the S&P 500 will do over the rest of my life. If it performs as it has historically, I'll be fine despite a 3 percent annual inflation rate. That's because the S&P has provided a real return after inflation of 7 percent a year on average for the past 50 years. It's really a matter of believing in capitalism and the American economy.
Now everyone should have a Plan B.  I have several of those: No. 1 Dust off my substitute teaching certificate and go to work. No. 2 Sell my house and 20-acre property, take the cash and downsize. No. 3 Find another full-time job in the information/communications/online business. It's an exciting place to be with Twitter, Facebook and smart phones changing the way we get our news and information. No. 4 Write that book on "What Women Need to Know about Retirement" and become the next Suze Orman. 
I am definitely excited about the future and the flexibility that my new life offers. Would it be as enjoyable without Ken? Nope. But even if everything changed tomorrow, I'm not sorry for taking the big step to retirement and in fact I look forward to making my retirement investments work for me and to the challenge of being in charge of all the hours in my day, every day.
Now where's the Social Security check?!


  1. Yes, this is absolutely true. It's really difficult to transition to retirement, especially in the current economic crisis. But, this doesn't mean that we have to give up. There are many things you can do to increase income. For example, Julia is doing some Freelance. But I think you made a small mistake in your transition to retirement. You just started planning it only 4 years ago. However, retirement needs more than 4 years to plan.

  2. You are absolutely correct in that I really had not planned well, especially since I ended up on my own at 60. I should have saved more, spent less. And I should have been more aggressive in managing my investment portfolio. That is why I am passionate on thieve topic. Thanks for your comment.