Are You Afraid To Retire Early?



retire earlyI was recently conversing with a coworker about finances.  I am ecstatic that I am already exchanging financial knowledge in my new role.  This office skews a bit older than my last office.  However, I think there are still going to be some riveting conversations to be had.


He retired from the federal government and returned as a contractor.  He retired in his 50s, and he has a nice pension that pays him 70% of his highest three salaries.  So clearly he’s not poor.  But when we started to talk about why he still works, I initially thought that he was going to share that he loves doing so and making a difference.  


That was my perception because I remember my best friend’s father loving his government job in the 80s so much.  So why quit a job you love to stay at home when you could make a difference in the workforce?


Not Ready To Retire

retire earlyI have to admit that I was taken aback when my co-worker admitted that he doesn’t feel secure for retirement.  That was why he continues to work.


I then asked him his “number” was.  He said that he wanted $2 million to feel secure in retirement.  To me, $2 million is a pretty big number, especially since he receives a nice monthly pension.  So I asked him how he derived that number.  He admitted that it was a nice round number and thought it made sense.  He also told me that if he had enough to retire, that he would retire tomorrow.


Average Person & Retirement

enjoying life today retire earlyAs a side note, the average 55-64 year old currently has $104,000 in retirement savings.  At a 4% withdrawal rate, that means that the average retiree can withdraw $350 from their retirement savings account every month.  


According to the latest figures, the average retiree receives $1,400 in Social Security benefits.  This means that the average retiree will live off of $1,750 a month, or roughly $21,000 a year.  In contrast, if my co-worker can achieve a $2 million investment portfolio, he would be able to withdraw $80,000 per year, plus his $50,000 pension and also whatever else he would get from Social Security.


Leaving Enough for His Wife

He believed that if he reached $2 million, that his wife would be taken care of if something were to ever happen to him.  His biggest fear was leaving her penniless.  While this seemed a bit extreme, I have heard from other people that they share a similar fear if they passed.


Digging Deeper

retire earlyAfter hearing his story, we talked about putting some numbers to paper so that we could get a better feel of his finances.  When we first sat down he admitted that he had no idea how much he was spending, or even how much he needed to retire.  


This took me a little aback.  Here was a 65-year-old man with no idea what he needed for retirement.  Although, he was sure that he wasn’t secure enough for retirement.  I didn’t quite understand why he was so sure if he had never run through the numbers.


So, I’d love to tell you that we sat down and knocked out all the numbers together, but that’s not what happened.  He wanted to go home and talk with his wife.  It took about three weeks before he finally got back to me with all of the figures.  


His Financial Situation

retire earlyWhen he was finally ready, he was thorough as he had everything organized nicely in a spreadsheet that was easy to follow.  His demeanor had changed because he actually knew what was going on at that point and gained confidence. 


When we examined the numbers, it turned out that he was spending $120,000 a year maintaining multiple properties, vacations, golf memberships, eating out, and enjoying life outside of work.  


While that number was higher than I expected, it gave us a great launching pad to determine how much he actually needed to retire.


His Benefits

He said that through his government pension, he received $50,000 a year.  He anticipated taking $30,000 from Social Security when he turned 70 since he wanted to maximize the his Social Security in retirement.  His wife worked part-time throughout her career and would receive benefits of $10,000 when she turned 70 as well, which would be shortly after him.


I thought those numbers seemed great.  $90,000 per year coming in, or roughly 75% of their income needs, was not too shabby.  So I wanted to help him determine where the remaining $30,000 would come from.


Withdrawal Rates

retire earlyAll over the web, you’ll find that the “perfect” amount that you should withdraw from your account.  Some people swear by the 4%, Trinity Study Rule.  Others advocate a more conservative approach of the 3% rule.  They believe that we are in a different environment than in the past.  Then there are some people who say to put all your money in the S&P 500 and live off the current 2% dividend and never touch your principle.


I’m not going to tell you which is the best strategy to use.  In some ways, I’d say whatever makes you feel most comfortable and helps you sleep at night. 


If we were to use the Trinity Study Rule of 4%, he would need a portfolio of $750,000 in order to meet his retirement needs.  If we decided to be more conservative and use the safe withdrawal rate of 3%, he would need $900,000.  Finally, if he wanted it to be bullet proof and utilize the 2% dividend, he would need $1.2 million.  


Nowhere Close to $2 Million

As you can see, my co-worker doesn’t need to come anywhere close to $2 million.  It was definitely assuring news for him.  


Retirement Number retire earlyHe also revealed to me that he had $1,200,000 saved in retirement.  So I told him he definitely had enough to retire today.  I said even if you took out $70,000 for the next 5 years and then drop down to $30,000 after that, you would have more than enough to cover retirement for the rest of your life.


I reminded him of his previous statement that he would retire tomorrow if he had enough today.  He responded saying he was a bit scared to do this.  But he thanked me and said that he was relieved by the numbers.  Despite the numbers though, he said he’d probably work at least another year, or until he felt ready.


2017 things to do retire earlyIn the PF community, most of us are ready to jump into retirement as quickly as possible.  So hearing someone say that they’d like to work an extra year just to feel more comfortable seems a bit foreign to me.  


For all I know, there could be something else going on that I’m not privy too.  But it definitely pains me to see him at work doing something that he doesn’t care for, when he clearly has enough money to retire.


However everybody has a reason, and I can’t be too hard on him.  I’m still trying to work through my own dilemma of whether I should work longer or retire early.

So readers, do you know anybody that worked an extra year when they didn’t need to in order to feel more secure?  Have you worked through all the numbers to determine your retirement “number”?

Mustard Seed Money

Welcome to the website. A mustard seed is a very small seed but astonishingly grows very large over time. My hope is that through your financial journey that your small investment in time, money and faith will grow beyond anything that you could ever imagine.


  1. Great article. I know people who definitely have enough money for retirement, but continue to work. It is not because of a fear or not having enough for retirement, but rather they like working/the concept of work. Early retirement is a foreign concept to them, and they feel that it is necessary for them to work until they are at least 60, even if they had enough for retirement years before that.

    • That’s awesome that they love work so much. I feel like if I could find something that I love that didn’t feel like work I would definitely continue working 🙂 I just haven’t quite found it yet.

  2. I was having a similar conversation with a guy in his 30s. He was saying his number was at least $5 million. I kept prodding and had no idea how he thought this was reasonable given you can get income of $100,000 a year off of 5% returns/interest/etc. Invest in some income producing assets and you can easily make more… $100,000 a year seems very reasonable and nice.

    I don’t have a number – I’m making rational decisions to maximize my wealth, but given my age, I’m not putting a cap on my potential wealth 🙂
    Erik @ The Mastermind Within recently posted…New! The Mastermind Within Debt Destruction Tool!My Profile

    • Thanks for sharing Erik!!! It always makes me smile when I see people’s number and then thought process behind it. There doesn’t seem like there is a rhyme or reason most of the time. Usually it’s I thought it was a good number 🙂

  3. I run through the numbers too often! We recently had a couple of posts on our site that went over our ‘magic numbers’ and how we are progressing against them. That said, I’m probably overly conservative and our expected retirement date (7 years from now) is probably a little longer than it needs to be.

    It definitely sounds like you co-worker doesn’t need $2M given his current income streams and anticipated costs.
    Mr. Need2Save recently posted…Income Taxes // A sobering look at 30 years of paying taxesMy Profile

  4. My parents have kept saying “one more year” for two years now. They’re in their mid-60s as well, so I think it could be a generational thing too. It’s what they know and it’s hard to give that up. We know that all too well in understanding the “why” behind a person’s spending habits.

    Our generation has really been on the early retirement warpath since we left school. That’s how it was for me at least. I believe it’s a result of seeing those same parents work like dogs for an extra scrap here and there. It’s not worth it. Extra degrees or certifications don’t lead to huge promotions like they once did nor are they worth the thousands of dollars of student loans you need to take on to get them.

    Am I scared of early retirement? Sure. Who wouldn’t be? You’re not talking about retiring at 65 with maybe 15 years left or so. You’re talking about retirement at 35, 40, 45 with 40 to 45 years left. So, it’s a big responsibility and the scariest thing for me wouldn’t be “losing it all.” But, rather, having to go back to work. So, it needs to be calculated properly and with various income streams.

    I think us here have the right idea. It may not be for everybody, where our generation or those before us, but it’s a great goal to have. If we work hard now, hit our numbers, and be diligent in our approach, there really is nothing to fear.

    Great post again, Rob! You’re killing it. You’re making me really think about my situation and I appreciate that.
    Dave @ Run The Money recently posted…True Cost of Owning a HouseMy Profile

    • Thanks for the kind words Dave!!! I definitely have seen too many people say just one more year 🙂 And it always seems like it turns into five years. I never understood trading five years of traveling for five years of cubicle work. But I guess whatever helps you sleep at night.

    • Thanks for stopping by Full Time Finance!!! I definitely agree that there is a huge loss of control when you’re not earning. I definitely wonder if that plays into the psychology of why he won’t retire.

  5. Coincidentally, my number is also very similar to the co-worker that you mentioned. However, my $2M includes my principal home. Ideally, when I retire, I would prefer to withdraw less than 4% on an annual basis.

    In terms of working an extra year. I probably wouldn’t mind as I know that I can retire anytime and don’t depend on my job anymore. It may be a fun year.
    Leo T. Ly @ recently posted…Financial Literacy For CanadiansMy Profile

    • Thanks for sharing Leo!!! I definitely think if I was working for fun that I would definitely have a different mindset. I definitely would dream big and try some crazy projects at work 🙂

  6. It seems like the vast majority of Americans have no idea what they need to retire. It feels overwhelming to figure out what you need, so people don’t know where to start and just end up guessing some giant figure.

    But as someone who has studied up, if I had 70% of my salary as a pension and then a full time salary on top of that…man, I could invest and donate so much while still living a full lifestyle. I guess for most people that is a situation where it would be really easy for lifestyle inflation to get out of control if you weren’t paying attention to your spending.
    Matt @ Optimize Your Life recently posted…How to Grow Your MindMy Profile

    • I think there is so much misinformation out there that people think they need 70-80% of their income before they can retire. It’s definitely something that people need to be better educated about.

    • Honestly I think that most people are afraid of losing the social aspect of work. I know that would definitely be the biggest downside working at home for me, let alone in retirement 🙂

  7. Great tale!

    If it was just me, I’d be able to retire on next to nothing. Throw in the wife and kids, suddenly it’s more complex. That being stated I adore my career and sell it endlessly on my blog.

    I will have to give it up eventually but I have a plan: be a net worth Millionaire by 40 and have no debts and 2 million in the bank by 50.

    Do I need either of these? No! But it’s good to have goals. My baseline for retirement is replacement of my income with pension & savings. Since we save 30% I only need to replace 70%! Yay math!
    Jack Catchem recently posted…The Lateral Cop Strategy For SuccessMy Profile

    • Thanks for sharing Daniel!!! I definitely agree that it’s a personal decision. I do wonder how many people operate in fear vs. operate with a lack of knowledge.

  8. Great analysis. Your coworker must of loved how you made him figure all this out and have an idea of where he is it. It amazes me when people don’t even know how much they have in their accounts. I’ll tell ya tho I know so many millionaires that keep working. They love what they do. Some of them travel a lot for business and I know their wives don’t like that. So kinda makes you wonder why they don’t stop and hang our /vacation with their wives. I agree with what your coworker said though. Definally want to leave a legacy for my wife when I die so she doesn’t have to worry about money at all.
    Passivecanadianincome recently posted…Life’s A FilmstripMy Profile

    • I definitely don’t think I would have as much fun traveling with c0-workers as much as I would with my wife and family. Makes you wonder what’s going on…

  9. It’s great to see you helped this man learn more about his financial situation. It’s so sad when people spend their entire lives working when a) they don’t want to and b) they can retire early. I haven’t met people who were able to retire and didn’t. The people in my life either work until they die or get the hell out of Dodge while they still can enjoy it. 🙂
    Mrs. Picky Pincher recently posted…How I started a blog while working full-timeMy Profile

  10. If you don’t think about it and you never pay attention then yeah you won’t be prepared, or ever think you are.

    On the flipside we’re anxiously awaiting hitting our numbers. There’s so much we want to do, the least of which is work.

  11. Unfortunately, in my immediate family, I don’t think anyone has enough saved in retirement to actually retire comfortably. Most have either not saved at all, or waited to much later to get started. Thus, I am thankful that I have taken it upon myself to be financially responsible and plan for the future. Even at 34, I feel like I am a little behind. But, we have worked hard to get all of our debt paid off and are now heavily ramping up the retirement saving. I am not sure just yet what our retirement number will be, but hoping its within the next 10 years or so!

    • Thanks for sharing Chad!!! I too feel behind but am diligently working to make up some lost ground. Hopefully I can get there sooner rather than later 🙂

  12. Retiring early (or at all) requires a break from the herd mentality. Even if the math works, I suspect folks look around like they’re doing something wrong. I’m glad you were able to give this guy a new perspective – now if we can just convince everyone else it’s OK!
    Paul recently posted…The Delights of Double DeductionsMy Profile

    • I definitely want to teach a Dave Ramsey style class and work backwards. I want to start with retirement and then move back to the basics. I want people to understand how valuable it is to think about the future not just the debt in front of them.

  13. We’ve run through all the numbers and have a plan in place. Right now I am chomping at the bit to get to my date (all of this is documented on my blog). I am curious to see how well I will actually execute the plan when the time comes. Will I wave goodbye to my job cheerily and ride away into the sunset? Or will I be struck by the OMY (one more year) syndrome?
    Mrs. BITA recently posted…Of Generosity and GratitudeMy Profile

    • I have been following along with your progress!!! You all are doing amazing. Having followed your blog, I have a feeling that OMY won’t be an issue. You all have some many other things that will garner your attention 🙂

  14. I understand that many people in their 30s, 40s don’t even think about retirement. But I’m a bit surprised that someone over 60 is so lost about the amount he would need for retirement. I would have thought that at that age people would be more clear about the math (especially with a nice saving on the account). It’s good he has someone around who opened his eyes 🙂
    Roadrunner recently posted…Hunting for an Investment Mortgage in the NetherlandsMy Profile

    • Thanks for the kind words Roadrunner 🙂 It’s always fun to have these conversations especially when they are eye openers 🙂 Definitely something that I enjoy immensely!!!

  15. Hi MSM,

    Glad to hear the conversations at work are more interesting as well!
    Staggering that someone so close wasnt sure or had any idea – no wonder they were worried about retiring!

    There is something there… am I worried about retiring early or ready? I would love to retire right now – but am I ready? I honestly don’t know. I think I will be far too over prepared so I will have a very comfy retirement!
    FIREin’ London recently posted…March ’17 PerformanceMy Profile

  16. Wow, kudos to you for advising your colleague on this complicated topic. There seems to be this dichotomy: People either vastly underestimate or overestimate their savings needs. While the former is more common (hence the low average/median savings) there are many cases where people over accumulate, probably because they follow some rule of thumb that doesn’t take into account pensions and Social Security.
    Anyway, great read, as usual. I hope you don’t get into trouble with your employer by telling people they should retire. 😉
    earlyretirementnow recently posted…Our Net Worth (as of 3/31/2017)My Profile

  17. Loved this story! It is great that you’re opening people’s eyes to the reality of their financial situation (although I bet it would have been hard if this man’s numbers had him working until age 75!). My dad seems to be in OMY syndrome as well; at 71 he’s been trying to retire for a few years. It’s likely in part due to he and my mother helping struggling family members, but also because he loves his work and would go stir-crazy without something like it to fill his time.

    It’s easy for me to scoff at people having no clue what they need to retire, but just a few years ago I was the same! I didn’t know what I needed to save or how to invest, but instead of learning those things, I buried my head in the sand. Thank goodness Mr. COD found this FIRE community and opened our eyes! Retiring by 50, plus staying home now for three years with my babies? Yes, please! I’ll take it.

    Keep up the great posts here!
    Mrs. COD recently posted…The Death of ShoppingMy Profile

    • Thanks for stopping by Mrs. COD!!! I have to admit that I never heard the term FIRE before I started my blog. It was definitely eye opening and something that I have really been striving towards ever since!!!

  18. To answer your question. Yes, I’m a little afraid to retire early. I can say, as a federal employee, your story is very common. There are those who even on top of a federal pension that they already qualify for, also receiving a military pension but they still work.
    Joint military at 22, retire 20 years later with a $35-$45K/year military pension that also comes with health care
    Work from 42 to well into their 50s, some even into their late 60s which also qualifies them for a nice federal pension on top of military pension and Social security and they are still working away. I think some folks just like to work. Very common to hear, ‘what would i do?’
    really good post.
    ReachingTheCrest recently posted…How Much Do You Need to Save? Part 2My Profile

    • Thanks for sharing ReachingTheCrest!!! I forgot about the double dipping with the military pension as well. Tons of money to be made off of Uncle Sam if you’re willing to put in the time and willing to be flexible 🙂

  19. That 4% rule is overly conservative and unnecessary. My in-law’s have regularly been withdrawing 100k per year, for 10 years, and only started with 1.2M. They have yet to touch their principal.

    A better strategy is to keep two years of living expenses in a high grade bond fund. That way, when the market dives, you need not touch your equity principal at all.

    For my retirement, at 41, which is soon, I plan on withdrawing about 6% per year, on average. I calculate we have a 38% margin of safety, which means we can withstand a 38% decline in the market, off the bat, and still have enough in assets to pay for our 60k per year spending budget, with historical returns of the SP500 at 9.7%, compounded, since 1965.

    Just for added safety though, I didn’t feel comfortable just exiting the door with only two weeks notice. Instead, I engineered my layoff. I asked my boss for severance in exchange for a smooth transition. He has already agreed to this, told his boss about it, and even talked to HR. It will be interesting to see what they come back with.

    As a frugal guy, I can’t even begin to mildly comprehend that guy’s lifestyle or spending.
    FinancePatriot recently posted…A beginner’s guide to early retirement investing and financial independenceMy Profile

    • Wow…that’s awesome that you have engineered your layoff!!! That would be amazing to do and I love how you have everything already thought out especially with the 38% decline. Sounds like you are well on your way to enjoying retirement.

  20. Great post. My father is actually going through this right now. While he probably has enough to retire comfortably with his pension and current savings, he decided to continue working a few more years. To ease his way into retirement he reduce the hours he works each week, so now he only works three days a week (Tuesday, Wednesday, Thursday). I don’t know the exact numbers, but his salary was also reduced to reflect the reduced work week. He has been on the new work schedule for a few months now and seems to really love it. To me it seemed like a good way to transition into the retired lifestyle.

    Like you said in your post, some people just are not ready to retire. From talking to my father and father in law it sounds like they are afraid of being bored and would rather work a few days a week than sit around the house. My husband and i would be happy to switch with them any day, but they don’t take us up on our offers 🙂
    Courtney @ Your Average Dough recently posted…20 Questions to Ask Your Partner Before Getting MarriedMy Profile

    • Hahaha…I would gladly switch positions with them now as well 🙂 Three days a week seems like a nice compromise plus a four day weekend. Count me in!!!

  21. I have to admit that I’m petrified of retiring early, for an entirely non-financial reason. My dad struggled for years with depression and an unhappy marriage and lost the fight three years ago. It was a mere 4 months after he retired and I firmly believe that the loss of the regular routine of work was a contributing factor. There’s a tonne of studies showing a drop in mental health after years of work routine is replaced with.. nothing.

    For your co-worker, I’d be looking more to the lifestyle than the money. It’s super important to retire to something bigger and better.
    LadyFIRE recently posted…Another way of looking at ‘cost’ (and a Chilli Con Carne recipe)My Profile

    • I’m sorry to hear about your Dad, LadyFIRE. I definitely agree that’s super important to retire to something instead of from something!!! I can see how the loss of routine would be a struggle.

  22. I think a lot of people are scared to stop working for a lot of reasons, financial and otherwise. For a guy who has probably worked the last 40 years of his life, it’s a big change. It can even be hard on a marriage. It’s one reason we wanted to leave the 9-5 often and early. I want our life to be bigger than that.
    Ms. Montana recently posted…Guest post over at 1500 days till Freedom!My Profile

    • I definitely love reading your story Ms. Montana!!! You are a rock star living your life. It’s definitely something that my wife and I aspire to in the future 🙂

  23. I’m not sure if this came up but normally with pensions there is an optional survivor benefit, so that if he died unexpectedly his wife would get 75% (or ballpark) of the monthly payout for the rest of her life. If he selected no survivor benefit … well, oops.

    I don’t blame anyone for spending to enjoy life but it sounds like he might consider simplifying. I bet he could sell one of his properties and both take away some stress as well as get closer to his number.
    Rich @ recently posted…Penny Is A Broke Gal Who Pays No Taxes. By Earning More, She Ends Up With Less!My Profile

    • Thanks for stopping by Rich!!! You know I didn’t even ask him if he chose the survivor benefit. I would think that he did since he was so worried. But you never know.

  24. Great post, it sounds like maybe this guy doesn’t want to feel like he has to pinch pennies. Many people find sport in being frugal, while others would prefer to go out for a meal without having to think twice. In a way it’s great for him to keep on working so he has some extra fun money, it’s in part what helps keep our economy churning instead of living as Spartan a life as possible to avoid a 9-5.

    • Thanks for stopping by Mike!!! You are absolutely right he might not be ready to retire and potentially downgrade his lifestyle. Although I’m not sure he really would based on the numbers 🙂

  25. $2 million? I can’t even picture this much money in my mind, let alone try to save that much 😀

    But to answer your question, my grandma has worked for several years after retiring, to supplement her income. Of course, back then, the retirement age for women was 50-something (can’t remember the exact age.. but it wasn’t 65!). So, she retired because the law ‘said so’. However, since she was still able to work and wanted to feel safer financially, she decided to just keep working.

    I don’t know if I’d follow her example though. I’d rather save up as much as possible now, so I won’t feel obligated to work when I should be lying o a beach somewhere with a cocktail in one hand and mashed up food in the other! 😀
    Adriana @MoneyJourney recently posted…Simple but effective investing tips and strategiesMy Profile

    • I too would love to be living on a beach somewhere drinking a pina colada in my old age. I’m not sure I’m passionate enough about something to continue working in my old age. So hopefully I can save up so I don’t have to 🙂

  26. It was surprising that this person had no idea that his amount saved wasn’t enough. That would be more than plenty for me but granted we live in an affordable part of the country. Things might be different in your area. He is lucky to have you to go over this stuff with. I think most people spend less than they think they will in retirement. Especially if their home and big expenses are paid off.
    Mr Defined Sight recently posted…Easter Weekend and the Candy IndustryMy Profile

    • I definitely think he was probably overestimated his expenses. But it’s what he feels comfortable with and I rather he overestimate than underestimate 🙂

  27. I enjoyed the post. Yes, it definitely seems that your co-worker does not need $2m as stated. The pension and SS are almost enough to meet their goal. People often seem to forget to look at all of the income streams.

    • Thanks for stopping by Dave!!! I definitely agree that he’s probably being a bit too conservative here. I think there’s something else going on that he doesn’t want to admit. But that’s his prerogative 🙂

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge