What happens if you’re ready to retire, have enough money to spend your golden years in comfort, but your partner is too scared to stop working? <\/p>\n
Meg, 63, has been married to Jo, 58, for more than 20 years. Meg, a social worker, is ready to retire. But Jo, who works in finance, is paralyzed over the question of when to retire. <\/p>\n
Must Read <\/p>\n
“I’m ready to retire. I’m afraid that my wife’s nervousness will keep me at my job longer than necessary,” Meg said during an episode of Ramit Sethi’s “I Will Teach You To Be Rich (1).” <\/p>\n
They have $2.1 million in assets, $4.3 million in investments and $133,000 in savings, along with $510,000 of debt. That gives them a net worth of about $6.1 million. <\/p>\n
“It might seem a little absurd to watch hand-wringing over retirement. It’s like, isn’t that what <\/p>\n
everybody wants?” said Sethi. <\/p>\n
“You have to understand that if you have been working for 30, 40, 50 years, it is really difficult to just turn that off,” he added. “People are good at what they do. They like being wanted.” And, of course, they like getting a regular paycheck. <\/p>\n
Meg and Jo have the money to retire by the end of this year. But it isn’t money that’s holding them back<\/a>. <\/p>\n The fear of retirement <\/p>\n Not getting a regular paycheck \u2014 and not being needed anymore in all of the ways you’re used to \u2014 can be scary. That’s why Sethi says people keep pushing their retirement date. Just one more year. And then another year. “When you don’t know how much enough is, it’s never enough. And you just keep working.” <\/p>\n While there’s no universal number for retirement, Americans believe they’ll need to save $1.46 million on average to retire comfortably, according to the 2026 Northwestern Mutual Planning & Progress Study (2). <\/p>\n High-net-worth Americans \u2014 those with more than $1 million in investible assets \u2014 believe they’ll need at least $2.67 million. That’s not surprising, since they’ll want to maintain their lifestyle in retirement. <\/p>\n But nearly half (48%) of survey respondents believe it’s likely they’ll outlive their savings, thanks to persistent inflation, longer life expectancies and uncertainty about the future of Social Security<\/a>. <\/p>\n Story Continues <\/p>\n Americans’ greatest fears about retirement include declining health that will require long-term care (39%), a reduction or disappearance of Social Security retirement benefits (38%) and outliving their savings and investments (36%), according to a survey of 10,000 Americans by the Transamerica Center for Retirement Studies (3). <\/p>\n These fears are legitimate: For example, the Old-Age and Survivors Insurance Trust Fund is expected to run out of funds by 2033, after which beneficiaries will receive just 77% of their benefits (4). <\/p>\n At the same time, the number of baby boomer 401(k) millionaires is growing, according to Fidelity Investments (5). And for millionaires like Meg and Jo, even that may not seem like enough to retire. <\/p>\n Read More: Are you paying too much for car insurance? Here are 3 clever ways to slash your monthly bill<\/a> <\/p>\n Overcoming the obstacles <\/p>\n Doing the math can help take the emotion out of a highly emotional decision. <\/p>\n It starts with determining what you want to do in retirement. Do you want to stay close to home and spend time with your grandkids? Or do you want to travel the world? Do you want to renovate your home or downsize? Those decisions affect your overall retirement budget. <\/p>\n Also determine when you want to retire. If you’re retiring early, your savings need to last longer. And partners don’t necessarily want to retire at the same time. The Northwestern Mutual study found that 41% of Americans plan to work or are currently working in retirement. <\/p>\n The ‘80% rule’ suggests you will need to replace about 80% of your pre-retirement gross income to maintain your lifestyle in retirement, assuming that your expenses decrease. Similarly, the ’25x rule’ recommends saving about 25 times your expected annual spending. <\/p>\n But you also need a plan for withdrawing that money in retirement. The ‘4% rule’ suggests withdrawing 4% each year, adjusted for inflation, while the ‘guardrails rule’ takes a more dynamic approach based on the annual ups and downs of your portfolio. <\/p>\n Other strategies include using lifetime income sources, such as Social Security, pensions and annuities, to cover essential costs, while using investments for guilt-free spending. <\/p>\n A financial advisor can help stress-test your retirement strategy to see how it will withstand various ‘what if’ scenarios, such as a market downturn. <\/p>\n Sethi gives Meg and Jo a few different retirement scenarios, including one where they retire by the end of this year. <\/p>\n According to Sethi, this provides them with $90,000 of discretionary spending annually \u2014 and they’d still have $3.5 million at the age of 95. Jo could access her 401(k) using the Rule of 55; she’d need more portfolio withdrawals before Social Security kicks in at age 70 with full benefits. <\/p>\n They could also use a more dynamic approach to withdrawals for handling market downturns. Even if there are a few bumps along the way, they still have options: file for Social Security earlier, pick up a part-time job, reduce their discretionary spending or even leverage the equity in their home. <\/p>\n “The only thing preventing them from retiring \u2014 it’s not the numbers,” said Sethi. “It’s how they feel.” <\/p>\n You May Also Like <\/p>\n Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first \u2014 clear insights curated and delivered weekly. Subscribe now<\/a>. <\/p>\n Article Sources <\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines<\/a>. <\/p>\n YouTube (1<\/a>); Northwestern Mutual (2<\/a>); Transamerica Institute (3<\/a>); Social Security Administration (4<\/a>); Fidelity (5<\/a>) <\/p>\n This article originally appeared on Moneywise.com<\/a> under the title: A couple with $6.1 million can’t agree on when to retire \u2014 Ramit Sethi says ‘it’s not the numbers’ holding them back<\/a> <\/p>\n This article provides information only and should not be construed as advice. 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