I retired at 50, went back to work at 53, then had a major medical issue that left me unemployed – ‘There’s no such thing as a safe amount of money’ for retirement

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Dear Marketwatch,

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I always said I was going to retire when I was 50. I worked and had savings since I was 16. Retiring without Medicare and Social Security is a scary thing. I retired and am going back to work. At 53, I worked a part-time job with a decent salary for hours, but I was so bored. And then life rang my bell.

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I had major medical problems. So big that when I was able to return to work they let me go because they didn’t think I could keep up with the workflow. They were probably right. No one else felt comfortable enough with my health issues to hire me. I applied for disability but was denied. While I was in ICU I appealed and the appeal was rejected. I appealed again and I was rejected because they didn’t think anything had changed from my original application.

I’m assuming you can imagine what my savings are now. I took early retirement with penalties, because I needed the income. $4,000 a month doesn’t break my prescription.

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Everyone needs to know that there is no such thing as a safe amount set aside for retirement. Life happens and in the blink of an eye your whole life and whatever you have worked for can be gone.

I am 68 years old, my husband is ill, and his $3 million estate will go to his son. I want to spend the rest of my day traveling – will I have enough money?

Dear reader,

I usually only show letters with questions for this column, but your note was so important to other readers that I had to respond – and let others see what you shared.

I am so sorry that you experienced this. Retiring early isn’t inherently wrong — many people want to do it, especially after decades of work. But without proper planning, it can lead to frustration, especially if an emergency occurs.

“Retiring early is a dream of many,” said certified financial planner Landon Tan. “But those years of not working reduce our chances of a successful retirement more than almost any other metric we toggle on when planning financially.”

Retiring early means you need more years to be able to cover financially, and that requires money – a lot of it. When planning to retire early, those extra years need to be considered—the front end in retirement, but also the back end if you live longer than anticipated.

“Today’s retirees are expecting their accumulated wealth to last 10-20 years longer than they did in the past,” said Glenn Downing, certified financial planner and founder of CameronDowning. “Centuries are no longer uncommon. For this to happen successfully, more assets are needed – that too simple.” One must prepare to live longer than expected so that their money is not left with them, which can seem daunting.

Those missing years can also affect your Social Security benefits, which so many older Americans rely on for most of their retirement income. People who retire early should have a clear picture of what to expect from Social Security in the future and how their plans may affect those expectations.

Leaving the workforce probably also means missing out on participating in a group health plan, and I think we can say with certainty that the pandemic has shown how important health insurance can be in difficult times.

You’re absolutely right – retiring before Medicare is scary. Healthcare is expensive even without an emergency. Not everyone considers this an expense when they’re dreaming of leaving it in their 50s, but if they don’t have proper insurance when they retire they can quickly blow through their retirement budget — or You can put yourself in a very dangerous situation. Those years can feel long when Medicare eligibility only begins at age 65 for most Americans. And it doesn’t even take into account long-term care, which is an entirely other expense. Think nursing homes, home health aids, and medical equipment needed for daily activities.

Don’t miss: Retiring early this year? Check out the Affordable Care Act plans now ahead of Saturday’s deadline

Knowing how much is enough to save for retirement is very difficult. There’s no such thing as a “secure” number before you retire, but there are some guidelines you can follow to get old age security.

Part of that equation comes down to personal circumstances—how much you typically spent in your pre-retirement life, how much you anticipate spending in retirement, various financial factors such as taxes and the cost of housing and utilities, and so on. . And as you’ve experienced — and as others are carefully reminded — major unforeseen emergencies can completely derail any type of financial security.

Another factor is what is available to you in your older years. I’ll get to that in a moment, hope it can help you or others in similar situations.

A recent survey found that retirees tend to focus on short-term changes, leaving them unprepared for the future. According to research from the Society of Actuaries, many retirees deal with these emergencies. The organization found that more than seven in 10 retirees have wondered how their lives will change in the coming decades, but only 27% feel financially prepared for it.

More than half of retirees surveyed said they couldn’t afford more than $25,000 for an unexpected emergency without jeopardizing their retirement security. More than half of black respondents and Latino respondents said they could not afford to spend $10,000 for financial shock.

“The world can really change very quickly around you, and you need to be prepared for change and to deal with change,” said Anna Rapaport, an actuary and fellow of the Society of Actuaries. Americans often didn’t plan for the shocks that life could have brought before the pandemic, and that hasn’t necessarily changed since, she said. “The aftershocks were there as well and the landscape changed a bit.”

Check out the Businesshala column “Retirement Hacks” For actionable advice for your retirement savings journey

But you’re not alone. Many people have fallen into tough times before and during retirement, with no or no pandemic at all. You may already be exhausted all the way, but this one retiree shares the steps he took when he lost his job at the age of 58. He looked for another job for 18 months before taking a job with a 40% pay cut, and had to stay very lean until he officially retired at age 64. That lifestyle included getting a roommate, buying a few household items at the dollar store, and extreme meal planning. Here’s what he now says about his retirement.

If your medical condition allows, can you do some part-time work, or find some ways to earn money while working from home? Or could you possibly reduce where you live or take in a roommate?

I know you didn’t ask for any tips and I’m sure you’re doing as much as you can to live comfortably, but there are plenty of resources you might want to consider if you haven’t already.

Have you discovered any government benefits such as assistance with housing, heating or groceries costs? There are a number of federal and state programs available to seniors in need of financial assistance—not just Supplemental Protection Insurance and Medicaid, although those are certainly the most prominent ones.

AARP made a list of resources, is divided by state, and has its own services, such as helping people age 50 or older get back to work. GoFundMe even has a list for this financial help For older Americans. This includes housing, food, medicine and options for returning to the workforce. States, and sometimes even individual cities, have departments and offices dedicated to aging issues, which you can also try calling. There is help out there, even if it doesn’t seem easy to find.

I wish you the best.

Reader: Do you have tips for this reader? Add them in the comments below.

Have a question about your own retirement savings? email us [email protected]

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