By Diane Palombi, OD
July 8, 2015
When to retire can be a difficult decision. There arefinancial andemotional aspects to it. Unfortunately, they don’t always come together at the same time. Here are some of the ways I’ve made retirement work for me financially.
The financial aspect was probably the easiest in my circumstance. My husband and Ihave several means of income. This is important since we are both too young to collect social security.
Over the years, we acquired several rental properties. One is the building where my husband’s business is located, which provides a steady stream of income each month. In addition, we have a few rental houses. The monthly rent checks help considerably in making ends meet. Of course, there are expenses with rental properties like taxes, insurance and maintenance. You also can have no income between renters, which can be a few months at a time. Besides the rental income, you have an asset that should appreciate in value. The properties can be sold if you need additional cash.
We also have annuities. This is similar to a pension. Again, we will receive a steady monthly stream of income when we decide to start drawing funds from the annuity until we both die. There are also regular retirement plans like Roth IRAs in which we have invested money. The capital is invested in stocks, bonds and mutual funds.These funds are available at age 59½, and you can withdraw the whole investment if necessary. Although presently the interest rate is pathetic, we also have some money in money markets and certificates of deposit. My financial planners say, as a rule of thumb, that your age is the percent of your investment that should be in safe investments that will not lose value. Then subtract your age from 100. Theremainder represents the percent inthe riskier investments, such as stocks, with more growth potential.
When you sell your practice, that will also give you some income. You could either live off that money, invest it or buy rental property. I did the latter. My husband kept his business and still draws a salary. The down side of thatapproach is that you still have risks. If the economy tanks, you couldlose your business. You are not totally divorced from what is going on with the company. Problems can arise that warrant your input. It is very important to have good and trustworthy employees on staff to run the company.
Our best investment has been our primary residence in Missouri. It has appreciated in value considerably over the years. If the need for cash should arise in the future, we can either sell it and live in our Florida home full time, or downsize to a smaller home in Missouri.
When my husband first brought up the retirement subject, I was not emotionally ready. My opinion was that we were too young, being in our 50s at the time. He was suffering from burnout. Running his business had really taken a toll on him and he wanted out. Some of his employees were driving him crazy with their drama, and some of his business suppliers were unreliable. In addition, he didn’t like dealing with the other aspects of running a business anymore, like accounting and dealing with health insurance for the company.
I started to reconsider retirement after I had a health scare. When you experience something that potentially could have killed you, retiring at an age where you can still have fun doesn’t seem like such a bad idea. In addition, I was having some challenges with electronic health records. I did not want to make the investment so late in my career.My heart wasn’t in my profession any more. Optometry has changed. The government and insurance companies dictate policy too much. I use to love going to work and interacting with my patients. Toward the end, it had become a job.I probably was not as familiar with new exam equipment and procedures as I should have been. This old dog was not interested in learning new tricks.
Deciding when to retire can be scary. Make certain that you have enough money in your nest egg to last the rest of your and your spouse’s lifetime. A mistake would mean that you would have to go back to work at an age where it may not be feasible. In addition, be sure that you are emotionally ready to take this major step in your life. I have talked to people who retired and then went back to work because they were bored or depressed.
There is no magic number for retirement. Like most things in life, it is an individual decision that only you can make.
Do you already know when you would like to retire? What are key factors that will determine when the time is right for you? Are you already retired? How old were you when you made the decision, and what was the decision-making process like?
Diane Palombi, OD, now retired,owned Palombi Vision Center in Wentzville, Mo. To contact her: dlpod1@hotmail.com
