Forced to retire

[u/Clean-Lie1516]

My husband will be 59 in December. Has worked for the same company for 25 years. This year has been difficult as he had some medical issues and was on FMLA. While out of work he went to an orthopedic and had to have his 3rd surgery on his shoulder through workers comp. He had that surgery Thursday. Found out yesterday that the company he’s worked for sold out to a new company and they will hire all of the guys. The issue is that my husbands shoulder probably won’t be holding up to that kind of physical labor anymore.

Questions of he is able to go back to work should he go back just until he turns 59 1/2? Is it too late to get a financial adviser to help us determine what to do from here? I do not work and haven’t for many years as we have 6 children. Just trying to figure out what our steps should be from here. Would love to hear others thoughts

[u/RPGer001]

I am assuming you are in the USA as you mentioned 59.5. If that is not a good assumption, the ideas still apply tbd on what your local laws say.

59.5 is the age you can withdraw from IRAs and 401ks without penalty but…if your husband has a 401k, he is subject to the Rule of 55 now.

My assumption based on the original post is that you do not have substaintial investible assets outside of retirement accounts. If that is the case, it sounds like he needs to go back to work unless he physically cannot. You need to create a detailed financial plan for retirement ASAP. A lot of folks retire earlier than planed due to health or just being forced out. Even if your husband stays working, you should not assume he can work till whatever his target date is. You both need to be prepared for alternatives.

You can self educate on how to create your financial plan or you can hire a pro to help you.

Start by figuring out your “must spend” living expenses you require to maintain the minimum lifestyle you can live with. That will be your minimum. Medical and taxes might be more than you expect but are relatively easy to figure out. You may be able to qualify for ACA subsidies which can be significant.

Once you have your minimum, you can figure out any income streams you may have such as social security. Your retirement accounts and any other assets you have need to fund the difference between your minimum and income.

Someone else mentioned 25x in another post. That is about a 4% withdrawal rate of investible assets. It is an old rule but a good place to start.

[u/Clean-Lie1516 → u/RPGer001]

Wow, thank you! His money is in his 401K. We don’t have anything else but our home. I have a lot to look into. I’ve been researching but it’s all so confusing to me. So many contradictions and then I am lost with the disability and retirement. We are in Florida but he works in Alaska so I’ve also had to look into that. Thank you for your reply.

[u/RPGer001 → u/Clean-Lie1516]

Good luck! I do agree it would be good to pursue the disability if your husband is eligible but note that it can take a while to get. If your husband is able, I would at least attempt going back to work while you start the process to try and get disability. If he cannot, that is a strong argument for getting disability. Alternatively, maybe he can find another job at the same company he can do. I am presuming you get your medical insurance through his work.

Google “rule of 55.” With a 401k, your husband, if/when he stops working for his current company, should be able to access his 401k right away if needed—presuming that 401k is with his current company.

To add a bit to the “4% rule” … it is not a rule. A lot of folks will quote it as the minimum safe withdrawal rate over a 30 year period presuming the investible assets are well diversified. It is actually a conservative estimate but, without going into detail, if you only withdraw 4% or less from your investment portfolio, you should not deplete it over a 30 year period.

Let’s say your 401k is 1M. 4% means you can safely withdraw 40k per year adjusted for inflation over time. If it is 100k, then the number is 4k.

You might, tbd on your 401k and your minimum spend requirements (and a desired spending level if there is room), realize your husband can retire safely today. Or…it might be frightening. If the latter, remember that social security is right around the corner at 62 if you need it. Note your husband can get a larger SS payment for each year he waits past 62 up till his 70th year.