4 Surprising Retirement Saving Secrets to Success
NEW YORK -- Dreams of early retirement are often reserved for Silicon Valley startup nerds, athletic superstars and lottery winners. But run-of-the-mill working stiffs like us? No chance, right? Well, don't count us out yet. More than a quarter (26 percent) of 3,449 currently employed workers who took part in a recent study said they plan to retire before they turn 65. The Allianz LoveFamilyMoney report surveyed 35- to 65-year-old Americans with household incomes of at least $50,000.
So, maybe there is still a chance. The study also revealed four interesting traits shared by the optimistic early retirement hopefuls among us. It's a good chance you haven't heard these tips before: they go well beyond the typical retirement saving advice of "start early," "live below your means" and "earn your 401(k) match."
For example, Tip One: Stay Married.
The survey found workers on-target for an early retirement are more likely to be married -- 76 percent of people on track for an early retirement are married versus 68 percent who never plan to retire. And they're making it stick. More than three-quarters (77 percent) of the respondents are still in their first marriage, compared with 70 percent of those who never plan to retire.
Secondly, they share similar financial habits. The study discovered most of the couples were just naturally "savers" instead of "spenders" and shared a "practical" approach to financial matters compared with those who plan to work forever.
And they talk things out. You've probably heard the stories of couples who hide money from each other, engage in "secret spending" and don't have a full debt disclosure policy. However, these couples -- well on their way to an early retirement -- find it "very easy" or "somewhat easy" to talk with their spouse or significant other about matters of money (90 percent compared with 77 percent of those who plan to be work bound).
And rather than benchmarking their financial success to their neighbors or the S&P 500, the early retirees-to-be compare themselves to their parents' financial status (21 percent compared with 14 percent of those who never plan to retire).
While we're at it, let's bust a retirement myth: Having children isn't a factor in delaying retirement. The study didn't find any difference in expected retirement age based on whether or not respondents have children.
But deciding when to retire also requires a bit of consideration regarding the timing of federal retirement and medical benefits.
"From a Social Security standpoint, you can start getting lower benefits as early as age 62, or you can delay retirement up to age 70 for your maximum monthly benefit amount," says Doug Walker, deputy commissioner of communications at the Social Security Administration, in a blog post. "This is one of the most important and challenging decisions you'll make in your life. When you decide to retire affects not only you, but it could have serious, long-lasting consequences for your family members, too."
For example, retiring at age 62 will trigger Social Security benefits about 25 percent lower than a full benefit payout at age 66. If you delay Social Security until age 70, the monthly amount is 32 percent more than at full retirement age. That kicks your monthly benefits up by $570 -- or $6,840 a year.
And if you retire early without health insurance, you won't qualify for Medicare until you reach age 65 unless you've been on Social Security disability benefits for at least 24 months. That means you'll have to cover insurance premiums with a portion of your retirement income. However, you may qualify for Medicaid or a Special Enrollment Period for coverage through the HealthCare.gov insurance marketplace. And you may also be able to earn a tax credit and lower your out-of-pocket costs.
Retiring early requires a bit of timing, full disclosure, clear communication -- and apparently a strong marriage. All goals worth aspiring to.