It seems like all I hear about is retirement: Are you ready? How much are you saving? How’s your investment portfolio looking? Is your money working for you? And all the other cliched questions. Since my dad’s being saying he’s “going to retire next year” for the past five years, I figured he’d be a great person to talk to about how he’s been planning for the big day – and how the COVID-19 pandemic has affected his timeline. When I interviewed my dad, Melvin Brown, he was 69 years old and working with a financial planner to navigate the uncertainty of an economic downturn due to a pandemic during an election year. Here’s what he had to say:
How long have you been planning to retire?
I guess I started early on in my 20s or 30s but it’s very difficult to do that then. You’re raising a family, having children, growing in your profession, and changing jobs. It was very difficult for me to stick to a plan and be able to save money like I wanted to and invest in things. I guess I really started focusing on retirement and saving for retirement about 15 to 20 years ago. That was when I was established. The children had grown up, everything financially had stabilized, and it was easier to work a budget.
Retirement planned began to change in the 1980s when pensions started to disappear. Were you a part of the transition from pension to 401(k)?
The first and second job that I had there was a pension program. But about five years into the second company, the pension program was ended. Then everything went into the 401(k) approach. Taking care of yourself was primary for me because I never had enough in any one of those pension programs to really plan for retirement with.
Do you still have any pensions?
This is one of my lessons learned. The first pension account I cashed out. The second one they gave me the choice to cash out or take the pension for the next 20 years. My financial advisor told me that I needed to think about that very carefully. It was late in my career, so cashing out and investing the money, there was a great deal of risk there. Not cashing out and getting a check every month for the rest of your life or the next 20 years was a sure thing. It’s not going away. Lessons learned, if I had to make the choice again today there would probably be very little thought about that. I would take the monthly check because it was a sure thing. I probably opted out for the money too late in my career for my investment to pay off, or to grow.
When did you hire a personal financial planner and how has he helped?
I’ve had a financial planner for about 15 years. That started when I was looking seriously about planning for retirement because I didn’t understand the markets, the mutual funds, the investments you could do in the stock market and things of that nature. I thought that I needed someone who could guide me and help me set up plans and goals and identify how much money I needed to put away each week, each pay period to reach what I felt was needed to retire.
Is there a certain amount of money you are targeting to save/invest before you retire?
My benchmark was deciding how much I needed to live on in retirement. This is how much social security is going to pay me and here is how much additional money I need to have with the investments paying me so I can live comfortably, but not lavishly.
What are your thoughts on social security? Are you drawing yet? What age is best to start drawing?
I’m no social security expert, but the longer you wait to start drawing, the more money you get. I’m my situation, it was driven by two things: 1) I really enjoy what I do, I really enjoy my job, I felt that I was still contributing in the things that I do every day; and 2) the other factor was being 69 there is a big jump, at least for me, in the amount you get when you wait to 70. I’ve been thinking about retirement seriously for the past two-to-three years. It just made sense for me to work another year and a half and wait till I’m 70 to draw social security. My health is good. I enjoy what I’m doing. If I was unhappy at work I probably would’ve retired earlier and claimed social security – even if it meant less money.
How has the pandemic changed your retirement timeline?
It’s certainly a concern and major issue for me. I was in the range of losing 25% when the pandemic first hit. My 401(k)s went down and all my other investments were impacted that way. I had to step back and start thinking about, “Can I retire when I want to retire?” Fortunately, the stock market has come back strong very quickly, and I hope it stays that way. Just in the last several months I’ve made up a lot of loss. At this point in time, it [the pandemic] hasn’t changed my plans. I may not have quite as much money as I hoped to have, but I’m sticking with my plan.
Do you save a certain percentage of your income for retirement?
Early on I did. As you grow and the family grows, and the kids move out of the house you get more fluid income that you can invest. It’s always rolled up as time goes on and I try to put 25% to 30% in. I get paid every two weeks. What’s left in the checking account after the two weeks goes into savings. I put as much as I can into the company 401(k), I buy as much company stock as I can, and other investments I put as much as I possibly can into them.
Is there anything you wished you would have done differently?
I should’ve gotten a lot more disciplined with my savings and investments earlier on in my career. I should’ve had a financial counselor a lot sooner than I reached out and got on. When you’re young and you’re getting married and starting a family I just didn’t have the discipline. There are so many unknowns and risks that happen to you at that stage of life. I did the best I could, but it probably could’ve been better.
What advice can you give me and/or the younger generation regarding retirement?
Keep track of how much time is left before you retire. Make wise decisions. The stock market is a long run. Investments are for a long duration. If there are things that happen late in life think about them. The pandemic was a reality check for me. If I would’ve known that was going to happen there would’ve never been a second thought. I would’ve taken the monthly check from my retirement. It wouldn’t have been much, but it would’ve been secure. When you get closer to retirement, that’s important. It stabilizes your income.
When are you actually going to retire?!
I hate to commit myself but I’m looking at next year – 2021. I’ll be 70 and I’ll be able to get the max out of social security and I’ll have another eight to 10 months for the stock market to come back.
UPDATE: He did it! My dad has contacted HR and submitted his resignation and officially announced his retirement effective Dec. 31, 2020. However, I’ll believe it when I see it! Good luck dad!
For more on my financial journey and thoughts from other unique individuals, check out my book Margin Matters: How to Live on a Simple Budget & Crush Debt Forever.