My father has been working for about 40 years and had never heard the term retirement calculator until he need it. As a young man he got into the steel workers union which, at the time, was one of the best blue collar jobs in the country. He worked very hard, in a dirty, physical environment. As he racked up year after year, his status in the union increased, his pension grew at an alarming rate, and he was entitled to an increasing amount of benefits such as first choice of holidays, and the ability to get as much over-time as he was willing to work. It was really good times and our family was solidly in the middle-class living the American dream living in the best place to live. He would NEVER live in 55 communities or assisted living facilities if he had a say in it.
A retirement calculator can guide your financial decisions
Unfortunately, nothing lasts forever. The combination of union pressure and overseas competition drove the steel industry out of the country and my father was given his pink slip. Having basically one skill, and no one willing to pay him for that skill anymore, my father decided to change direction and learn a new trade. He was always handy, and had a particular skill and interest in electrical work, so he decided to become a licensed electrician.
Had we run a retirement calculator at that time the future would have seemed dismal. However, he put in the time, and got into a firm as a journeyman where he would build up experience doing real electrical work. Within 2 years, my father was fully licensed and was getting a reputation as a skilled electrician who had a knack for problem solving.
Where is best place to live given your financial position?
Taking a suggestion from a friend, he decided one day to take a risk and start his own electrical business, specializing in residential work. It was tough at first, and money was very tight as he tried to spread limited resources between the family’s essentials, advertising and supplies for his business. However, his persistence eventually paid off, and his business was thriving, he was earning significantly more than the cost of living and once again we were living the American dream.
Years went by and one day my father decided he did not have the passion for his business anymore. He really was not enjoying the day to day responsibility and spoke to my siblings and me about taking over or selling the business. Although he had many good years, he had no idea how long he could live off of his savings, pension and investments.
He was not the type to reside in 55 communities
We spoke to a financial adviser and they strongly encouraged him to plug in his financials into a retirement calculator to help him figure out when he can retire. Retirement calculators take several inputs such as your age, the age you’d like to retire, the cost of living and the type of financial lifestyle you want to live in retirement. In addition, it will ask for your investments, pensions, savings, and any other asset or income you have. Given all of these inputs, the retirement calculator will then tell you 1) at what age you can retire without prematurely running out of money and 2) what types of modifications in income and lifestyle you’d need to make in order to retire at a certain age.
After running the numbers for my father, he was amazed that his retirement age was 62 – that was 3 years ago! He already lived in the best place to live so he could devote his spare time to hobbies. Although I don’t think he’ll ever fully retire, hes taking it easy now and is confident in his decision based on what the retirement calculator told him.