Current Status
Kate and Joe have been married 42 years and have 3 grown children. Joe is 68 and Kate is almost 66. Joe retired with a pension and is receiving Social Security benefits. He is also receiving Medicare and has a supplemental insurance policy. Kate is still working full time and trying to decide whether or not to retire or at least go part time. Kate works in upper management and while her job has quite a bit of responsibility, it’s not that demanding. She is well liked and respected by her peers. Kate’s salary is $65,000 per year.
Kate and Joe’s net worth is around $800,000 including their home. Approximately $400,000 is held in tax deferred retirement accounts. Their yearly expenses are about $30,000 and they project this to increase about 3% per year. Their home is paid for and they don’t have any outstanding loans or credit card bills. Both are in excellent health, get regular checkups and have no health threatening habits.
Kate’s benefits at her place of employment are excellent. She gets 6 weeks paid vacation each year, sick leave, and has a 401k plan. The company match in her 401k plan is 15% of her yearly wages and she will be fully vested if she decides to retire. She has paid health and life insurance and gets a discount on any medications she might need.
What's at Stake?
If Kate decides to go part time at her job, she will lose all benefits except a small amount of vacation time and will become an hourly employee. Since she will lose her health insurance, she will need to activate her Medicare and start drawing Social Security benefits. Any charges for Medicare and the supplemental insurance will be her responsibility.
In a month or so, she will be eligible to make as much money as she wants and receive full Social Security benefits without penalty.
Kate has worked her entire life and now feels it’s time to relax but she is a workaholic and isn’t sure she can enjoy life without working. Both Kate and Joe enjoy traveling but are more content to stay at home now that they are older.