# I’m 64, single, considering retirement after fighting cancer — I have $1.6 million. Should I retire?

Looking forward to your thoughts.

Chris

See: I lived ‘adventurously’ but now my debts equal half my savings and we live ‘hand to mouth’ — how can I save for retirement? 

Dear Chris, 

I am so happy to hear your cancer treatments were successful and you are cancer-free. That is a huge relief. 

Financially, you appear to be safe to retire, advisers said. You’ve done a great job saving, and you have other sources of income, which is always comforting. With your current assets, you could possibly take about $60,000-$65,000 out of your portfolio every year, assuming it is properly diversified, and then use rental income and Social Security income to meet your needs, said Brenda Knox, a financial adviser at Financial Elements.

You may even be able to take less out of your portfolio after you’re done paying for COBRA. If you need $8,000 a month, less your Social Security and the money you get from rental properties, that would be about $4,250 a month ($51,000 a year), or 3% of your portfolio, “which is very doable,” said Scott Hammel, a financial adviser at Apeiron Planning Partners. Of course, these figures are dependent on various factors, including how your portfolios are allocated, if your expenses are more or less than you estimate and if anything unexpected pops up. 

Still, there are a few points financial advisers brought up that I’d like to share with you. 

First, one of the most important components to retirement planning is figuring out an estimate for how much you’ll be spending in it. You said your estimated expenses are $8,000 a month, or $96,000 a year. You seem to be diligent about your saving habits, but make sure you take every possible expense into consideration when making that estimate. Does it include a nice discretionary or travel budget, as well as Medicare and health care costs after 65? A single man can expect to spend $140,000 in retirement on health care alone, according to Fidelity Investments. Are you planning to ever move, and would that affect your monthly expenses? And don’t forget taxes, especially in California.  

This might sound morbid, but also consider what your life expectancy will be — which can help you determine how you withdraw from your funds so that you’re sure to have enough to live comfortably your whole life. You’re cancer-free now, which is absolutely wonderful, but do you expect this to affect your health care costs later in life? And does your family have a history of living to an old age? A financial adviser can help you create a retirement spending plan as well as build a stable trajectory to meet all of your short-term and long-term needs. This moment of reflection could also help you decide when to take Social Security. 

You may feel compelled to claim Social Security now, even though it’s earlier than your Full Retirement Age. And some advisers even suggest you do, given your medical history and depending on your family’s history of longevity, Hammel said. But you should do that in the first year after unemployment stops, so that the other income doesn’t make your Social Security taxable. 

You might also want to wait until your Full Retirement Age, if you’re comfortable leaning on your other sources of income in the meantime, or even later. Once you claim Social Security early, that reduction in monthly benefits remains the same for the rest of your life. Comparatively, if you wait until Full Retirement Age, you get 100% of the benefits owed, and if you delay even longer, up until age 70, you would get more than you’re technically owed in benefits. 

If you decide to hold off on claiming Social Security, you can instead convert some of your individual retirement account money to a Roth, which means you pay the tax now and then withdraw tax-free later on, or you can just withdraw from your IRAs as you go to meet your living expenses, Knox said. 

“I’m comfortable with him dipping into the portfolio more in the first couple of years in exchange for the higher Social Security benefit down the road if his health is good,” she said. “If he was my client, we’d review the Social Security question each year — discussing the portfolio and longevity assumptions.” 

Now to your investments. One of the most crucial things you can do for your financial stability is ensure you are properly diversified so that you’re getting enough of a return, Hammel said. “On this portfolio, a good rule of thumb is 4-5% distribution, so about $60,000 to $80,000 a year without significantly eating into principal, as long as it’s invested in a moderate risk tolerance,” he said. Do you know your risk tolerance? Having an idea of how comfortable you are with risk will allow you to shift your asset allocation accordingly. 

You also have a lot in cash, which is great, but all of that money in that account is not working as hard as it could be, said Glenn Downing, a founder and principal at CameronDowning. You definitely need an emergency fund, but perhaps with not as much as you currently have. Again, this is where a financial adviser could help — a professional planner could assist you in allocating the right amount into a cash account while also making sure your risk tolerance and risk capacity are aligned with your portfolios. 

Also see: I’m 55, tired of ‘soul-crushing jobs,’ have $1 million invested poorly — can I retire now?

Also look into those rentals you have. I couldn’t tell if you meant $1,250 per unit or in total for your rental income, but if it’s collective, that sounds a bit low for the Bay Area unless they’re studios or one-bedrooms, Downing said. You can eventually raise the rent, if even slightly (and if that’s even a possibility in this pandemic), or you can sell and try to get a better return in the stock market. Rental units are a form of diversification, which is great, but you may be able to do better elsewhere, Downing said.  

Even if you are single, you should have estate planning documents in place. Create a will and health care proxy or power of attorney. I say this because no matter what, you should be in control of what happens to you and your assets if you become incapacitated or worse. If you don’t have these documents, the courts will decide for you. 

I’ll end with this: Before you officially retire, have a plan for what you’ll do with your days. The idea of retirement is often one that brings excitement — who doesn’t want a break from the hustle — but without any real idea of what to do in retirement, it could quickly become a bore or even a stress. 

You might already know what you want to do in this next chapter, but if not, take the time now to review any potential opportunities, such as volunteering, some part-time work in a field you’ve always loved or taking on a new hobby. 

“This is a big planning point, even more than money,” Downing said. “If he’s only 64 now and cancer is gone, he can easily have 30 years ahead of him.” 

Have a question about your own retirement savings or where to live in retirement? Email us at [email protected]