I’m getting laid off. How can I decide if I can retire?

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Q. I think I’m getting laid off from my job and I’m 62. I have $650,000 in my IRA which was rolled over from an old job and $100,000 in my current 401(k). I don’t think I will be able to get a new job paying what I make now and I would love to retire. But my mom is going strong at age 92 and I don’t think I have enough to keep me going that long. How can I decide when I can retire and how much I need to earn and save before then? I don’t have a mortgage, fortunately, and I live in the same home with her.
— Working for now

A. We’re sorry to hear about the layoff.

It’s tough when you have a big change like this.

Making decisions about retirement can vary greatly from one individual to another, said Michael Cocco, a certified financial planner with Beacon Wealth Partners in Nutley.

That’s because everyone has a different set of circumstances, needs, assets and income, he said.

The very first step when evaluating if you can retire is to map out your expenses.

Start by completing a budget worksheet to first itemize your “needs,” which are the necessities of life such as housing, food, utilities and transportation, Cocco said.

That will help you figure out your minimum expenses in retirement, he said.

Next, make a list of your “wants” in retirement.

These are things that are not 100% vital to your day-to-day living, but are things you may want to do in retirement, such as seeing shows, going out with friends, vacations and more.

Once you establish your potential expenses in retirement, you can now solve for these expenses using your available resources.

First, tabulate all of your income sources in retirement, he said.

Look at what your Social Security benefit will be and whether you have a pension.

Next, look at your assets, such as the IRA and 401(k) you mentioned. Ask yourself what the reasonably expected long-term average rate of return for those assets will be and how they can provide potential retirement income for the rest of your life, Cocco said.

Make sure to consider healthcare costs given that Medicare coverage is not available until at age 65.

“If you do retire at 62, what is your plan for medical coverage until then? How much will that cost?” he asked. “These are all factors you must consider as well before moving forward with any type of strategy.”

Before you take the retirement leap, consider meeting with a certified financial planner who can look at your entire financial situation, he said.

“You may need the help of a professional to fit together all of these puzzle pieces to help you create a sound retirement strategy that will take care of you financially for as long as you live,” Cocco said.

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This story was originally published on March 15, 2023.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.