Today, we’re diving into a hypothetical client scenario to learn from others’ experiences. Eric Hogarth, CFP® joins Better Money on WFSB to discuss the question: “I’m 58 years old with $500,000 saved for retirement and an expected inheritance of $500,000. Can I retire now?”

That answer depends on several factors. First, it’s crucial to understand how much money you spend annually. At 58, retiring is considered early, and having a clear picture of your expenses is essential.

Considering Your Marital Status and Financial Dependents

Next, take your marital status into account. If someone else relies on you financially, or if you care about leaving money behind after you’re gone, these factors will influence your retirement plan. Some people prefer to spend their savings down to zero, while others want to ensure there’s something left for their heirs.

Navigating Healthcare Costs and Inheritance in Retirement Planning

Healthcare costs are another significant consideration. At 58, you’re likely getting health insurance through your employer, but you’ll need to pay for it out-of-pocket until you qualify for Medicare at 65. This can cut into your retirement funds substantially.

You also need to be realistic about when you’ll receive your inheritance. It’s an important part of your financial plan, but the timing is uncertain. Relying too heavily on this can be risky, as it means waiting for a loved one to pass away, which is not something anyone wishes for.

Strategic Planning to Maximize Your Money

Developing a tax strategy is vital. During your working years, taxes are straightforward, but in retirement, it’s more complex. Different tax codes apply to Social Security, dividends, interest, and Roth IRA distributions. Paying attention to these details can impact how much money you actually have to spend.

In summary, while retiring at 58 with a million dollars is possible, it requires careful planning and a thorough understanding of your financial situation. Consider your expenses, marital status, healthcare costs, inheritance timing, and tax strategy to make an informed decision.