I have a friend who lost his job in a downsizing a few years ago (he’s an engineer). He has been looking, and getting a few interviews, but no job offers. lately, he’s been thinking of retiring early (he will take a huge hit in SS). What can I tell the guy? Is it worth it for him to keep looking? He’s an optimist, but realistically, is it better for him to just quit? He is 62, so 3 more years till eligible for full SS benefits.
Actually, if he’s 62, it’s four years (full benefits for that generation, which I share, start at 66 not 65).
This is a fairly straightforward calculation that an engineer ought to have no problem with. Does he have enough resources (unemployment compensation, savings, spousal income, whatever) to last four more years until SS kicks in? Will the loss in savings be made up for by the increased SS benefits?
Are the odds of him finding any work at all so low that he should give up? Maybe he needs to be more creative in his job search, or to improve his interviewing skills. If it were me, this is where I would focus. Even part-time or temporary assignments would be better than nothing.
I would think starting SS at this age would be the last resort, and only if it would significantly preserve his existing savings, and if he is not in danger of losing his home or of other financial disaster. Also, if he has a 401(k)/IRA, he can start drawing on that without any penalty and without any loss of future SS benefits.
Roddy
Rather than random folks on the internet, your friend should talk to an independent financial advisor (not a broker) - like the folks here http://www.napfa.org
The hit on SS depends on how long you expect to live and taking it at 62 is not necessarily bad and many recommend that approach. Payment is reduced by 25%, but you get to draw for four extra years. It takes 12 years until you start to pull ahead. So ask yourself if you would rather have the money early or later when you are 78 and older?
Could he take SS and keep looking for a job at the same time? It’s possible to suspend SS payments, correct?
This would be what I would do, if I didn’t have enough in savings and retirement.