Retirement without the Magic Number?

My father retired from his job at the age of 55, without a magic retirement number. He was offered a high-paying but temporary job, realized he had enough years to claim full pension benefits from the job he’d worked for nearly 30 years, and retired. When the high-paying, contracting job, ended two years later he officially stopped working.

My dad’s financial story is an interesting one. He was the sole provider of my family. My mom stayed-at-home with my brother and I for 12 years. Even after she rejoined the working world, she did so only part-time, and at very little pay. To this day, her income is not utilized to pay household bills. My dad didn’t start saving for his retirement until about ten years after the 401(k) was established. At that point, he was more than two-thirds through his career. He began saving sometime in the late eighties, early nineties at which point the maximum 401(k) contribution was only $10,500.

So how did the sole provider in a mid-range, government job, retire so early? First, when my parents decided that my mom would stay-at-home, they agreed that all expenses would need to be kept at a minimum. They lived in a modest home and didn’t upgrade anything in it. Even the wall paper remained the same for thirty years. I give a lot of credit to my mom on this one. She was always mindful of money and made certain to keep the shopping bills at a minimum. Second, my dad put extra money towards the mortgage whenever he could. This ultimately allowed him to pay off his mortgage seven years early. Without the expense of a mortgage the decision to retire became much easier. Third, my father receives medical benefits through his previous employer. He is able to receive health benefits at the same premium rates as current employees. Fourth, he receives a pension equal to roughly 55% of his previous pay. He takes a cut in the pension benefits so that my mother will continue to receive benefits if he passes away before her. Fifth, my mother and father do not lead an extravagant life.

My father recently told me that he has not touched any of the money in his 401(k). Since he is not old enough to earn social security he and my mother are aptly living off of his pension. That means that they are able to sustain their needs at 55% of his previous pay.

Not only was my father able to retire at age 55, he also paid off the college expenses of my brother and I in their entirety. As I try to attain that magical retirement number, which I currently estimate around $2 – $3 million I am amazed that my father was able to retire without aiming for a specific number. It seems the lack of pensions and medical care for retirees have really changed the rules of retirement, without them I wouldn’t think of retiring without a monetary goal in mind.