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Sunday, December 9, 2012 - Page updated at 07:30 p.m.

Scott Burns: Retirement is in the eye of the beholder

By Scott Burns
Syndicated columnist

Q: I turned 56 recently and would like to retire soon. My wife and I own a four-bedroom house worth around $275,000, which we have paid off. We have no debt, and our three children are living independently after graduating from college.

I have about $1 million in my 401(k) and other investments, including a $150,000 annuity. Our property taxes are around $8,000 a year. We are both healthy and have excellent health insurance through my employer.

Can I retire before I turn 62? Do I have enough money? And what about health care?

A: The greatest impediment to early retirement is the cost of health care. I have met many people who had buyout offers from their employers — but decided not to take them when they learned how much health insurance would cost before they reached Medicare age. The cost can be punitively high, and that assumes you can get the insurance.

The sad reality is that while modern health care can do much that wasn’t even imagined 50 years ago, you and I have to treat the health-care system as if it were a bloodsucking monster. While the doctors and nurses who care for us may be altruists with utterly benign intentions, the institutional delivery of health care is bankrupting the country.

You can start exploring costs by getting quotes online. Blue Cross Blue Shield, for instance, quotes plans from about $750 a month to $1,250 a month for a $1,000 deductible plan for a nonsmoking couple in their mid-50s. Plans with larger deductibles cost less.

With $1 million in financial assets, you have far more resources than most Americans. Many retired readers would assure you that they do nicely on much less. This is particularly true if you are willing to be flexible about your largest single expense — shelter. You can rent an apartment for less than the operating expenses of your house. This would free every dime of equity for the creation of additional income.

An even better option is to buy a low-cost condo or a manufactured home in a 55-plus community. Owning the unit will reduce costs significantly. If you visit and check the multiple listings for manufactured homes, you will find many in high-quality 55-plus communities available for well under $60,000. Something like this would leave you with an additional $200,000 or so to invest.

A very quick way to start exploring this notion is to pick up a copy of Where to Retire magazine, available in most Barnes & Noble bookstores.

The important reality here is that retirement isn’t just about “the number” — the financial assets you need to kiss your job goodbye. You can change the number at will by thinking of retirement as an opportunity to do a major “reset” for your life and embracing the most powerful capacity human beings have: our ability to be flexible and adapt.

This, by the way, is beautifully captured in a lovely recent film, “The Best Exotic Marigold Hotel.”


Copyright, 2012, Universal Press Syndicate