Facing Early Retirement at 61 with a Young Child: My Financial Plan and Concerns

Retiring early with a young child comes with more than its fair share of additional challenges. That said, if the math checks out and one won’t be over-extending their nest eggs (think withdrawing far north of 4% of their retirement fund in any given year), prioritizing family may not only be a wise move, but a profoundly rewarding one. Indeed, time is money, but money can’t be used to buy back time, especially when there’s a young child involved.

Of course, if the math doesn’t check out and the nest egg isn’t padded enough, it can be a risky move to drop everything and hit the retirement button. Of course, I’d strongly encourage anyone in a similar situation to get the blessing of a financial planner who can gain a better understanding of the full financial picture as well as the priorities of the prospective retiree.

In this piece, we’ll check in on a specific case involving a Reddit user who’s a few years away from Social Security age, who’s hoping to wind down for retirement at around the age of 61. With a 35-year-old wife and a toddler, though, (there’s a bit of an age gap here, to say the least), the otherwise financially sound prospective retiree faces an early retirement that could be met with more than a handful of unexpected expenses.

Either way, let’s dive in and see how the soon-to-be retired individual can make things work as they look to exit the workforce and spend more time with their much-younger family.

Does this Reddit user have enough to support themselves and a young family as they enter their 60s?

There are unique challenges whenever there’s a considerable age gap between spouses. With a 23-year difference, this age gap is wide enough to make things really tricky. The prospective retiree has a nice nest egg, with a $1.1 million 401(k), a $500,000 IRA, and a nice Roth annuity that’ll pay $7,000 annually by the time they’re retired. With a mostly-paid-off home ($43,000 in mortgage left) and a nice passive income stream from a business venture, there’s definitely a lot of wiggle room when it comes to the cash flows. 

As for expenses, they’re expected to come in at a fairly reasonable $4,000 per month. Based on the “4% rule,” and combining their passive income sources (annuity, passive income from the business, and dividends from the portfolio), this Reddit user looks in pretty good shape. And with Social Security poised to come online a little while later, things are looking rather smooth as the Reddit user finishes the last three years of their career.

With a stepdaughter heading off to college, a young child to raise into one’s golden years, and healthcare expenses that should be given extra attention given the 23-year age gap, the prospective retiree’s expenses are going to be hefty. 

The 35-year-old spouse should get to work.

While a sustained retirement could work, I’d argue there’s limited wiggle room with three people to support. If our Reddit user plans to retire, they’ll be able to look after the young child. So, what would their 35-year-old partner be doing?

Arguably, I’d encourage the soon-to-be retired individual to push their spouse to head back to work, at least on a part-time basis. Raising a child and covering a stepdaughter’s post-secondary pursuits are not going to come cheap. Combined with inflation and supporting three others, I believe, will be too hard as it stands.

Although a financial advisor could offer a more personalized, nuanced perspective, I’d argue that I think a retirement would be on stabler footing if the 35-year-old were making an income as well to add to the nest egg to be better prepared for any storms that could happen in the future. If both spouses are retired, I think the budget could get really tight, especially if the stock market continues sliding further into bear market territory. In short, this retiree is right to have concerns because their list of commitments could stretch their budget too thin in retirement.

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