A former service member recently wrote to MarketWatch’s Moneyist with a pressing question: can he and his wife afford to retire by the end of the year? With combined monthly income of around $7,000 from pensions and Social Security, and $140,000 in cash, the short answer is yes—but there are important caveats.
Their financial foundation is strong, but retirement decisions hinge on more than income alone. Timing Social Security, managing risk, and planning for the unknown all play major roles in determining whether retirement can be both comfortable and sustainable.
Income
The couple expects about $7,000 in monthly income after taxes. That includes:
- Two pensions: $3,600 and $1,500
- Social Security: roughly $3,500 combined
Their estimated monthly expenses are around $4,000, giving them a surplus of $3,000 each month. That’s a solid buffer, assuming the budget includes all basic and recurring costs. While this sounds great on paper, there’s more to consider.
Timing
One major factor is when to claim Social Security. For anyone born in 1960 or later, full retirement age is 67. Claiming before then reduces monthly benefits for life. Waiting until 70 increases payments through delayed retirement credits, making a big difference over time.
According to the Social Security Administration, spousal benefits are capped at 50 percent of the worker’s benefit if claimed at full retirement age. If taken earlier, the spousal payment is permanently reduced.
In this case, the wife has little or no U.S. work history, so her income will rely on the spousal and later, survivor benefit provisions. Delaying the husband’s claim maximizes her benefit as well. This is especially important if she outlives him.
Survivor
Survivor benefits can provide financial security for a surviving spouse. If the higher-earning spouse passes away, the widow can claim 71 percent of the deceased’s benefit at age 60, or 100 percent at full retirement age.
In the letter, the writer mentions he elected survivor benefits for both pensions and holds a $240,000 life insurance policy. These add important layers of protection and reduce the risk of income loss after death.
Strategy
Financial planners often recommend pairing guaranteed income like pensions and Social Security with a liquid savings buffer. The couple’s $140,000 in cash can serve as this buffer, covering:
- Emergency expenses
- Home repairs
- Health care costs not covered by Medicare or Tricare
- Unexpected inflation
T. Rowe Price and others suggest having at least one to two years’ worth of expenses in cash or cash-like assets. For this couple, that would mean setting aside $48,000 to $96,000 as a reserve, leaving a portion of the $140,000 available for discretionary spending or low-risk investing.
Claiming
Research from the National Bureau of Economic Research shows that most Americans would benefit from delaying Social Security claims. The longer they wait—up to age 70—the higher the benefit, not only for the worker but also for the spouse and survivor.
The downside? Most people don’t wait. Only about 10 percent claim at 70, even though over 90 percent would increase their lifetime income by doing so. The average household leaves over $180,000 in lifetime spending power on the table by claiming early.
In this case, the couple can afford to delay, thanks to their pensions. That makes waiting a smart long-term move if health allows.
Risks
No retirement plan is bulletproof. While the couple’s monthly income covers their current needs, there are future risks to consider:
- Inflation eating into fixed income
- Health care costs not fully covered by insurance
- Big-ticket expenses like a roof replacement or car purchase
- Long-term care needs
The couple should also clarify how the $140,000 is allocated. If part of it is in a Thrift Savings Plan (TSP), that money carries different rules and risks than cash in a checking or savings account.
A realistic plan should also include a replacement fund for household repairs, health-related surprises, or one-time needs that exceed their monthly surplus.
Retirement Snapshot
| Category | Details |
|---|---|
| Monthly Income | $7,000 after taxes |
| Monthly Expenses | $4,000 |
| Surplus | $3,000 per month |
| Savings | $140,000 |
| Social Security Timing | Full retirement age at 67 |
| Spousal Benefit | Up to 50% at full retirement age |
| Survivor Benefit | Up to 100% at full retirement age |
| Life Insurance | $240,000 |
Bottom line
Yes, this couple can afford to retire. Their guaranteed income more than covers fixed expenses, and they have a healthy amount of savings for emergencies or future needs. Survivor benefits, pension elections, and life insurance help protect the spouse from financial risk.
That said, retirement success depends on planning—not just income. Delaying Social Security, keeping a liquid cash reserve, and budgeting for health and home expenses are key to keeping the plan viable long-term.
Retirement is not just about whether the math adds up today, but about how well the plan holds up when life throws curveballs. For this couple, the numbers work—and with a little extra planning, the lifestyle can, too.
FAQs
Is $7,000 a month enough to retire on?
Yes, if your expenses are below that and savings support surprises.
When should I claim Social Security?
Delaying until 67 or 70 increases lifetime benefits.
What is the spousal benefit under Social Security?
Up to 50% of the worker’s benefit at full retirement age.
How much cash should retirees keep?
One to two years of expenses in liquid savings is ideal.
Are survivor benefits higher than spousal?
Yes, up to 100% of the deceased spouse’s benefit.