Retiring early is a tempting thought that may be workable if you have ample savings. When planning your retirement, it can be easy to get caught up in thinking about all the things you can do with your newfound free time.
In fact, you can become so caught up that you overlook important considerations. So before planning fun stuff like family visits and vacations, consider how the following factors will play into your retirement planning.
Retiring Early Reduces Benefits
If you retire before the age of 59 1/2, then you’ll typically have to pay early withdrawal penalty fees for taking money from your taxed-deferred account, like IRAs and 401(k) plans. You’ll also receive reduced Social Security benefits if you take early retirement. Lastly, if you retire early, then you won’t qualify for certain money-saving benefits like Medicare.
Social Security Benefits
If you choose to receive your Social Security benefits before the usual retirement age (67), then you will receive reduced benefits. By delaying your retirement, you increase your delayed retirement credit. Delayed retirement credits in turn increase your benefits as a retiree.
Medicare
You aren’t eligible for Medicare until age 65. This age limit restricts your options for health insurance if you choose to retire early. Unless you have a spouse who is still working and you can get on their insurance plan, then you’ll have to be paying for it out of pocket and private health insurance is expensive.
You May Live Longer Than You Expect
According to the CDC, the average life expectancy of a person living in the U.S. is 78.7 years. If you take early retirement at age 55, then that’s 23.7 years you have to spend living off your savings. Do you have enough savings to support your lifestyle and live comfortably for another two decades?
Difficulty Finding Extra Income
Many retirees think they’ll easily make extra income by working a part-time job, only to find that they’re not able to keep up with the work.
But, there’s hope. If you find you are unable you keep up with a part-time job, you could still earn more income if you qualify for a federal program like Supplemental Security Income.
This program provides monthly cash benefits to low-income persons aged 65 and over, and to blind or disabled people. If you fall under one of these categories, then you may be eligible for the program. Supplemental Security Income may be a workable source of extra income for those who qualify for it.
Visit heardandsmith.com for more info on Supplemental Security Income.
Plan Your Retirement With Care
As you can see, there are many things to consider about retiring early, other than where you’ll spend your next vacation. In short, retiring early is certainly doable. But, to do so, you must first carefully consider roadblocks you might come across that keep you from living out your dream retirement and how to avoid them.
Dawn Magazines provides up-to-date information on everything you want to know on one convenient website. Browse our Lifestyle archives for more helpful tips.
Retiring early is a tempting thought that may be workable if you have ample savings. When planning your retirement, it can be easy to get caught up in thinking about all the things you can do with your newfound free time.
In fact, you can become so caught up that you overlook important considerations. So before planning fun stuff like family visits and vacations, consider how the following factors will play into your retirement planning.
Retiring Early Reduces Benefits
If you retire before the age of 59 1/2, then you’ll typically have to pay early withdrawal penalty fees for taking money from your taxed-deferred account, like IRAs and 401(k) plans. You’ll also receive reduced Social Security benefits if you take early retirement. Lastly, if you retire early, then you won’t qualify for certain money-saving benefits like Medicare.
Social Security Benefits
If you choose to receive your Social Security benefits before the usual retirement age (67), then you will receive reduced benefits. By delaying your retirement, you increase your delayed retirement credit. Delayed retirement credits in turn increase your benefits as a retiree.
Medicare
You aren’t eligible for Medicare until age 65. This age limit restricts your options for health insurance if you choose to retire early. Unless you have a spouse who is still working and you can get on their insurance plan, then you’ll have to be paying for it out of pocket and private health insurance is expensive.
You May Live Longer Than You Expect
According to the CDC, the average life expectancy of a person living in the U.S. is 78.7 years. If you take early retirement at age 55, then that’s 23.7 years you have to spend living off your savings. Do you have enough savings to support your lifestyle and live comfortably for another two decades?
Difficulty Finding Extra Income
Many retirees think they’ll easily make extra income by working a part-time job, only to find that they’re not able to keep up with the work.
But, there’s hope. If you find you are unable you keep up with a part-time job, you could still earn more income if you qualify for a federal program like Supplemental Security Income.
This program provides monthly cash benefits to low-income persons aged 65 and over, and to blind or disabled people. If you fall under one of these categories, then you may be eligible for the program. Supplemental Security Income may be a workable source of extra income for those who qualify for it.
Visit heardandsmith.com for more info on Supplemental Security Income.
Plan Your Retirement With Care
As you can see, there are many things to consider about retiring early, other than where you’ll spend your next vacation. In short, retiring early is certainly doable. But, to do so, you must first carefully consider roadblocks you might come across that keep you from living out your dream retirement and how to avoid them.
Dawn Magazines provides up-to-date information on everything you want to know on one convenient website. Browse our Lifestyle archives for more helpful tips.
