My career is one of my favorites. I enjoy working with the crew members in my company and developing personal relationships with my clients. But telling a customer they should retire early has to be the best part of my job as a financial advisor.
In the United States, the average retirement age is 63 for women and 65 for men. However, after the COVID-19 outbreak, many people have been faced with the prospect of early retirement and are unsure whether it is the right choice for them.
If you find yourself in this position, the first thing you can do is figure out whether early retirement is a viable choice for you. Here are a few things to think about.
WHAT ABOUT YOUR SAVINGS?
If you’re a baby boomer, you might have put off starting a family until later in life, and now that you’re approaching retirement age, you may still have children in college or just starting out. You may also have elderly parents who need financial assistance to cover high medical expenses or nursing home fees. Perhaps you even owe money on your credit cards and have a mortgage. Before deciding whether or not to retire early, take a close look at your expenses and the size of your nest egg if you want to stay in your home and retain your current standard of living.
LIVING LONGER LIFE
Your Social Security statement contains an estimation of your life expectancy, or you can get it by going to the Social Security website and entering your gender and birth date. However, for a variety of reasons, your personal life expectancy can vary. Let’s say you come from a long-living family and you take care of yourself by eating a balanced diet, exercising regularly, and taking your drugs as directed. You must consider this when calculating how long your savings would last.
INCREASED MORTALITY
The Journal of Public Economics published a study in 2017 that found a correlation between early retirement and mortality rates, especially among men. When they turn 62, about a third of Americans begin claiming Social Security benefits in their first month of eligibility. Men could face a 20% increase in mortality risk if they claim benefits early and retire, according to the study’s findings.
SAY GOODBYE TO BUCKET LIST
The more you save, the more you’ll be able to pamper yourself in your golden years. Sure, Cape Cod is lovely, but how about a Tanzanian safari, a Caribbean cruise, or a Mediterranean cruise? If you remain in the workforce, your 401(k) savings will expand dramatically, allowing you to live out your dreams.
DEREASE IN SOCIAL SECURITY
You’re probably aware that if you start collecting at the earliest possible age, at 62, you won’t get your full benefits. In reality, only about 70% of your benefits will be received. Total retirement age for those who turned 62 in 2019 is 66 and six months. The maximum retirement age for anyone turning 62 in 2020 is 66 and eight months. The full retirement age will rise by two months per year until it reaches 67; the full retirement age will be 67 for those born in 1960 or later.
