Deciding on Retirement
When is it time to take it a little easier? There’s a range of possible answers. People are working past 65 at about double the rate of the 1980s, according to the Bureau of Labor Statistics. Still, the vast majority of people are actually retiring before then. Which path is right for you?
DOING IT EARLY
Retirement, as the National Bureau of Economic Research notes, “improves both health and life satisfaction.” So why not start right away? Leaving the workforce before retirement age has its obvious perks, whether that’s traveling, spending time with friends and family, taking up new hobbies or simply recharging. And many are doing just that: Men retire on average at 64.6 years of age, according to Investopedia, while women average 62.3 years old.
The caveat is that not many people reach their 60s with enough financial resources to fund this kind of extended retirement. Others may have health concerns, with insurance connected with their employment. Medicare benefits don’t begin until age 65, leading to large out-of-pocket costs if you have to buy insurance on the open market. Social Security benefits are limited before age 66 or 67, depending on when you were born, so you’ll need to have built up a large nest egg beforehand.
WHY SOME PEOPLE WAIT
For some older workers, staying in the workforce offers a continued opportunity to put away money for later. Others simply want to remain active as they age. Your federal benefit also goes up, the longer you wait. Monthly benefits can increase with each month you delay retirement after age 66 or 67. When you’re finally ready, however, there are some important things to factor in.
CONSULT A PROFESSIONAL
Find a trusted financial planner to build a retirement plan, either through the National Association of Personal Financial Advisors, the American Institute of Certified Public Accountants or personal recommendations. Make sure to work with a certified financial planner, since they’ve earned credentials that hold them to certain standards and regulations.
MAKE A PLAN
Once you’ve gotten the financial details ironed out, it’s time to consider what you’ll do with all of the time you used to spend at the office. Some are remodeling their homes, while others are buying motor homes or downsizing. There will be far more opportunities to visit with family, but also to volunteer, do public service work or mentor. Consider going back to school to learn some new craft or just to explore a personal interest. You may even decide to start a business or work part time.
WORKING LATE IN LIFE
If you choose to return to work in retirement, you’ll have a chance to expand on a particular passion and to supplement your income. But there are also limits to the amount of money you can make without impacting retirement benefits, including some pensions and Social Security. In the near term, your payout can be temporarily reduced, but you actually may be eligible for a higher benefit later. The earning limits depend on your age. If you make more than that amount, $1 will be withheld from your Social Security payout for every $2 earned above your limit.