6 Reasons You Might Not Want to Retire Too Soon
| Photographs By Joshua Resnick
Retirement is often portrayed as the ultimate dream at the end of your career.
You’ve likely seen an image of some older couple lounging on their porch, drinking sweet tea. You might see the gentleman golfing with friends, while his wife has lunch with hers. It’s the epitome of leisure.
Retirement is the end to the American Dream that most hope to achieve after long, successful stint in the workforce. It’s many people’s chance to pursue new hobbies, travel to all the places they never had a chance, or even volunteer.
Unfortunately, the dream of retirement doesn’t exist for everyone, and for those it does, it’s important to be wary of the age at which you retire. While the sooner, the better might seem like the goal, retiring too young isn’t necessarily a good thing. Here are six reasons you might not want to retire too soon.
1. A Gap in Insurance
With the rising costs of health care, from prescriptions to procedures to simple doctor visits, not receiving the assistance from an insurance company can mean paying a lot out of pocket. When you’re working full-time your insurance comes through your company, when you retire, the usual path to insurance is Medicaid.
Unfortunately, Medicaid doesn’t usually become available until you reach the age of 65. Retire anytime before that and you’ll have so many years until then to pay health insurance premiums. Between having to purchase health insurance on an individual market, which is undoubtedly more expensive, and purchasing insurance at a period in your life where policies have a tendency to be more expensive in general, making up for lost insurance can take a large chunk of your money.
2. You Could Save Even More
Depending on the age at which you begin to save for retirement, retiring early might begin to look like a possibility. Again, you might think to yourself that you can enjoy your life of leisure that much quicker.
However, even if you reach a rate of pay that seems adequate, by retiring early you lose quite a bit of compound interest that you could have earned. Moreover, to retire early would require you to save an exorbitant amount each year prior to retirement.
Instead of taking about 11 percent from your yearly income, you might have to take upward of 35 percent. If you’re an extremely frugal person and don’t find yourself spending on any luxuries, then this might be ok for you. But, for many who appreciate a life of comfort, taking away over 30 percent of their income makes life before retirement less than stellar.
Nonetheless, the longer you can save for retirement, the better. It’ll keep you from scraping by in your working years and leave you with enough when you retire to live comfortably.
3. You’ll Have Less Time to Pay Things Off
Throughout your years of life, you’ll likely acquire a number of things that you either have to take loans out for or make monthly payments on. From student loan debt, to your mortgage, to possibly a vehicle, most people require quite a few years of their lives to pay off these items.
Depending on your length of schooling, most people need at least 10 if not upward of 20 years to pay off student loans. Moreover, most mortgages come at a rate of either 15 or 30 years.
When you’re retired and living off a set amount, having a mortgage or student loans hanging over your head is not only more stressful, but could cost money that you might have otherwise needed during your retirement period.
4. You Could Reduce Your Social Security Benefits
Social security is there to assist you when you no longer have an income continuously coming in throughout the year. Social security is calculated by looking at your earnings in your best 35 years. This means that depending on when you file, you can raise or lower that number.
If you don’t wait until your full-retirement age, you risk seeing a reduction in your benefits. Opting to acquire your benefits early means that you’ll lower them for the rest of your life. Social security can give you an extra $40,000, if not more, a year. This additional income could be of use in an emergency.
5. You Might Find Yourself Twiddling Your Thumbs
Working a job gives you a purpose in your life, and when you’ve done it for the past 30 to 40 years, having it suddenly stop can be a bit of shock.
At first, it can be exciting to have eons of free time ahead of you to do with what you please. After a while, however, too much leisure can become a little boring. Hobbies only fill up your time so much and after awhile traveling can get old. The same routine everyday can be tiring and if you retire too soon, the more creative and out-of-the-box you’ll have to be about filling your days.
Furthermore, there’s an abundance of studies surrounding the correlation between retirees and depression and length of life. Ergo, if you enjoy your job and can stand to wait, you might want to put retirement on hold.
6. You Could Get Charged for Early Access
Your IRAs and 401(k) are great resources for your retirement money. However, they come with one stipulation. You can’t access that money until a certain age, 59.5 years of age to be exact.
If you choose to retire too soon, you’ll have to pay a 10 percent surcharge to take your money out early. While there are a few ways around it, if you simply wait until the traditional retirement age, you’ll save yourself the hassle and the charge altogether.
After working every year since you were eighteen, retirement can sometimes feel like it can’t come soon enough. You probably sit and dream of all the things you can do when that day comes, all the things you can accomplish that are unachievable with a full-time job. Nonetheless, retiring too early has its costs. So, before jumping the gun, carefully consider the hurdles you’d face. If you can wait, you might want to stay in the workforce just a little longer.
At what age do you hope to retire? Would you still consider retiring early despite some of these issues?
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