Plan for an early retirement – even if you don’t want one | Personal Finance

(Maurie Backman)

I know many people who have the goal of early retirement, whether it’s in their late fifties or sometime in their early sixties. Personally, the idea of ​​early retirement does not interest me. (Technically, if I have my way, I’ll never really retire, but that’s another story.)

When you retire early, you face some challenges that can be mitigated by, well, not retiring early. Take care for example. If you retire before age 65, you’ll need to figure out coverage because you’re not eligible for Medicare yet. That can be a huge expense.

Then there’s your savings to think about. You may be able to collect a nice big nest egg. But if you need that money for 30 or 35 years instead of 20 to 25 years, then you don’t have that much purchasing power.

Image source: Getty Images.

People also read…

That’s why I think early retirement is a bad idea, at least for me. But I know plenty of people who agree. Still, you may want to plan early retirement, even if your goal is to work into your late 60s or later for a major reason.

Life doesn’t always go as planned

Perhaps you intend to work well into your late 60s or 70s. But you may have to retire early if you are unable to work due to health problems.

That’s exactly what happened to 53% of early retirees in a recent Clever Real Estate survey: they left the workforce ahead of schedule due to health concerns. And while you can take steps to avoid that scenario by taking good care of your health when you’re younger, the reality is that even those in good shape with established habits can see things get worse later in life.

Take a relative of mine who has always followed a good diet and is a healthy weight. In her 40s and 50s, she had no reason to believe she would have health problems in her 60s. But in recent years, she’s developed some problems with grout paint and fatigue, to the point where she’s already had to scale down from 40 hours of work a week to 20. And she’s only 62.

Her goal is to continue working part-time for as long as possible to avoid having to rely on Social Security too early. And luckily she has savings to fall back on. But her original plan was to retire in her late 60s, and now, here she is, looking forward to retiring in a good five years or so.

It is therefore a question of saving steadily throughout your career, so that you can arrange it financially if you retire early. Along these lines, don’t wait until your 50s to ramp up your 401(k) or IRA contributions. Instead, increase your savings rate earlier in life in case you don’t have as many working years left as expected.

Health problems can be sudden, and they can also be sneaky. But if you plan and save accordingly, you won’t have to worry so much about managing your finances if you’re forced to retire early.

The $18,984 Social Security Bonus Most Retirees Completely Overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” can give your retirement income a boost. For example, one simple trick could save you as much as $18,984 more… per year! Once you know how to maximize your Social Security benefits, we think you can retire with confidence with the peace of mind we all strive for. Click here to learn how to learn more about these strategies.

The Motley Fool has a disclosure policy.

Leave a Comment