To Jennifer Nelson Next Avenue
Robert Johnson, a professor of finance at Creighton University’s Hyder College of Business, retired from his financial education career in 2018, but he wasn’t comfortable spending his retirement years like an eternal vacation. rice field.
Playing golf, reading for fun, and having a completely unstructured day all sounds great, says Johnson, but especially for those who find purpose in their work. For , the novelty wears off quickly.
“That doesn’t mean you shouldn’t consider early retirement, but you should plan how you’re going to spend your day,” he says.
Retiring in your 50s sounds great in theory, but it can come with some obstacles, the biggest of which can be boredom. “An unfinancial reason for reconsidering retirement in your 50s has to do with purpose,” says Johnson.
Additionally, if you don’t plan carefully, early retirement can also involve many additional costs that you wouldn’t have if you had waited.
before joining big resignation Forever, evaluate your finances carefully with a financial planner. Arrangements in the gray area between all work and no work – pre-retirement, sabbatical, “workation”, call it what you want – can be more than what you’re after There is a possibility
Reasons to Reconsider Retirement
Here are six reasons why you should reconsider retiring in your 50s.
1Fulfillment. It will probably get boring, says Taylor Jessie, director of financial planning and investment advisor at Taylor Hoffman in Richmond, Virginia. “You might enjoy doing nothing on the beach sipping margaritas for a year or so, but after the initial ‘honeymoon’ period, you want to enjoy life more.” believe that there is an instinctive desire to find purpose in life through meaningful work.
“Maybe that means working less hours from age 55, changing careers in your 50s to pursue something you’re more passionate about, or doing more volunteer work at your local charity.” he adds. Working like a turkey and being happy for the next 30 years should give you pause.
Johnson started the company with a few friends who were in a similar position. The biggest advantage was being able to choose who to work with. “I only work with people I like,” he says. “If you work with people you like, or do things you like, you don’t think it’s work.”
health insurance headache
2. Medicare. Most of us will lose health insurance through employment once we leave the workforce. Also, most people don’t qualify for Medicare until they’re 65, unless they have a long-term disability. Retiring in your 50s leaves a significant gap in health insurance coverage that you have to pay.
The Affordable Care Act (ACA) allowed people under 65 to find health insurance through state markets, even with pre-existing medical conditions, but the policies available are usually highly deductible plans. They can feed you for a few years until you qualify for Medicare, but health insurance and related out-of-pocket costs can quickly add up, given the 10+ year gap. there is. The good news is that his ACA was recently changed under the Biden administration, limiting health insurance costs to his 8.5% of his income.
“You may be eligible for subsidies (premium tax credits) that make self-purchased coverage more affordable than many people expect,” said a licensed broker, healthinsurance.com. org analyst Louise Norris. “If you are retiring early, you may find that your income is significantly reduced and you are eligible for large subsidies,” she adds.
Another option is COBRA. This insurance allows you to keep your previous employer’s health insurance, but you must pay the full premium yourself and it expires after 18 months.
have you saved enough?
3. savings. If you retire at 55 instead of 70, your savings will need to last much longer. Only 42% of workers over the age of 55 believe they will have enough money to live comfortably in old age, according to a study by the Institute for Employee Benefits.
This leaves a large portion of people nearing retirement feeling insecure about their ability to cover the basics. expensesIf you’re unsure about your retirement savings, it may be worth delaying the date by at least a few years. will give you more time to raise your eggs.
Four. retirement account. If you retire before 59 1/2, it will be difficult to withdraw money from your retirement account. Early withdrawals from IRAs and 401(k)s are subject to a 10% tax penalty unless you qualify for one of several exceptions. Recent IRS rule changes allow people under 59 1/2 to withdraw easily from their retirement savings accounts with virtually no penalty using a recurring payment plan, but can withdraw That doesn’t mean you should.
Calculate your IRA withdrawal
SEPP or what’s called a “72
For example, if you had $1 million in your 401(k) at age 50 and applied the SEPP rules, you could potentially withdraw up to $60,300 per year. He is also obliged to keep these withdrawals for 10 years. But by the age of 60, she’s used up more than half of her account, leaving $500,000 and her 20-plus years of retirement.
Five. Social security. Benefits are based on average earnings for up to 35 years, so if you retire early, you may not be able to use your highest earnings year to calculate your monthly benefits. At the same time, Social Security will reduce your benefits if you ask to receive them before what is considered the “normal retirement age” based on the year you were born. If he applied for benefits three years before her normal retirement age, his monthly checks would be reduced by 6.67%. If you apply four years or more early, your benefits will be reduced by 5% each year.
Benefits of being busy
6. Short lifespan and early cognitive decline. Some studies suggest that people who stop working before the age of 65 have a shorter life span and faster cognitive decline. “Keeping working in her 60s, 70s, and even into her 80s keeps her active and socially involved and helps prevent cognitive decline,” says journalist, author and woman of the Alzheimer’s movement. Founder Maria Shriver says:
Shriver, co-founder and CEO of nutrition bar maker MOSH, said, “Studies show that working with age and developing skills reduces the risk of dementia, including Alzheimer’s disease. “The forced interactions encountered in the work environment, such as team meetings, water cooler talks, and customer meetings, can help improve health and mental wellbeing at all ages.”
Carefully consider all financial and emotional issues before considering retirement in your 50s.