Retirement and money go hand-in-hand, whether people like it or not. The first thing to find out is the amount of money you have managed to save. Is your nest egg large enough to cope with your current lifestyle? If the answer is no, you can keep working until the age of 70. You could increase your Social Security retirement benefit by doing so.
It could go up by 24 percent from your Full Retirement Age to the age of 70. The good thing is that you will get more money, the bad one is that you may not like to work for 3 more years. Besides, another advantage of late retirement is the fact that you can keep making contributions and invest more money. Another difficulty could be finding a good job if you lose yours at that age.
What about early retirement and healthcare expenses?
Another upside of waiting to retire until you are 65 years old is the fact that you can get free Medicare at that age. Losing your employer’s insurance when you retire at the age of 62 could be costly. Thus, it could be wise to think about this. According to the U.S. Department Of Health and Human Services, Medicare is for those aged 65 or older.
Unless you are a person with a disability, ALS, or have End-Stage Renal Disease, in which case you may be able to claim it. Moving on to a different con, it is true that you will have less time to relish retirement. So, it will depend on how hard or entertaining your job is and how much free time it allows you to have. Finding the right balance is essential to have fun and make use of the money you saved.
What about required minimum distributions?
Do not forget about the fact that retirement plans have RMDs at the age of 72. Not doing so may imply having to pay penalties. You should avoid them since they will be a waste of money and time. Some plans like traditional IRAs or some 401(k) may have taxes when you withdraw money. So it is another expense you should be aware of.
Whether you decide to enjoy an early retirement or a late one, you should do what best suits you. Whatever you choose, may have its pros and cons, and you never know what lies in store. Talking to other friends or relatives that have retired may shed some like on this important decision.