Most people work their whole life to support themselves and their family, and to build up a nest egg so that they can enjoy their twilight years in retirement. If you are especially good at saving up for retirement, you may consider retiring before the current standard Social Security retirement age of 66.
While there is certainly something to be said for being able to retire early, it may not be the right choice for everyone! When you begin to consider retirement, make sure that you speak to a financial planner, and consider these five reasons why early retirement may not be the right course of action:
5 Reasons Why You Shouldn’t Retire Early
1. You will reduce your potential savings significantly.
It may seem obvious, but the less that you earn in your lifetime, the less money that you can save. This means that retiring early means less money in the bank! If you want to travel in retirement, or leave some money to your family or favorite charities, you will have more opportunity to do so if you continue to work and build up your savings with the extra paychecks.
2. You will get less Social Security benefits.
The amount that you get from Social Security changes depending on the age at which you start to collect. For example, people born between 1943 and 1954 would only receive 75% of the total allotted retirement benefit if they begin collecting at the earliest possible point (age 62). This is because they start collecting four full years before the standard retirement age of 66.
3. You will have increased health care costs.
Retiring early (at age 62) may cause you a bit of a health care conundrum. Retirement means that your employer-sponsored health care will expire, but you won’t be eligible for Medicare until age 65. This means that you will have to purchase your own health care policy for three years. Of course, if you are looking for your own health insurance policy, Vargas and Vargas Insurance Agency can help you find a great policy at a great price!
4. Your health and self-esteem may decline.
Many people take a great deal of pride in their job. Leaving the working world has been proven to take a toll on both health and self-esteem with the loss of ‘occupational prestige.’ This means the increased risk of being diagnosed with physical illness or depression. According to a study by IEA, “retirement increases your risk of clinical depression by 40 percent while raising your chances of being diagnosed with a physical condition by 60 percent.”
5. Your social circles will get smaller.
Work may be stressful, but the bond that you make with coworkers is substantial. Socialization at the workplace accounts for a considerable amount of relationships for most people, and lacking in those interactions several days a week can be taxing for some people.
If you want to speak to a professional financial planner about your retirement options, and to get advice about whether early retirement is right for you, call Vargas and Vargas Insurance Agency at 617-298-0655. The agents here at Vargas and Vargas Insurance can also help you with your home and auto insurance, health insurance, and much more, so call today!