Before retiring at 55, think. Consider these three points

There are several things you should think about before retiring at age 55, if you have planned for these matters.

Income Planning

On average, life expectancy is 77 years in the United States as of 2020. If you decide to retire at age 55, you may need to have income for at least twenty years. If you want to have enough income, you will need an accurate estimate of how much you plan to spend each year. After that, you need to compare that with your current pension income sources.

Paying for Healthcare

Medicare coverage starts at age 65. If you wish to retire at age 55, you will need a source of health insurance that provides coverage until you reach age 65.

Making the Most of Your Time

When considering early retirement, think seriously about what you wish to do with your time and money. If you have expensive hobbies, consider these additional costs when planning. If you want to travel, decide whether you will keep your home or choose to rent it so you are not tied to a specific place.

Frequently Asked Questions (FAQs)

How much money do you need to retire?

What is the 55 rule?

You can take distributions from your 401k account if you have separated from your employer if it occurs during or after the year you turn 55.

Resources

The Balance uses only high-quality sources to support the facts in our articles. Read our editorial process to learn more about how we verify and keep our content accurate, reliable, and trustworthy.

Centers for Disease Control and Prevention. “Deaths in the United States, 2020.”

Social Security Administration. “Retirement Benefits.”

Internal Revenue Service. “Traditional and Roth IRAs.”

Internal Revenue Service. “Retirement: Frequently Asked Questions About Periodic Payments.”

Internal Revenue Service. “Retirement Topics – Early Distributions Penalty Exceptions.”

Social Security Administration. “Medicare Benefits.”

Official Healthcare Website. “How to Determine Health Insurance Premiums.”

Health Insurance Agency. “ACA Report on Unsubsidized Customers,” page 7.

Kaiser Family Foundation. “Health Insurance Marketplace Calculator.”

Ewing Marion Kauffman Foundation. “National Report on Early-Stage Entrepreneurship in the United States: 2020,” page 11.

USAGov. “Retirement.”

Internal Revenue Service. “Topic No. 558 Additional Tax on Early Distributions from Nonqualified Retirement Plans, other than IRAs.”

Source: https://www.thebalancemoney.com/why-retire-at-55-2388841

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