Retirement is a big decision. Along with marriage, divorce, having children, and moving, it is one of the biggest life transitions you will face. Research indicates that the happiest people during retirement are those who start planning early. Unfortunately, many people wait until the last minute, like for an early retirement offer from their employer. During retirement, you will rely on the money you have saved during your working years, so it makes sense to start saving early.
How to Retire in Your Fifties
If you are planning to retire in your fifties, you need to have enough assets to support your lifestyle for decades to come. This means you either have to have saved a lot, or rely on very little, or both. People who retire early typically have worked hard in the early years of their careers, inherited money, and/or invested wisely. They may have started a successful business, worked to grow it, and sold it for a substantial profit; they may have also developed and sold intellectual property. To make their savings last, they also know how to live within their means.
Warnings About Early Retirement
Apart from the financial aspects, there may be reasons to rethink retiring in your fifties. If you have always been someone who is career-focused, or a “type A” personality, or an ambitious person, and you have the funds to support early retirement, you may want to think twice before retiring. You may find retirement enjoyable for a few months, but without a new project to work on, you may find that having too much time can lead to boredom. Business owners and working professionals are the most likely to experience boredom during retirement.
Another thing to consider is long-term health. In midlife, you may be vibrant and healthy, but in a few decades, things may change. For a successful early retirement, you should assume that your health needs and medical expenses will increase. To retire at age 50, you should consider that your money may need to cover living expenses for 40 years (or more), which will not be the same as your current situation.
Note: If you have sufficient assets in your retirement account and want to withdraw money without incurring early withdrawal penalties, you may be able to set up 72(t) distributions. This option allows you to access your retirement savings at any age without paying early withdrawal penalties.
How to Retire in Your Fifties
If you have a surplus in savings, retiring in your fifties may be more realistic than you think. Why? Many people assume that their retirement money is inaccessible until they reach age 59½, which is the age (set by the Internal Revenue Service) at which you can withdraw funds from your retirement account without a 10% penalty. However, there is a special rule for individuals who leave their jobs after their 55th birthday, allowing them to withdraw money from employer-sponsored retirement accounts without penalties. You can take money from your retirement account early while delaying the start of Social Security benefits until age 70, which would often make early retirement possible.
Another thing you will need to plan for when retiring in your fifties is health insurance. You will still have 10 years before Medicare coverage starts, and you will not be covered under your employer’s insurance plan, so when budgeting for retirement, make sure to account for the costs of purchasing your own health insurance.
Like…
if you’re still working at seventy, you might be the type who never wants to retire. Many people continue to work in their later years simply because they can and prefer to stay active.
If you plan to retire at seventy, the good news is that you will receive the maximum Social Security benefits by waiting until you start receiving payments when you are seventy. (Note: There is no benefit in waiting past seventy.)
There is another piece of good news: like wine, some retirement products get better with age. Annuities and reverse mortgages become more attractive in your later years because the shorter time frame works in your favor when calculating costs and interest rates.
By the age of seventy, you will also need to consider the required minimum distribution when taking from your retirement accounts. Many plans require withdrawals starting at age 72 for those who turned 70 and a half after December 31, 2019. If you miss this, there are significant penalties, so make sure to start on time.
Finally,
Although it applies to people of all ages, when you reach the age of seventy (or even earlier), you should ensure that all your affairs, including accounts and insurance policies, are in order: if you haven’t done this yet,
Source: https://www.thebalancemoney.com/when-to-retire-a-guide-to-retirement-from-ages-50-70-2389050
Leave a Reply