If you’re wondering whether early retirement is for you, here are ten reasons why you SHOULD take Social Security benefits at 62.
10. You Need the Money
Not everyone can wait until full retirement age to start receiving Social Security benefits. Some may actually need the money as soon as possible due to unforeseen circumstances, such as an unexpected job loss or a health setback that removed them from the workforce.
Unfortunately, unplanned early retirements are far too common. According to The Motley Fool, the 2019 Retirement Confidence Survey showed that more than four in ten people retired earlier than they had expected, mostly due to health problems/disabilities or changes at their place of employment. Still, the money is there for times like these, so if you find yourself in a situation such as this, it’s perfectly fine to retire at 62 instead of 70.
9. You Won’t Live Forever
If you have an illness that you know is going to get worse over time and possibly cut your life short, you may want to consider early retirement. Even if you’re not ill right now, you should still consider that your health may decline as you age.
Here’s something else you will need to consider: the age of your relatives when they passed away. If your relatives didn’t live past their 60s or 70s, there’s a good chance you might not either. Now, no one is saying that this will happen to you for certain, but it is quite common and something worth thinking about.
8. Your Spouse is Taking Benefits at 70
If you’re a married woman, the truth of the matter is that there’s a good chance you might outlive your husband. And, if that’s the case, as a widow you become eligible to receive the greater of either your benefit or your late husband’s benefit — provided that he doesn’t claim his benefits early. By not claiming them early, he actually increases the monthly amount you’d receive.
TIP: Don’t wait until you’re past full retirement age to start taking spousal benefits. According to Kiplinger.com, “spousal benefits don’t get the same increase from FRA to age 70 as a primary benefit does.”
7. You Can Afford To Retire Early
Many people plan to continue working until their benefits reach their maximum at age 70. But, if you’re one of those who have carefully planned and has an adequate retirement account that will let you quit your job, retiring early can be a good thing. So, just what exactly qualifies as an “adequate retirement account?” According to Investopedia, “you’ll need 25 times your annual expenses (minus Social Security) in order to avoid outliving your money. And the earlier you retire, the more you’ll need.”
6. You Want to Pursue Your Dreams
If you’ve always longed to be an actor or musician, wanted to own a business, or feel like you’ve put off traveling long enough, taking an early retirement can be just the thing you need to make pursuing your dreams possible. Just make sure that the dreams you decide to pursue fit into your budget. According to Money Talks News, Jacob Dayan, CEO of Chicago tax services company Community Tax, advises that you do some careful planning and consideration beforehand. For example, you should consider all the financial risks involved in starting a new career.
5. You Think You Can Get More in Lifetime Benefits
Although taking an early retirement will reduce your overall benefit amount, you’ll actually get more payments in the long-run — meaning you’ll get more in lifetime benefits. This is especially important if you have a serious health issue or have a family history of health problems. Claiming your benefits early can provide you with more options than if you’d wait it out until full retirement age. These options include using the money to pay bills related to your care, investing it in an account that would go to your heirs, or just hanging on to it for as long as it lasts.
4. You’re Feeling Burned Out
If you’ve been working most of your life, chances are you’re starting to feel burned out. And, if that’s the case, early retirement is probably the best thing for you. Yes, there are many people who live happier, healthier lives when they work longer, but that’s not the case for everyone. In fact, studies from The National Bureau of Economic Research show that retirement actually helps improve a person’s health and happiness. So, do yourself a favor get out of the rat race. Your mind and body will thank you.
3. Your Healthcare is Covered
Keep in mind that Medicare coverage doesn’t begin until you reach age 65. So, if you want to retire at age 62, you will need to have a plan in place that will cover your healthcare costs until Medicare kicks in. That being said, if you are able to get coverage through your spouse’s plan, continue coverage through a former employer via the Consolidated Omnibus Budget Reconciliation Act (COBRA) or have purchased private health insurance, you are likely a good candidate for early retirement.
FYI: Although COBRA can extend your coverage for a limited time, you’ll likely end up paying more for it than if you were to pursue other coverage options.
2. You Want to Lower Your Housing Costs
Did you know that retiring can lower your housing costs? Yep, it’s true — if you decide to downsize or move to a cheaper place, that is, as many retirees do. Moving from a large metropolitan area to a small town can save you a lot. For example, the median monthly rental cost in Boise, Idaho, in late September 2019 was $1,450. Now, compare that to the median rental cost at that time in San Francisco County — over $4,500.
FYI, the median home value in Boise was $307,500, while the median home value in San Francisco was a whopping $1,355,200!
1. You’re Worried That Social Security Will Run Out of Money
We’ve been hearing for quite some time now that the Social Security program will soon run out of money. In fact, according to the Social Security Administration itself, “as a result of changes to Social Security enacted in 1983, benefits are now expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted.” So, if you are nearing retirement age, it may be in your best interest to start receiving your benefits as early as possible.
Your turn! If you’re planning on early retirement, let us know the reasons you feel it would be beneficial to you. Leave a comment below.