The decision to retire is rarely an easy one. Giving up your career means more than just losing a steady paycheck — it can also mean giving up part of your identity and upending your routine.
With a 43-year work history, you’re obviously contemplating a retirement date. After all, you’re tired and you’re old enough to claim Social Security benefits, albeit at a reduced rate. You may also be eager to kick off retirement at a time when your health is in solid shape.
However, there can be advantages to holding off on retirement and working a few additional years, so it’s important to look at the big picture when making your choice.
Retiring too early could mean leaving your job at a time when you’re not financially or emotionally secure. However, retiring past the traditional age could mean missing out on things you’ve always wanted to do in your golden years.
There are a number of things you should consider when deciding when to retire. First, think about Social Security, and whether you’ll need to claim benefits right away if you retire.
If you were born in 1960 or later, which is the case if you’re 62 now, your complete Social Security benefit won’t be available to you until age 67 — otherwise known as your full retirement age (FRA).
You can file as early as age 62, but your benefits will be reduced if you don’t wait until FRA. The closer you get to FRA, the less of a reduction you’ll face.
You should also think about health insurance, since that’s something you need to have at any age.
According to Fidelity, a 65-year-old who retired in 2023 can expect to spend an average of $165,000 in health care and medical expenses throughout retirement.
“Health care costs are among the most unpredictable expenses, especially when it comes to retirement planning,” said Robert Kennedy, SVP, workplace consulting at Fidelity.
Medicare eligibility generally does not begin until age 65. If you retire sooner, and your health insurance is tied to your job, you might end up spending a lot of money to put coverage in place.
You’ll need to research options, like COBRA, which allows you to retain your old employer coverage for a period of time, or a health insurance marketplace plan to see what the costs entail.
