Two Things to Consider Before Retiring at 62

Retirement Planning

Two Things to Consider Before Retiring at 62

Posted by COTO Insurance & Financial Services
6 years ago | April 3, 2018

Once you reach your forties and fifties, it’s normal to begin focusing on retirement much more. Planning seems more urgent now, and at the same time, retirement is starting to sound a lot more appealing.

Because you will be eligible to take Social Security benefits as early as age 62, you might begin to wonder if an earlier retirement could be possible. Yes, it has worked out well for many people, but there are two major hurdles you should first consider.

Social Security benefits. You will be eligible to claim your Social Security benefits early, at age 62, but there’s a downside. Your checks will be reduced by about 25 percent, and in most cases, this decision is permanent. So, do the math carefully before deciding to take a cut in benefits. You want to make sure you have enough income from other sources.

Healthcare. Healthcare might be an even larger hurdle than the reduction in Social Security benefits. Since you won’t be eligible to sign up with Medicare for 3 more years (when you turn 65), what will you do about the cost of healthcare in the meantime?

Some retirees are lucky, and their former employees provide them with a healthcare plan. Before counting on this plan, though, investigate its offerings. Some retirees healthcare plans are not as comprehensive as those offered to current employees, or they can cost more through higher deductibles or premiums.

You could also purchase your own healthcare plan, but watch out for budget troubles if you go this route. Go ahead and assume that your premiums will rise each year, because they probably will. Make sure you have plenty of “wiggle room” in your budget.

Some early retirees have taken a gamble, and chose to go without a healthcare plan for three years. We simply cannot recommend taking this route. No matter how great your health is at 62, that can change very quickly in your sixties. You could be risking your retirement savings if you bet on your health.

If you investigate both of these factors and feel satisfied with the answers you receive, you might be able to retire at 62. But please make sure to meet with us first, so we can help you double check everything and make a plan for any unexpected surprises.

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