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  • Writer's picturePremier One Financial Company

Making a Choice Between Early Retirement and Working Past Retirement Age

Choosing between retiring early and working past retirement age isn’t an easy decision to make. That’s why it’s crucial to weigh your options carefully by considering your financial situation and healthcare needs and understanding the potential implications of each path.


Factors to consider when planning to retire early

Thinking of spending more time in the company of your loved ones? Maybe you simply want to escape the daily grind and devote time to doing what you love. Or maybe you’ve had a health issue and want to focus on caring for yourself. Whatever your reasons for early retirement, do not decide until you’ve considered these:


Retirement age

If you’re retiring early, whether at 55, 58, 60, or 62, understand that the reduced income and benefits could significantly impact your finances and healthcare planning. This could mean supporting yourself financially and paying for medical expenses out of your own pocket.


Medicare

Unless you have renal failure or amyotrophic lateral sclerosis (ALS), the required age for Medicare is 65. And that does not change if you choose to stop working early. You'll need to consider how to handle your healthcare expenses until you become eligible.


Social Security

The full retirement age for Social Security is between 66 and 67, depending on the year you were born. Retiring early means receiving reduced benefits due to earlier claim age and a lower lifetime earning history.


Post-employment healthcare planning

Healthcare is a significant retirement expense. As you won’t be eligible for Medicare, you want to look for other options, such as employer-sponsored insurance. If you’ll lose that upon retirement, it’s crucial to explore other alternatives that will suit your financial situation.


Pros and cons of working past 65

Does the idea of working past 65 sound enticing for various reasons? Great! You can work for as long as you want. However, know that working past 65 comes with pros and cons.

Pros

  • Continued income, which means bigger pension and retirement savings

  • Higher Social Security benefits

  • Staying socially connected

  • Bigger nest egg

Cons

  • Impact on Social Security benefits

  • At age 70½, required minimum distributions (RMDs) from your individual retirement accounts (IRAs) and other qualified retirement plans begin to apply.


How age plays a crucial role in your decision


Medicare

One of the requirements to be eligible for Medicare is to attain the age of 65. If you fail to sign up when you first become eligible, you will face lifelong penalties such as paying a higher premium. However, if you’re working for a large company, you could delay Medicare enrollment without incurring penalties.


Social security

You can start receiving your social security benefits as early as 62 years. However, you can only receive full benefits at your full retirement age, which differs depending on your birth year. If you delay claiming your benefits till you reach 70, your benefit amount will be higher.


Making the best choice for your health and finance

Ultimately, the decision to retire early or keep working past retirement age is yours to make. However, don’t forget to consider your financial and healthcare circumstances. If you need more explanation on how both options can impact your Medicare coverage, we’ll be glad to help. Reach out to us today.


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