Retiring early is the dream for so many people but finding out some of these unexpected issues can be problematic for your retirement and your entire family. Early retirement isn’t for most people. In fact, only 11% of today’s workers intend to retire before age 60, according to recent research from the Employee Benefit Research Institute study. Before deciding whether or not retiring early is the most appropriate course of action for you, consider that:
- Healthcare is expensive since the most relied upon federal program for retirees, Medicare, doesn’t begin until age 65 and private health insurance before Medicare kicks in can be very expensive and you may not be in a position to qualify for Medicaid.
- Retiring prior to age 59 and a half means that you would pay a 10% early withdrawal penalty for most of your tax deferred accounts like 401(k)s and traditional IRAs.
- You limit compounding interest power. When saving for retirement there’s no bigger friend than time. If you set aside $250 a month between ages 25 and 35, you’ll have around $237,000 when you retire, assuming that you get an average 6% annual return and make no withdrawals. But if you work 10 more years and retire at age 65, you’ll have around $464,000 because that extra ten years worth of contributions helps and the compounding interest associated with it really supports you.
Schedule a consultation with an experienced estate planning attorney to learn more about how you can make the most out of your retirement and your estate plans with proper planning.