Recent surveys show that around 58% out of 2,400 retirees left their jobs sooner than planned. This unexpected shift has caused financial strain amongst many, due to health expenses and the necessity to spend retirement funds for extended periods.
Given this trend, retirement experts suggest five strategies to keep in mind, particularly for individuals nearing retirement:
1) Understand Health Insurance Options: Early retirees often face substantial health expenses before becoming eligible for Medicare at 65. Options such as Medicaid, Affordable Care Act (ACA) insurance, private insurance, spousal insurance, or COBRA can be considered. However, the cost of these insurances, especially COBRA and ACA marketplace insurance, can be high.
2) Be prepared for potential changes in government-aided healthcare: ACA insurance costs are predicted to double by 2025 due to the expiration of specific government subsidies.
3) Consider delaying Social Security: Choosing to collect Social Security benefits before the Full Retirement Age (FRA) will result in lesser monthly benefits. For each year after the FRA that collection is delayed, monthly benefits could increase by 8%.
4) Create a Bridge Fund: A temporary fund can be set up to cover early retirement expenses. This would reduce the reliance on Social Security benefits, which could then be claimed at a later stage for increased monthly incomes.
5) Utilize your working years wisely: Consistent savings, gig work or part-time jobs for additional income, and maximizing contributions to 401(k) and Roth IRA plans are advised.
While many individuals find themselves retiring earlier than expected, careful financial planning can ease the transition.