As a Financial Advisor I talk to people every day who have a strong desire to retire early.
But this is a difficult goal for many and there is much to consider. One common fear people have about retiring early is running out of money.
To watch a short video that can potentially help you avoid running out of money in retirement please check out this free video here.
While retiring early is certainly a worthy goal many people have these related questions:
At what age is my retirement considered early, 55, 60, 62?
How much money will I need to be able to retire early?
Is retiring early all it is cracked up to be?
Can I retire at age 62, collect Social Security, and still work part-time?
These are all very valid questions and I will attempt to help you walk through some of these in this article. Let us take the first question:
At what age is my retirement considered early?
Full Retirement age according to Social Security is age 66 and some months for most people depending on the year you were born.
If you were born in 1960 or later then your full retirement age is 67.
But Social Security is only one form of Retirement Income and they do not control when you get to choose to retire.
That being said retiring anytime before your full retirement age with Social Security would probably be considered retiring early.
How much money will I need to be able to retire early?
Everyone these days seems to be concerned with what their magic number is in order to be able to retire but the truth is that everyone’s number is vastly different.
How much you will need depends on a lot of factors like:
- What is your burn rate? Or in other words how much do you typically spend monthly?
- What is Life Expectancy like in your family? How long might you live?
- Are you willing to reduce your lifestyle needs or do you want to live large in retirement?
- Are you willing to work at least part-time, or do you intend to stop working altogether?
- What kind of rate of return do you think you can get on your money?
- How aggressive of an investor are you? And how experienced an investor are you?
Unfortunately, no matter what you read in the money magazine there is no one size fits all answer to how much money you will need.
Some people can get by on little and some people will likely never have enough.
It all depends on the factors mentioned above.
This is why it is so important to have a well-thought-out financial plan.
For more information on how to structure a solid retirement plan please check out our free video on how to avoid going broke in retirement here.
How about we look at our next question?
Is retiring early all it is cracked up to be?
You may be thinking, of course, it is.
Who does not want to retire early? Sign me up, right?
But retiring early does come with its own set of problems that you may not have thought about such as:
- If you take Social Security early you get a smaller check for the rest of your life.
- You also get a smaller cost of living on a smaller check for the rest of your life.
- You run a bigger risk of running out of money because you have to make your money last longer
- You have less time to accumulate the money that you are going to need.
- You might lose your motivation to get out of bed in the morning.
- You give up part of your social life as you spend much time now hanging out with co-workers.
- Some people get depressed when they no longer feel like contributing members of society.
- If you do not have plans to volunteer or fill that void, you could feel devoid of purpose.
But do not despair a better option for many that are sometimes overlooked is a Hybrid retirement! 
This is where you quit the job you have worked for most of your adult life and pick up a part-time work gig that you do more for enjoyment than for the money.
Not that the money hurts.
This is a great option, especially for people who need a change but have not prepared as well as they should have and do not really have enough saved.
If you like to tinker around with home repairs and remodeling you could get a job at Home Depot or Lowes.
You probably hang around there more than you should anyway.
Or you could take that crafting hobby and turn it into a business and sell your wares on Etsy or spend time outside at art and craft fares while bringing in more money.
Working part-time in retirement solves multiple problems.
It gets you out of the house, keeps you socially active, gives you purpose, and can make your money last much longer.
And working part-time for just a few years could really extend how long your other assets last by an equal amount or longer.
Now let us look at our last question:
Can I retire at age 62, collect Social Security, and still work part-time?
The answer to this one is a bit tricky, yes, and no.
You could do all 3 of the above but there are some restrictions you will want to be aware of.
At age 62 you are only allowed to earn so much income and if you go over it there is a steep penalty.
For every $2 you earn over the 2020 threshold of $18,240 you lose $1.00 in penalty.
What actually happens is say you go over in 2020 you will likely lose all of your Social Security income starting in January of 2021 until the penalty is made up for.
This could be an uncomfortable loss of income.
As long as you stay under the specified amount for the year though you have nothing to worry about.
You can work, collect Social Security, and retire early at age 62.
As you can see there is a lot to know and much to consider before you retire early.
If you want to know if this is the right move for you a good place to start is by watching this free video that explains how to avoid going broke in retirement while holding on to your nest egg. Click Here.
Disclosure: Investment Advisory Services offered through Retirement Wealth Advisors, LLC. (RWA) a Registered Investment Advisor. Rockford Retirement Planning, Inc. (RRP,Inc.) and RWA are not affiliated. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Consult your financial professional before making any investment decision.
This information is designed to provide general information on the subjects covered, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that RRP,Inc. and its affiliates do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney.
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