When Is the Right Time to Retire?

Before you hand in that letter of resignation announcing your retirement, do some careful planning and calculations. While finances are certainly not the only consideration when you’re deciding if the time is right to retire, you do have to be sure you can live without that regular paycheck. At Trusted Choice Healthcare, we care about the decisions you make. Here are some factors to think through.

  • Early retirement, defined as leaving the workforce before age 65, requires more savings. Catch-up provisions in your retirement plan may be available to help you boost your savings if you are over 50. However, few people have the financial means to retire years early. A good rule of thumb is to estimate that you will need 25 times your annual expenses without Social Security to live out the rest of your post-retirement life.
  • Normal retirement is between the ages of 66 and 70. These are the years when most people find themselves with enough savings to live comfortably and still in good enough health to enjoy their free time.
  • Late retirement, defined as leaving the workforce after the age of 70, is an attractive option if you’re in good health and love your job. You have time to build up more savings, and you’ll draw the most significant benefit from Social Security. Unfortunately for some people, working longer into an elderly retirement is necessary because of a lack of savings and assets.
  • Social Security payment can begin as early as age 62, but the benefits are reduced to 75% of the full monthly amount until age 66 (for anyone born between 1943 and 1954). Your spouse’s benefits are reduced to 35% of your maximum amount compared to 50% if you wait until you are 66.3 years of age. If you wait until age 70 to begin drawing your social security benefits, you can take home almost one-third more in your monthly check.
  • Health insurance is expensive, and Medicare eligibility doesn’t begin until age 65. Standard Part B coverage in 2020 is about three times cheaper than a plan through the Affordable Care Act. Your financial plan must include health insurance and out of pocket costs like prescriptions, deductibles, and copays.

Should You Retire Completely?

In the United States, men retire at an average age of 64 years and women at 62.1 years. The free time to travel, pursue a hobby, or write a book is a siren song to someone who feels burned out and tired of the 9 to 5 rat race. Many retirees choose to keep working, but they move to a part-time job or something less stressful than their full-time career. While conventional wisdom says that you stay healthier the longer you keep working, those who work in high-stress occupations often cite improvement in their health when they leave the pressure behind.

Should You Stay in Your Home or Downsize After You Retire?

Most people who retire decide, at least initially, to stay in their own homes for as long as they can do that safely, citing familiarity and feelings of safety as primary reasons. For those who have paid off their homes, a house with no mortgage lends a great deal of stability during this time of transition. However, more and more retirees find a smaller home’s appeal with less upkeep and lower expenses hard to resist. Here are a few things to consider when you are making the decision.

  • Carefully evaluate your current expenses compared to the place you are considering. Be sure to include utilities, taxes, maintenance, and fees such as HOA or condo association dues.
  • Think about whether your current home can accommodate physical limitations that may develop as you get older. If your existing house has lots of stairs, narrow doorways, or long hallways, mobility may be problematic later. You may want to consider something with a more amenable floor plan. In recent years, these concerns have influenced the development of continuing care retirement communities (CCRCs) where you can move between independent living, assisted care, and a nursing facility as your health dictates.
  • Consider where you would like to live. Do you want to be closer to your family? Does your lifestyle fit better in an urban setting or out in the country or maybe near the beach? Each setting comes with savings, expenses, benefits, and downsides for you to consider. For example, you may not need a car in the city, but you may feel isolated in the country. One strategy is to rent something for a few months in the area you consider to see how you like it before you commit.

Where Can I Learn More?

At Trusted Choice Homecare, we can show you healthcare options that will help you stay in your home vs. retirement home longer if you choose the route. Contact us today at (716) 431-5550 to learn more about New York State’s Consumer Directed Personal Assistance Services (CDPAS) for you or someone you love.
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