Too Soon To Retire?

Question: My husband would like me to retire next year when I turn 62. I am a little hesitant because I know my Social Security benefits will be reduced due to my age. How do I decide whether this is the right decision for me?

Answer: The final decision should be right for both you and your husband but remember this shouldn’t be viewed strictly as a financial consideration. Retirement affects so many aspects of a person’s life and people don’t always realize the impact until after they’ve retired. First of all, are you ready to leave the life of active employment? Have you thought about what you will do with all the extra time you will suddenly have? Are there activities that will give you something to look forward to and keep you mentally challenged? Has your sense of identity been centered on your professional career and, if so, are you prepared for the change in how you define yourself?

Without question, retirement is going to impact your financial status. Unless you are independently wealthy, retirement should be well thought out before taking that final step. First, calculate all your sources of income if you retire at age 62. Next, compare that figure to your expected monthly expenses. You should be able to get a good sense of whether you can comfortably live on the given amount.

In today’s environment, few people can expect to maintain their lifestyle after retirement by relying on Social Security alone, but it will be a major source of income for many of us. Early benefits are permanently reduced by a pre-determined percentage each month before full retirement age. The actual benefit is based on the 35 highest wage earning years. Assuming your salary is at the highest point in your career right now, retiring early even by a few years could significantly reduce your retirement benefits.

Some early retirees approach this with the view they will be ahead of the game by drawing on their benefit for a longer period of time. There are all different angles to look at this from, but the only one that matters is what is right for your individual situation. Remember you can always work part-time and collect your Social Security benefits (although you could be penalized depending upon how much you earn).

You’ve hopefully been reviewing the statement you receive every year from Social Security that gives you an estimate of your benefits based on the age you retire. You also can go to www.ssa.gov to calculate an estimate of your benefits at varying ages of retirement. Perhaps you’ll see a considerable difference in the benefit by continuing to work for a few more years. Or you may agree with your husband and know it is the right time for you to say goodbye to the world of time clocks and job responsibilities.