Are You Planning to Retire Too Early?

“Early retirement” is something of a status symbol among a lot of people. If you work hard and make enough money, you don’t have to wait until your social security kicks in to leave your job. Just quit and live a life of luxury, doing whatever you’ve always dreamed of. Unfortunately, studies show that many Americans today are retiring too early—before they’ve built up enough of a nest egg to support themselves.

Building Your Savings

The generally accepted age to retire is in your mid-60s. Therefore, it makes sense that half of Americans do so between the ages of 61 and 65, and a full two-thirds of the population has stopped working, at least full time, by 66.

However, there are more factors to consider than just when society says you should retire. The main one is, can you afford to support yourself for the rest of your life, without working full time? Even after faithfully contributing to an IRA/401(k), many find that they still haven’t built up enough of a nest egg to sustain themselves and their families.

Early Social Security

It is true that your retirement account isn’t your only source of income when you leave work. You’re also eligible to collect social security. However, many people start taking that too early as well.

You’re allowed to start collecting benefits when you turn 62, but you’ll receive only 75% of the full amount, since collecting early means the money needs to last longer. You’re not eligible to get full benefits until you’re 66. For people born after 1960, the age has been raised even higher, to 67. Yet most Americans go on social security before they’ve reached the right age, even though it means a smaller monthly check.

The Case for Working Later

This lack of social security funds, combined with the fact that most Americans don’t have enough in their retirement savings, means that many seniors are struggling to make ends meet. Some are forced to go back to work, or continue working part-time. Some aren’t able to find jobs due to their age, or have to take a menial position at a much lower salary.

People are living longer these days, and able to stay healthy and active well into their 60s and 70s. Therefore, especially if you’re still building up your nest egg, it would behoove you not to jump into retirement the moment you turn 65.

Instead, remain in your current job for a few extra years at your current salary (that you’ve spent your whole career working towards), and be sure to make the maximum contribution to your IRA/401(k) each year. If you’re 50 or older, you’re allowed to put a little extra in annually, to make up for the time you may have missed. By doing this, you’ll have more to live on, and your full social security benefits will be waiting for you when you leave work as well, to supplement your monthly income.

Your retirement is supposed to be a time when you can relax and not have to worry about work or money anymore. If you haven’t reached the point where that’s possible for you, then leaving work will end up being a hardship, rather than a benefit. Pay attention to your IRA/401(k), work towards building it up, and don’t retire until you know that you’ll be well taken care of.