Would you consider having an early retirement?
Even though you might absolutely love what you do at work, there might be times when you’re so tired and bored that you would prefer to just lay around or go on a long vacation. And as you think about going away for a longer period of time, your mind stumbles across one thing: what about early retirement?
So you give it a thought, you might start a list of pros and cons so that you’ll be able to make the right choice. Let us tell you that according to experts, early retirement is not suitable for everyone. As a matter of fact, 11% of today’s workers consider retiring before the age of 60.
For many of the people who actually make the decision to leave the workforce, the reality can be quite different than their fantasy. With that being said, here are 8 important things nobody tells you about early retirement.
1. You’ll actually spend more money than you think
There is an unwritten “rule” that says you’ll spend approximately 80% as much in retirement as you do when you go to work every day. After all, you won’t transfer money every month to your retirement account or pay your Social Security payroll tax, presupposing that you don’t have an earned income anymore.
But that’s not always the case for young retirees who are a bit younger, healthier, and who are now free of their jobs. You might easily find yourself spending as much money or even more than you did when you were still working.
Some experts say that there is a thing called a “spending surge”, which usually happens to early retirees who spend a lot of money on relocation, home improvements, or travel. Typically, this behavior only last two or three years, but this is more than enough to spend a lot of money you’ve worked hard for before your retirement.
Some retirees even stated that their spending and expenses were actually a lot bigger than they were expecting. There are people who think about retirement as a long-lasting vacation, and they look for certain things and activities to do, and not all of them are free.
…Long story short, even though you want to treat yourself and have fun now that you don’t work anymore, you still have to be mindful of how much money you actually spend on a daily basis.
2. Your couple’s life can change
Retirement is a big life transition, to be honest, so you might need some time to adjust. This means that you have to be patient and understanding with yourself, but also with your significant other.
Even though there might be couples who love to spend all of their time with each other, the thing is that the majority of spouses don’t actually look like those pictured in commercials and ads.
You’ll both have to adjust to being home 24/7 and doing things together every day. Will you share all the activities around the house, such as cooking, cleaning, and garden work?
…These things have to be honestly discussed, as experts say, because many couples divorce after their retirement!
3. Health care is not cheap
Medicare is a federal program that is designed especially for American seniors, and it provides health coverage for more than 61 million people. However, this plan doesn’t start until the age of 65, so you need to find an alternative until that period comes. But the thing is that health care is not cheap.
The actual law says that your private health insurance can’t cost more than 8.3% of your total household income. A person who has $50,000 as a household income, for instance, will have to pay $346 per month for a mid-level silver plan, which means $4,150 per year.
4. You’ll still have to pay your house expenses
Many retirees plan on leaving the workforce without a mortgage, but not all of them succeed. In conformity with an American Financing survey, 44% of retired homeowners who are between 60 and 70 years old actually still have a mortgage.
But even if you have paid off your mortgage and that’s no longer a source of stress, your house expenses don’t disappear. As some financial planners say, increasing property taxes and home maintenance can add up, leaving you with a lot of spending.
Illinois, New Jersey, and New Hampshire are the cities with the highest property tax rates, in conformity with Rocket Mortgage company, while Alabama, Hawaii, and Colorado have the lowest.
A thing that might help homeowners face all of these more easily is to set aside 1% of their home’s cost annually in order to recover replacement and repairs. That is $3,000 a year for a $300,000 house. However, keep in mind that there are some states that offer lower property tax rates for people who are 65 years old or more.
5. You’ll have a lot of free time
We know, this might sound confusing because who wouldn’t love to have more free time (sign us up for this, please), but expectations are different than reality. You might want to lay around and relax, play sports, read a ton of books, go to museums, or lounge poolside, but can all of these actually keep you occupied every day for all these years that are ahead of you?
You have to take a lot of things into consideration before you decide that you want to have an early retirement. You might consider volunteering, picking up a new hobby, or even taking a course that you’ve always wanted but didn’t have time for.
…Don’t forget to make a plan in advance of retirement! It will help you!
6. It might be hard to earn an extra income
Finding a job that suits your schedule when you’re in retirement might not be as simple as you think. Even though many people plan on working when they retire, not all of them actually end up doing it.
And that’s because the majority of part-time jobs require a commitment to a schedule that might not be flexible. It might not sound that bad at first, but this might cut into other retirement plans, such as volunteering or traveling.
7. You won’t have big Social Security benefits
Experts say that the sooner you begin to get Social Security, the smaller your benefits will be. For instance, if you were born in 1960 or later and start receiving benefits at age 62, which is the earliest age at which you are eligible, your monthly payments will be 30% lower than if you wait until age 67, which Social Security refers to as your “full retirement age”.
For every year that you postpone, from the age of 67 to 70, you’ll have an extra 8% in your monthly benefit. But after you reach the age of 70, you won’t receive any bonuses for delaying.
8. You might need new friends
If you’re planning on having an early retirement, you might consider making friends with new people, especially if your current friends are still in the workforce. Another thing you have to keep in mind when it comes to early retirement and socialization is that your new pals might be a bit older than you, but that’s not something bad, is just a fact. I guess you’ll have to get used to finding some new Mahjong partners! Don’t have a Mahjong set? You’ll love this Travel Mini Mahjong Set from Amazon!
…Do you plan on having an early retirement? Let us know about it by leaving a comment down below!
…If you need more tips and tricks regarding your life as a retiree, make sure to check this article out as well: National Park Passes: 7 Amazing Ways Seniors Can Benefit From Them!