Retire

How To Retire At Any Age – Forbes Advisor – Forbes

Summary

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Once upon a time in America, you would turn 65, get your golden watch and start cashing Social Security checks. But retirement looks different these days, and the age you choose to retire can range widely.

Just one in four Americans aged 45 to 54 is aiming to retire at 65, according…….

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Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations.

Once upon a time in America, you would turn 65, get your golden watch and start cashing Social Security checks. But retirement looks different these days, and the age you choose to retire can range widely.

Just one in four Americans aged 45 to 54 is aiming to retire at 65, according to the Employee Benefit Research Institute (EBRI). The rest are split between early birds (40% expect to retire before 65) or later exits (36% expect to retire after 65).

While the path to a secure retirement can be difficult at any age, here are the key pitfalls you’ll want to avoid whether you are planning an early, normal or late retirement.

How to Retire Early

Dreaming of retiring in your early 60s or even earlier? Here’s how you plan for the best early retirement.

Assume You Will Earn a Lower Rate of Return

Yes, you’re still quite young—and generally speaking, younger people should be in more aggressive, stock-heavy portfolios.

But once you stop working, “you need to think more about protecting your portfolio,” says Nick Foulks, of Minneapolis wealth management firm Great Waters.

For instance, you might create a bucket of money that will cover your spending for at least a few years, and keep that in conservative investments such as cash and bonds. That will likely mean your portfolio’s overall rate of return will be less than when you were working and investing more aggressively.

Plug in lower expected rates of return on a retirement calculator to get a sense of if your portfolio will actually be able to support an early retirement.

Budget (a Lot) for Health Insurance

If you’re going to need to purchase health insurance coverage before age 65, when Medicare kicks in, the monthly premium for an individual plan sold on the ACA Marketplace “can be like another mortgage payment,” warns Beau Henderson, founder of RichLife Advisors in Gainesville, Ga.

A 55-year-old, non-smoking, childless couple with a household income of $100,000 would qualify for a premium subsidy of around $800 for a Silver plan in 2022. Even so, they will still be on the hook for another $700 per month just for their share of the premium. And if they actually need care, the annual out-of-pocket cost can be more than $17,000 in 2022 with a Silver plan.

That’s just one reason why early retirees may consider part-time work or relying on a still-working partner’s plan: Health benefits could save them thousands of dollars a year and provide better quality insurance.

Watch Out for Early Withdrawal Penalties

Any money you take out from a retirement account before 59 ½ may get slammed with taxes and penalties, depending on what kind of account you own and how long you’ve …….

Source: https://www.forbes.com/advisor/retirement/how-to-%E2%80%8B%E2%80%8Bretire/