Should you keep working or retire early? What if you didn't just have those two options?
Whether you have been working steadily for years or are looking for a new job, once you hit 60, the idea of retiring early can be tempting. After all the years of work, it might seems like a relief to retire and be able to enjoy it while you are still young and active.
The problem is that if you aren't really prepared financially for the retirement, you can end up blowing through your nest egg fast and ending up in a difficult situation later in life. Which is the time when you are least likely to be able to do something about it.
But, it's tempting, and working all the time and socking away every dollar can make you feel burned out and itching to break free of the nine to five. So, what can you do?
According to CNN Money, there is yet another choice, and one that makes sense for many people. If you have a sizable retirement fund, but aren't sure that you are ready to retire, you may want to consider continuing to work. The difference is that instead of continuing to put away money for your retirement, you use it to fund a pre-retirement.
The idea is that if you use the money you would normally save to do some things that you wanted to do when you retire, while still working, you can have the best of both worlds. In fact, when you stop saving, you can afford to cut back your hours or even afford more of the activities you enjoy and you'll still end up in a better financial situation when you retire than if you opted to retire early.
This type of pre-retirement has several benefits:
- Working longer will boost the amount of Social Security you will receive – If you visit the Social Security Retirement Estimator at the Social Security website, you can see how much you will earn if you retire at different ages. Not only will your benefits be larger because you retire at a later age, you will also have a longer amount of time to pay into it.
- You can keep your benefits – If you are receiving health insurance through your employer, it can be worth continuing to work in order to keep those benefits. Paying for health insurance completely out of pocket can be very expensive, especially if you or your spouse has any sort of health issues. Until you reach 65, you won't be able to qualify for Medicare, so this is certainly something to factor into your decision.
- Your investments have more time to mature – Since you aren't dipping into your retirement accounts, they will still have a few more years to mature. You can even talk with your financial planner to see if it would be a good choice to invest some of the money into things like annuities in order to get greater short term growth.
Whichever way you decide to go, it's a good idea to look at it from every angle and decide what is best for your particular situation.
Have you thought about early retirement? Let me know in the comments.
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By Melissa Kennedy- Melissa is a 9 year blog veteran and a freelance writer for ManufacturingWorkersBlog. Along with helping others find the job of their dreams, she enjoys computer geekery, raising a teenager, supporting her local library, writing about herself in the third person and working on her next novel.
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