This week’s theme is: Early retirement offers - what should you do if this happens to you?

What many people often don’t consider when they retire earlier than planned is how an early retirement will impact your money. Many people just think about the salary they’d be giving up, but it’s actually a lot more complex than that. 

Today, I’m talking about how taking an early retirement offer can impact your money - namely, how it will affect your health insurance, your social security, and your retirement savings.

Health insurance - is health insurance coverage included in your early retirement offer? If not, how will you pay for health insurance? Most private plans cost at least $900-$1,200/month. You’ll need to find an affordable way to get health insurance until your costs go down at 65 once you’re covered by Medicare. 

Social security - An early retirement might force you to take social security earlier than you planned. Not only is your lifetime benefit permanently reduced, but you’re also giving up what are likely to be your highest earning years when calculating your benefit. 

Social security lifetime income is dramatically different for someone who lives to their life expectancy if they start drawing social security at 62 vs. your full retirement age. It’s likely to reduce your income by $100,000 or more. 

Plus, you’re later working years are usually also your highest working years. Social security benefits are calculated based on your highest working quarters, so you’re also going to get less if you stop working, unless you’ve already maxed out your benefit. 

Bottom line is that early retirement has expensive consequences for your social security. 

Lastly, your retirement savings. Not only are you giving up the ability to save more in your last working years, you are also going to need to make your retirement portfolio last longer in retirement, since your total years spent in retirement will now be greater. 

You’d be surprised how much of an impact retiring just 6 months or 1 year early can make, so be sure to understand the multifaceted ways an early retirement offer can and will impact your money in retirement. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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