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Is it Possible to Retire Before 65?

Filed under: Retirement

Mature couple talking to financial planner at home

Do you feel as though you can’t wait to abandon your desk, your commute, and the time clock? Retirement isn’t just a dream; at some point it will become your reality. But at what point is that reality actually realistic? Age 62 is the earliest age at which you can claim your Social Security benefits, but your monthly checks will be smaller than they would have been if you waited until “full retirement age” as defined by the Social Security Administration.

You might not be bothered by this reduction in benefits, if you have saved money for retirement by purchasing an annuity, investing in a retirement fund, or securing another stream of future income. But even if you aren’t worried about your income in retirement, you still have one very important factor to consider if you want to retire before age 65.

What will you do about health care?
Are you planning Medicare benefits to kick in once you claim Social Security? It’s a common misconception, but it doesn’t actually work that way! You won’t automatically receive Medicare when you retire. In fact, you aren’t even eligible for Medicare until you reach age 65. So what will you do about health care if you want to retire earlier than that?

If your employer offers retiree health benefits, you might be one of the lucky ones. But make sure to fully investigate the plan before you retire. It is probably not identical to the health care plan you enjoy now, and might carry a higher deductible or co-pays. Make sure you understand your retiree health care plan completely, and assess whether it also covers vision and dental benefits. If you’re going to incur extra expenses in retirement, you should plan for them beforehand.

If you won’t be covered by a retiree health plan (and that is quickly becoming the trend), then you can purchase your own health insurance through the health care exchange. Keep in mind that these plans do change from one year to the next, and premiums can be unstable. If you’re eligible for a tax-based stipend to help cover the cost of your premiums, it will depend upon your annual income.

Most retirees find that their health care needs increase sharply as they age. If you plan to retire before you’re eligible for Medicare, carefully consider the out-of-pocket expenses you will incur until you turn 65.

This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.