3 Risks of an Early Retirement

We often hear from clients who hope to retire early, and from others who have already made that dream a reality. As you might expect, some are thrilled with their decisions, while others regret a few things.

If you’re trying to decide whether you can retire a bit earlier than originally planned, take advantage of this opportunity to learn from the experiences of others. The following three factors can sometimes pose a risk if you retire early, but we can also help you plan around them.

Yes, your Social Security benefits will be lower. The fact that you can claim Social Security as early as age 62 leads many retirees to go ahead and retire at that age. But there’s just one catch: Those benefit checks will be 25 percent smaller than they would have been if you had waited until your full retirement age (65 to 67, depending upon your date of birth).

This might be okay with you, if you have otherwise prepared for a reasonable retirement income. Or, you might be able to live on your first stream of income for a few years, and delay Social Security benefits to claim a larger check later. Let’s meet up and run the numbers under both scenarios.

Your lifespan can be a “risk”. Retirees are living longer these days, and that’s a good thing! But a longer life can pose a challenge to your retirement income. The longer you need to live on your savings, the more challenging that prospect can become. Consider the fact that many people are enjoying retirements of twenty or more years, and ask yourself whether your income will be adequate.

Inflation impacts everyone. Inflation will impact you, whether you live ten more years or thirty. But at current rates, you could reasonably expect for prices of many goods and services to approximately double in twenty years. Your retirement income might feel generous enough now, but will it grow enough to offset inflation?

We can help you answer these questions, and decide if an early retirement is possible for you. Just call us to schedule an appointment, and we’ll help you evaluate your income, expected expenses, and all of the options available to you.