Planning the Perfect Time to Retire

Many look forward to retirement their entire careers. Nothing sounds better than being able to rest again, especially since you spend so much of your time between 20 and 60 not resting. If you’re one of those people, consider the following so you can plan perfectly for that blissful day.

Reach full retirement age for your Social Security

Your social security is best taken out later rather than sooner. It turns out that every year you delay retiring; the more you get back from social security in the long run. Here’s how it works.

The “full” retirement age according to the U.S. Social Security Administration is over 65. The exact age is dependent on your year of birth. Anyone born in 1960 and later must wait until 67 to reach full retirement age. To see where you fit in, check out the Age to Receive Full Social Security Benefits page on ssa.gov.

That said, the minimum age to start receiving Social Security is 62. If you retire at 62, your total monthly benefit amount will be reduced by about 30 percent. The closer you approach your full retirement age, the more you’ll receive.

63 will diminish it by 25%. 64 by 20%. 65 by 13.3%, and 66 is 6.7%. When you reach 67, you become eligible for full benefits. In addition, you become eligible for higher monthly checks the longer you wait after you reach full retirement age.

Maybe these percentages don’t mean much to you now, but consider the following deficits in yearly incomes. Consider the example of a hypothetical 61-year old woman making $55,000 a year.

If she were to claim her benefit at 62, she would receive about $15,400 a year. If she were to delay that by four years (to her designated full retirement age), then she would receive about $20,500 a year. Wait a further four years and she gets $27,100 a year, not to mention how much she saved from the extra eight years of $55,000 a year. The jump from $15,000 to just over $27,000 is usually worth the time.

You’ll want to at least delay retirement until 67 to maximize your full potential in regards to social security. The added benefit of delaying until 67 will be that you are able to earn more throughout those years, as well as save more, abolish debt better, and possibly even further your career that much farther. So wait if your situation allows it.

Wait for your 401k to fully mature

The money in your 401k is yours. That said, it may not have fully matured or become “vested.” Your company has likely signed an agreement to match your contributions for a set amount of time. If this is the case, then you likely won’t have full access to your 401k until that time frame is complete.

Pay off your debts

The last thing you want to take into retirement is a mortgage, car payment, or other forms of debt. Debt will hurt you more than you can imagine. Retirement comes with a reduced, fix income. In most cases, it doesn’t nearly afford you the comfortable spending habits that you’re used to. Adding debt to that reduced income is a form of suicide. Strive to have all of your debt paid off before you retire so you have nothing left hanging over your head.

Prepare a plan to stay busy

As blissful as retirement sounds, many fall into depression after a few years. When you’ve spent your life working, you can only take sitting still for so long. You want to be doing something, but there’s nothing to be done. Money is coming in and your life is taken care of. Yet you still lack that sense of fulfillment that comes from working every day.

Bring meaning back into your life with plans. Volunteer at a hospital. Get involved in the community. Spend a lot more time with your family. When all is said and done, returning your life to a busier state will help you to be happy throughout the experience. The happiest in retirement are those that stay busy.

If you plan properly for your financial and mental health, then you’ll find yourself enjoying the bliss of doing what you want to do, when you want to do it. You maximize your freedom in retirement, even if it means that you have to stick around a job for a few extra years to make it happen. You’ll never regret that sacrifice. You’ll only ever regret jumping into it without preparing for these four concerns.

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