We all know that most of us will leave our jobs and retire at some time in our lives. According to some findings, many Americans want to retire a few years before the age 65.
Hearts & Wallets, a consumer research firm, released a report in March 2021 that over 17% of Americans believe waiting until age 65 is too late to retire. Insufficient savings, high housing prices, and debt burdens prevent many from reaching full retirement at 55.
According to Hearts & Wallets, the percentage of people planning to retire at 59 has risen from 11% in 2018. 17.3% of participants wanted to retire before 55, while 39% planned to retire before 65.
According to the survey, 11.5 million of the approximately 70 million American families with major breadwinners under 55 aim to retire by then. Almost half are under 35. Increasingly, individuals work beyond retirement age. That’s up from 23% in 2015.
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Housing and utilities account for 43% of consumer expenditures, making them the biggest category. Varas says most individuals can save money on housing by downsizing or moving to a cheaper region. It’s difficult for advisors and guidance programs to balance real estate and investible assets. “That’s the largest trade-off in this equation.”
A quarter of families also have student loan debt, either for themselves or their children or grandkids. Hearts & Wallets reports that although that proportion is steady, the average amount owed is smaller.
Nonetheless, three-quarters of those anticipating early retirements lack a full year’s worth of savings. Varas advise against quitting employment without at least a five-to-one asset-to-income ratio.
Two Retirements
Randy Bruns, the founder of Model Wealth, says that retiring before 65 takes special planning.
“We’ve had many clients ask for this. We assumed early on that a 4% rule would need to be reduced to 2 or 3% to accommodate for a longer retirement,” Bruns noted in an email. ‘Normal’ retirement (age 65+) was subsequently cheaper if the early retirement years (55-65) were isolated.
For example, consumers must seek private health insurance before being eligible for Medicare.
Setting Financial Concerns Aside
According to Michael Simmons, director of financial planning at Transitions Wealth Management, the pandemic has made some customers more focused on the charitable possibilities when they retire. It has made others want to retire sooner. He added that clients should evaluate the emotional and social aspects of quitting their job.
“Retirees encounter extra obstacles they haven’t addressed or prepared for,” Simmons stated in an email. “What will they do? How will they respond to losing touch with coworkers they have known for years? How will they now define success?
Patricia Hausknost, 66, was one of the early retirees who worked hard to save and pay off debt. The couple currently teaches at UCLA and are open to other options in the future. “Most individuals who can afford to retire don’t know what to do with themselves,” wrote Hausknost. Liz Windisch of Aspen Wealth Management says she sees more millennials pursuing financial independence before age 50.
Windisch remarked in an email that people should retire from corporate America around 50 and then work for themselves or a charity. “They can accomplish it if they start early.”
An Excellent Way to Discover New Things
According to Juan HernandezAriano, director of WealthCreate Financial, persons contemplating early retirement are frequently engineers or physicians who own their clinics and have significant interests in other activities.
Studies show that hobbies lead to early retirement. “I’ve seen engineers who are more financially prepared yet more cautious. But physicians-entrepreneurs are less prepared but more determined to retire early.”
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My name is Kevin Wirth and I have worked in the financial services industry for many years and I specialize in life insurance and retirement planning for individuals and small business owners, with a specialty in working with Federal Employees. I am also AHIP certified to work with individuals on their Medicare planning. You can contact me by e-mail or phone. I look forward to the opportunity of working with you on these most relevant areas of financial [email protected] 914-302-2300
