When working on your retirement calculator, one of the most important decisions you must make can be a difficult one: when will you retire?
Deciding at which point in your life you will retire can be quite a hassle, and it can affect your future in different ways. To assist you with this, we have provided you with two substantial factors that you must consider that could affect your retirement calculator.
Factor #1: Social Security
Many people don't realize that the full retirement age has changed. They still believe that 65 is the magic number, but that is no longer true. Depending on when you were born, your full retirement age will be closer to 67, and if you're several years away, it could be even later.
Fact is, you can actually retire when you are 62 and begin receiving benefits. But while an early retirement may sound great, making this decision can have a lasting effect on your future. If you retire at 62, your monthly income from Social Security will be less than had you waited until you were 65. Taking that one step further, if you wait until after your full retirement age, your benefits will actually increase. In fact, if you wait to retire until you're 70, you will receive approximately 75% more money than if you had decided to retire when you were 62. Imagine the difference 75% could make to your future.
Factor #2: Health Benefits
If monetary concerns don't interest you as much as simply having the freedom that goes along with retirement, then you might want to consider what happens to your healthcare. As you grow older, your cost for health care will most likely increase due to a number of factors that go along with old age. Making sure that you maintain your healthcare benefits is an important part of your retirement calculator.
Many retirees plan to utilize Medicare. While that system doesn't pay for everything, it can be a great benefit and cover a large portion of your healthcare expenses. Problem is, even though you can officially declare retirement when you're 62, you cannot apply for Medicare until you're 65. Which means that if you retire early, you would need to cover your medical expenses and/or healthcare for as long as three years. This could be a costly decision that might greatly affect your retirement plans.
There are a couple of additional factors to consider, also. First, if you are receiving Social Security disability, you may be eligible to begin receiving Medicare before the age of 65. And second, some employers will supplement your Medicare costs, depending on when you choose to retire. This is becoming an increasingly important factor in the decision-making process of when to retire. If you think your employer might offer this benefit, it would be a good idea to check so that you can plan accordingly.
Other Factors to Consider
The above represent two very important factors that you must consider when deciding when to retire, but they are not the only ones. You must also consider such things as the amount of your earnings from retirement accounts that are separate from Social Security, what types of expenses you might have such as travel or hobbies, the current state of income taxes at the time of your retirement, and any kind of care or other expenses related to family members that you might need to plan for. Above all, it is important to sit down with your loved ones and a financial expert in order to help with this important decision.
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