Ramsey Solutions

 

Questions You’re Asking: Can I Retire Early? – 2
By Saghir A. Aslam
Rawalpindi, Pakistan

 

(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live securely with dignity and fulfill their religious and moral obligations towards charitable activities)

3. Take health care costs into account

Identifying possible retirement planning gaps could also involve weighing health expenses if you retire early. Even if you become eligible for Medicare soon (coverage starts at age 65), a younger partner could need another form of coverage.

If you have a spouse who will continue to work for an employer who provides health insurance, one option may be to get coverage under that plan. Otherwise, paying for health coverage until you qualify for Medicare at age 65 will be an important expense to consider in your retirement planning.

This will also be a time to explore costs associated with long-term-care insurance to help cover costs associated with in-home health care, assisted living facilities, or nursing homes. These costs aren’t covered by traditional health insurance, making them a common planning gap that can be costly: Today, the median annual cost of a private room in a nursing home is more than $116,000.1

4. Carefully consider when to start collecting Social Security

You can opt to take Social Security payments as early as age 62, though delaying can mean bigger checks in future years. However, postponing receiving Social Security isn’t always the best choice.

Delaying Social Security could require you to live entirely off your savings and investments for several years. Drawing from your savings and investments could reduce the amount of money that might potentially be there at the back end of your life expectancy money that you might need or may want to pass on to family members.

Once you’ve retired, it can make sense for you to reevaluate your situation annually before deciding whether to continue delaying Social Security payments. One item you need for that annual review in retirement: a current copy of your Social Security benefit estimate from ssa.gov.

5. Explore ways to fill potential income gaps

Understanding your anticipated expenses allows you to begin to identify the income sources to help pay for them on retirement. With your income sources clearly defined, you can have a plan in place to offset potential disruptions from market volatility.

So, what happens if you find a gap between your retirement goals and your expected or actual retirement income? It mostly boils down to two main choices: Reduce your spending or find more income. Learn more about creating a retirement income plan.

Some retirees start new jobs or careers based on hobbies and interests giving music lessons or overseeing operations at a golf course, for example. And some take on a part-time role doing something that they enjoy. The benefits can be both financial and emotional. So, think about all options available to you as you consider retiring early.

(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)

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