Today, the Social Security full retirement age is 66 for people born between 1943 and 1959, and 67 for people born in 1960 or later. The full retirement age is not the only thing that has changed, but also the average amount of time someone would spend in retirement due to health care improvements. To decide to retire at 65, you would have to factor in this new trend. Retiring at 65 might be difficult in today’s world especially if you haven’t saved enough, or spent too much money on traveling in your youth, or any of the other reasons listed in this article. ..
10 Reasons Why Retirement at 65 Could be Difficult
If you want to retire on a comfortable income, you need to contribute at least 50% of your income to an IRA or 401(k) account. If you only contribute a fraction of your income, you may not be able to afford the lifestyle that you want when you retire.
People often postpone their retirement because they don’t want to miss out on any of the benefits that come with it. Some people might prefer having the distraction of going to work and being in the company of coworkers to keep them from getting too lonely. Another downside of having your spouse pass away is that you will only receive one Social Security benefit instead of the two you could have if you were still married in retirement.
Social Security retirement benefits can be claimed as early as age 62, but many people rush to claim as soon as they can. However, many people don’t consider that by claiming early, they lose 30% of the benefit they would have received upon reaching the full retirement age. If possible it is advisable to try and delay claiming until age 70 to receive the full benefit.
If you take money out of your retirement savings, it could mean a loss in your retirement income. You may have to pay income taxes and lose 10% of the money if you use the money for specific qualifying expenses.
An IRA or Roth IRA can help you save for your future, by providing the opportunity to defer taxes on your income. There are different types of IRAs to choose from, so it’s important to find one that will fit your needs and budget.
If you’re in your 50s or 60s, refinancing your home could mean that you’ll be paying off your mortgage well into your 90s. This could have a huge impact on your ability to retire at the age of 65 because you’ll have debt hanging over your head. In addition to an unpaid mortgage, debt has been on the rise among people aged 50 to 80 years old. Reducing your debt before retirement can help your retirement savings go much further. ..
Retirement is a time when many people have to make difficult decisions about what to do with their lives. Some people have to postpone their retirement because they still have family that relies on them. Even at 65, you might have a child in college or a parent that requires caregiving you pay for.
Many people become desperate or concerned about having enough money to retire comfortably and can end up making poor investment decisions as a result. The reminder here is that you don’t always have to go big to boost your savings. There are many small ways to save money, such as setting aside a fixed percentage of your income each month, and investing in low-cost index funds. ..
When you make withdrawals from your IRA or 401(k), the money is treated as taxable income. This means that you will have to pay taxes on the money when you withdraw it. You should also be aware of the taxes that may be due on up to 50% of your Social Security benefits, depending on your marital status and income. ..
Some people might have the bad luck of reaching the age of 65 at a time when the market takes a nosedive and have to postpone retirement so they can save more, whilst waiting for the conditions of the market to improve. If you plan carefully, the negative impact of a downturn might be minimal.
Conclusion: Tips to Help You Retire at 65
The first tip to make retirement at 65 easy is to not retire at 65, but try to hang on until you reach full retirement age according to your year of birth. Secondly, avoid outliving your money by saving more now and taking the necessary steps to increase your savings. Lastly, plan for your retirement, this means more than just investments, but take the time to strategically think about your retirement plans.
