Why you should retire is a question some might not need to ask, but for those that do, there are plenty of reasons why. Retirement is an opportunity that opens doors that were previously closed prior to retirement.
Sometimes, retirement is a necessary step in life that makes possible new steps in different directions. Whether the retirement is voluntary or involuntary, some of those newly opened doors have dollar signs behind them.
• Employer provides severance package
Some employers will pay you to retire and don’t give you a choice about it. Some employment contracts have clauses allowing severance pay under certain conditions. If such is the case, the severance package may entitle you to enough extra funds to consider retiring.
• Retirement hobby supplements income
If you’ve chosen to retire to pursue a hobby that otherwise would have been an unimplemented pursuit, that hobby may be monetized with the right decisions. In such case, retirement not only allows a chance to do something you enjoy and want to do, but also provides a potential additional source of retirement income, both of which could not be accomplished as easily without first retiring.
• Traditional IRA requires withdrawals
If you’ve reached the mandatory distribution age for Traditional Individual Retirement Account (IRA) withdrawals, there may not be enough time to spend it without retiring. Of course, this is something not every retiree has the luxury of, but it is a reason that many people have in their retirement financial tool box.
• You have a Reverse mortgage
A reverse mortgage pays homeowners back based on the equity value of the home. This type of payment may supplement a retirement income to financially justify retirement. If the income isn’t used, it can be reinvested to potentially earn retirement income at a higher yield than the housing market might provide. This type of income could also help finance retirement in later stages.
• Social Security Income allows it
In addition to IRA and reverse mortgage distributions, you may also qualify for Social Security payments. These payments may put your income over the top if you have several other sources of retirement income. Financially, there simply may be no reason why you should not retire if this is the case.
• You’ve become the recipient of a marital trust
For families with large estates, a marital trust may have been created to avoid heavy taxes upon death of a surviving spouse. Marital trusts make use of estate tax exemptions by passing on assets through a trust that optimizes tax benefits. An example of a martial trust is the A/B trust which divides inherited assets between a spousal and other beneficiary trust.
Several of the above reasons why you should retire are geared toward those whose retirement options and benefits apply by default. However, with the right decision making and financial planning, additional reasons why you should retire may also exist. Even if you haven’t reached retirement age, there may still be ample rationale for why you should retire. Moreover, unless you love your job, require one, and/or it brings you happiness beyond any motive for why you should retire, then there are plenty of explanations why you should retire sooner, rather than later if those reasons are financially workable.