Retirement is an important life event which can have significant impact on the lives of the retiree and his or her dependents. Those who have prepared themselves well for retirement should enjoy retirement life to its fullest while many others experience a decrease in their quality of life due to many different reasons. Thus, for anyone contemplating early retirement it is best to weigh the pros and cons of such a move. This article explains several reasons that may persuade such persons to wait until full retirement age before retiring.
Deductions on the retirement funds due to early withdrawal
Among the many different reasons to wait until full retirement age for retiring, the impact on a retirement fund when the funds are withdrawn at an earlier age than 65 years should be highlighted. In the event of an early retirement, it is possible for a person to withdraw from the retirement benefit funds as early as 62 years of age. However, once a withdrawal has been performed, there shall be deductions on the total available funds over the coming years. Furthermore, there is a risk of being taxed on the withdrawal amount when such funds are withdrawn early. Thus, a person retiring at 65 years could enjoy much higher return from his or her retirement benefits than a person retiring early.
Deductions on the annual income of a retiree
At the same time, when a person retires early, he or she may experience another deduction in the retirement funds depending on the amount of early earnings that he or she may have until 65 years of age. Thus, for the years 2010/2011, the stipulated income level for enforcing deductions is $14,160 per annum. This means that a retiree earning in excess of $14,160 shall be subjected to deductions in his or her retirement benefits fund. However, when a person retires at age 65 there is no limit to the annual income and therefore would not experience any deductions from the retirement benefit fund.
Health benefits of retiring late
Apart from the financial benefits, psychosocial benefits of late retirement should also be considered when making a decision on the retirement age. It is often recognized that a retiree is much more likely to suffer from various physical and psychological illnesses than their working counterparts. Although it is not clear as to why such a scenario take place, many believe that maintaining an active lifestyle which requires focused attention and revision of memory could have a positive influence on the well-being of a person.
Medicare starts at 65 or older
As Medicare health benefits start at 65 or older, it relives the burden of having to think of one extra expense, which is the unexpected health costs, following retirement at 65 years or older. However, when retiring early one has to find ways to compensate the medical bills until he or she reaches full retirement age.
Prolongation of beneficial social networks
The ability to maintain a healthy social network for a prolonged period of time is another good reason for retiring at 65 years than retiring at a earlier age. Such social connections should enable a person to feel wanted, be recognized, be loved as well as be part of a team rather than feel being isolated following an early retirement. However, planning ahead and making new social connections following retirement should prevent such deprivations and therefore make the retirement life a joy to live.
Apart from the reasons mentioned in this article, there might be many different reasons for each individual to retire past the age of 65. In whatever circumstances, it should be stated that an early retirement without proper planning could be more disastrous than retiring at the full retirement age which is as high as 67 years per the U.S. Social Security Administration.