So far, the third decade of the 21st century has been witness to an astonishing assortment of unexpected events, both on the societal and personal levels. Because of this, if you’ve suddenly been thrust into retirement ahead of schedule, your plans – however well-conceived – have been disrupted. The good news here is, if you’re not ready to retire, either emotionally or financially, you have options!
If you’re behind in your retirement savings, and the financial reality of retiring early has you stressed out, or if you’re simply not ready to transition to retirement, you may not have to. Talk to a financial advisor about your options. These options may include the following scenarios.
Working in Retirement
The loss of the job you thought you’d keep until your planned retirement doesn’t mean you have to stop working. The skills and knowledge that you’ve accumulated in your career can help you land another position. Depending on where you are in your retirement planning, it may not have to be another full-time position either.
Consider the possibilities of becoming self-employed, perhaps as a senior consultant or contractor in your area of expertise. Or maybe you’d like to work on a freelance basis or part-time. The opportunities can be compelling.
Working in retirement can provide more than just continued income. You may also be able to secure employer-sponsored healthcare and a retirement plan, which may even come with an employer match!
For many people, retirement is the end of era, and reaching the finish line sooner than expected can be scary and uncomfortable. In our experience at Global View, sometimes a change in perspective can make a big difference.
Instead of a finale, look at retirement as a transition to the next chapter. Review your plans, update your budget and re-examine what retirement looks like.
When retirement comes earlier than expected, instead of focusing on the sudden loss of income, turn to your budget to see if there are ways to make the transition easier on your nerves. One way to do this is paying off debt. By getting rid of debt, you’ll conserve your cashflow and reduce or eliminate interest payments.
If you have several debts you’d like to remove but don’t want to dip into your savings, talk to a financial advisor about leveraging your assets. For example, you may have a second home or other property that you can sell. If you’re not ready to part ways with it right away, discuss the possibility of renting out your property to create new income streams and tax savings.
Selling your current home allows you to cash out your accumulated equity, and you may not need to recommit it by purchasing another home.
Perhaps you were planning to relocate or downsize after you retired, and now face the prospect earlier than anticipated. If moving to an area with a lower cost of living, enjoying less overhead can make an early retirement less stressful than you may have initially thought. The process of moving will also keep you busy.
If you have a stake in or own a business, you might be able to sell it for a handsome profit. Alternatively, you might want to hand it down to your children or other family members in return for a fixed percentage of the revenues.
Coordinating Retirement With Your Spouse
For many people, the idea of early retirement is scary because they assume they’ll need to tap into their retirement accounts earlier than planned. While that’s often the case, it’s not always necessary.
If you are married, for instance, you might be able to draw upon your spouse’s Social Security benefits while continuing to postpone claiming yours. This strategy is known as restricted application, which is available to you if either spouse was born before January 1, 1954 and you have reached full retirement age. In a restricted application, you can make a benefit claim based on your spouse’s earning record, even if your spouse has not yet claimed benefits. Your restricted claim will not impact the personal Social Security benefits of you or your spouse when you eventually file for benefits based on your own work record.
This can be beneficial because for each year you postpone your personal Social Security claim, you let your monthly benefit amount grow. For example, once you reach full retirement age (say, at age 66), you’ll be eligible to receive your full primary insurance amount, which is based on your earnings record. However, by postponing your claim, your benefit will grow 8 percent per year until age 70.
During the postponement period, you may claim spousal benefits based on your spouse’s work record. You are eligible for 32.5 to 50 percent of your spouse’s benefits, depending on your age when you claim spousal benefits. The nice thing about a restricted application is that you can claim spousal benefits even if your spouse hasn’t claimed personal benefits yet.
Review your plans and talk to a financial advisor about the Social Security strategies available to you. At Global View, we have two Registered Social Security Analysts with the National Association of Registered Social Security Analysts on our team than can help walk you through different scenarios based on your specific situation.
Finding a Financial Advisor for Retirement
It is not our intention to minimize the toll an unexpected retirement can take on your finances and your psyche. We just want to make sure you know you have options. And you don’t have to face it alone, nor should you! The Global View team can help you reformulate your retirement plans and assist you in exploring your options, including some that might not have occurred to you on your own.
Finding a financial advisor for retirement can be overwhelming, especially when you’re looking for help during an already stressful or uncomfortable time. If you were forced to retire sooner than planned, schedule a no-obligation conversation with the team at Global View to see how we can help. Putting together a new plan can change your perspective, your attitude and your feelings about retirement.