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Why you shouldn’t retire in your 50s

You work so much of your life, it’s understandable that when you reach your 50s, you might want to be done with the whole song and dance. However, as fun as it might seem to retire in your 50s, it’s generally not a good idea. Here are a few reasons why.

Your Savings Will Need to Last

If you retire in your 50s, you better have a huge stockpile of savings as well as a retirement income plan (i.e. a plan for how you are going to invest and spend this money in order to make it last). That’s because you can expect to spend about 30 years in your post-work life. Sure, the first few years might be great. But over time, things could get quite difficult. No matter how much you have saved, if you stop working in your 50s, a lot can happen over those 30 years of retirement. If you retire early, you could also run the risk of running out of money early. You don’t want that to happen.

You Could Get Hit With Penalties

Retiring in your 50s means you’ll incur penalties when you try to make withdrawals from your qualified retirement accounts like IRAs and 401(k)s. There will be a penalty — typically, it’s about 10 percent of the withdrawal amount — if you take funds before you hit 58 and you’ll have to pay income taxes on your withdrawals as well. There are ways around this penalty, but it gets complicated. You want your money to stay in your accounts for as long as possible, so that the investments can grow.

There’s No Medicare

As USA Today notes, you can’t qualify for Medicare until you reach 65. If you retire in your 50s, you’ll be stuck paying for medical expenses until you can qualify. That can get quite expensive. The bottom line? The earlier you retire, the more difficult things can be. Retirement should be as easy as possible. Do yourself a favor and keep working through your 50s.

Chris O'Shea

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