What Is The Earliest You Should Retire?

What Is The Earliest You Should Retire?

What is the earliest age you should retire?  Obviously, the earlier you retire, the longer your investments will have to support your living expenses.  Is there an ideal age to retire early?  In this video, I share my thoughts on this topic.

FULL TRANSCRIPT

Patrick: When is the earliest you should retire? Find out my thoughts on that coming up.

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Patrick: Hey, everybody, I'm Patrick King with Transformative Financial. Here on this channel we help people make money, keep money, and feel more financially secure along the way. If that sounds like something that you're interested in, please contact me. My phone is (404) 500-9261 and my e-mail is patrick@transformative-financial.com.

Today, what is the earliest age that you should consider retiring? At least in my opinion, and I'll give you my reasoning behind this as well.

Retiring early always sounds nice especially if you've had a long career working for the same company especially in some of the bigger companies where there's a little bit more nonsense than-- [laughs] there maybe a smaller company but it doesn't make sense to retire early. There are a few complications around retiring early. Such as, number one, paying for healthcare. That's freakin' expensive. Also, your retirement savings has to sustain you for a longer amount of time.

That gap between retiring early and a normal retirement age, you're depleting those assets and instead of not only letting them grow but contributing to them. Some people are out there who are lucky enough to have a pension. There are also some people who have the good fortune that their company covers their medical expenses until they get to age 65 when they're eligible for Medicare. Those are nice and if you're one of those people consider yourself very lucky, you're in the vast, vast minority.

If you don't have like those things, like the rest of us-- like most of us. What is the earliest that I think you should consider retiring that makes financial sense? First off I have to say, I really don't recommend retiring early for several reasons. It doesn’t allow the portfolio to grow that's going to sustain you for the rest of your life. And then staying engaged, keeping it mentally sharp. I'm certainly not above slowing down, but in general, I don't recommend retiring early.

But if you're set on it, in my opinion, that age is 63-1/2, which is a very specific age. So why? Why do I say age 63-1/2 is the earliest that you should probably consider retiring? Well, it goes back to those health care, preretirement health care expenses. If you retire at age 63-1/2, you're going to have another 18 months runway of COBRA, until you hit age 65 at which point you'll be eligible for Medicare.

The COBRA plan is not the cheapest in the world if you’ve ever priced one of those out, but it's going to be less than what's available to you now through the healthcare marketplace. This is being filmed in 2018, so who knows what the future is going to be like. That gives you some runway with some manageable health care expenses up until you hit Medicare. Yes, those pre-Medicare expenses, healthcare expenses are kind of a hidden cost that are associated with retiring early.

You've got a lot of cash flow items right up front. People tend to be a little bit more active to take some vacations and you throw some health care health insurance costs on top of that, it doesn't help things at all. It may actually make better sense to retire later than 63-1/2. If you're wondering what the right age is for you, give me a shout, contact me, call me, shoot me an email, contact information is below on the show notes. I love to talk with you about the specifics of your situation.

That's what I've got today, folks. Thank you so much for watching. If you like this please like. Don't forget to subscribe, if you want to see more videos like this. I'm Patrick King with Transformative Financial. Again, thank you for being here. Until next time, cheers.

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