Retirement plans can sometimes take an unexpected turn, leading to an earlier retirement than originally anticipated. While this situation may leave you feeling unprepared and rushed, it's crucial to regain control of your financial path as soon as possible. Here are essential factors to keep in mind as you navigate this transition.
Avoid Hasty Decisions: When faced with an abrupt change like early retirement, it's tempting to make quick and rash decisions. However, it's wise to take a step back and avoid rushing into choices without careful consideration. Take the time to reflect on your new circumstances, organize your thoughts, and ensure your important documents are in order. By approaching these significant decisions calmly and thoughtfully, you can set yourself up for a more stable future.
Exploring Work Opportunities: Finding yourself out of work in your 60s can be disheartening, but it's worth noting that age is no longer a significant barrier. Many companies value the expertise of experienced individuals and may seek them as consultants or trainers. Consider exploring part-time or temporary work options if you are able to do so. Not only can it provide additional income, but it can also offer a sense of fulfillment and purpose.
Managing Tax-Deferred Accounts: If your retirement strategy includes tax-deferred accounts, it's essential to evaluate withdrawal options. With a lower income in retirement, you may find yourself in a lower tax bracket, making it advantageous to withdraw funds. However, be mindful of potential penalties based on your age and consult with financial and accounting professionals for personalized advice.
Understanding Social Security: Delaying Social Security payments can result in higher benefits in the future. However, when deciding the optimal time to begin receiving payments, consider the following factors:
- Do You Need the Money? If you require the income that Social Security provides, even in a reduced amount, taking benefits early may be the only choice for you.
- Consider the needs of your Spouse. Starting Social Security benefits early may substantially reduce your spouse's survivor benefits after your death. This is especially important to consider as women often have longer life expectancies than men.
- Are You Healthy? If your current health is poor, starting Social Security earlier may be a sensible decision to ensure you have sufficient income during retirement.
Seeking Professional Guidance: Making unexpected changes to your retirement plan can significantly impact your overall financial strategy. However, remember that financial professionals have experience assisting individuals in similar circumstances. It can be beneficial to seek guidance and expertise during this time of transition, helping you make informed decisions and regain confidence in your financial future.
Note: This article is intended for informational purposes only and does not replace personalized advice. Consult with financial professionals before making any decisions regarding tax-deferred accounts or retirement planning. Having a trusted advisor by your side can provide valuable support during this adjustment period.
The views and opinions presented in this article are those of Thielen & Associates, Inc. and not of Avantax Wealth Management® or its subsidiaries.