Unplanned early retirement? paid Fidelity
Make smart use of unemployment and savings, severance, or disability money.For some, retiring early is a dream. But for those faced with an unplanned early retirement—they are laid off late in their career or have a medical disability—it may be a different story.
While you may be eligible to begin taking Social Security at age 62, that might not be the best decision—even if you aren’t working. That’s because after you reach age 62, every year that you delay taking Social Security , you could receive up to 8% more in future monthly payments. Also, delaying your own Social Security may increase your spouse’s survivor benefit.
The Bartons had a total pretax household yearly income of $120,000 before Michael left the workforce, meaning a $70,000 decrease in income. Yearly household expenses total $100,000 . In addition, the couple has $800,000 in retirement assets in a combination of taxable , tax-deferred , and tax-free accounts.
People who face such a situation at a younger age may not be able to forego Social Security until age 66. In this case, they can build a bridge strategy that takes them to age 62, the earliest point at which they can receive Social Security benefits.Your income sources will be different after a layoff than they might be following a disability. The differences call for distinct strategies to provide income until you take Social Security.
But severance and unemployment eventually run out. What’s more, inflation potentially increases the couple’s expenses each year. So they increase their withdrawals in subsequent years, starting with their taxable accounts. Find helpful guidance, tools, and services to assist you as you prepare for retirement on your terms.*With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation.
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