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10 Reasons Not to Retire Before 66

By Selena Maranjian - May 28, 2016 at 8:40AM

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There are many reasons to not retire before 66, such as the ability to save more, amass more, spend less, and enjoy more health insurance. But if all your ducks are in a row, retiring early might still work.

Many, if not most, of us dream of retiring early. It does have obvious benefits, such as gobs of leisure time to finally do all the fun things we haven't been getting around to. But there are also plenty of valid reasons to not retire too early. Here, for example, are 10 reasons not to retire before 66 -- the age at which many people are expected to retire, per the Social Security Administration (SSA).

For those born between 1943 and 1954 (i.e., those between roughly 62 and 73 years old), the SSA has assigned a "full" retirement age of 66 . That means they can receive their full retirement benefits beginning at that age. For many other people younger or older than that, 65 or 66 or so is a common age to think about retiring at, and many are aiming earlier. Let's review the disadvantages of that.

  1. Insufficient funds. A key reason to not retire before 66 or so is if you haven't planned or saved or invested effectively enough to be where you need to be financially before retiring. Consult a financial advisor if you need to, but figure out how much of a nest egg your retirement will require and amass it before retiring. A $400,000 nest egg, for example, will give you a 4% withdrawal of $16,000 in your first year. Coupled with your Social Security income, will that be enough? Everyone's calculations will be different.

  2. More money. If insufficient funds is a problem, it can be addressed by not retiring at 66 or earlier. Working a little longer means you can earn more money and sock away more money.

  3. More nest egg growth. Working a little longer also means that your nest egg will have more time to grow. If you've amassed $300,000 by age 66 and you work three more years, with your nest egg growing by an annual average of 8%, you'll end up with about $378,000, a much more helpful sum.

  4. More Social Security. Delaying retirement can also permit you to put off starting to collect Social Security. For every year between your full retirement age and 70 that you delay, your payout will grow about 8% larger -- up to a total of 32% larger. That can turn an expected check for $1,500 into one for almost $2,000, a meaningful difference. 

    Delaying retirement enlarges Social Security checks.

  5. Less nest egg depletion. Meanwhile, by not retiring at 66 or before, you'll also be putting off the day on which you start drawing down your nest egg. Not only will it be able to grow more, but you won't be working against that growth by making withdrawals, either.

  6. More health coverage. Health insurance coverage is another reason to not retire before 66 or earlier. If you have generous health benefits through your job and you keep working a few more years, you can keep them, saving money. You won't be eligible for Medicare until age 65, so retiring before that can be especially costly.

  7. More home equity. By not retiring before 66, you'll also be able to keep making mortgage payments, building your home equity and perhaps even paying off your loan entirely. That's not a bad thing to do before retirement, so that you'll have that big obligation off your back before your salary stops arriving.

  8. Risk aversion. By delaying retirement you can also reduce risk. The more you're able to sock away for retirement, the better you'll be able to deal with any curve balls life throws your way, such as a costly health development or a sudden need to help out your child.

  9. A spousal strategy. Keep your spouse in mind, too. If you retire early and your younger spouse keeps working, there may be some resentment afoot. You might delay retiring a bit so that you can both keep building your war chest for retirement and then retire together and begin enjoying it.

  10. Less boredom. Finally, know that many people find retirement to be not quite as wonderful as they expected. They may find themselves bored, restless, and missing the social aspect of work, if not their work itself. If this may be you, working longer might be a good move.

Of course, despite all the above reasons to not retire before 66, you may still want to. You might have sufficient funds and lots of plans. If so, go for it -- and enjoy!

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