The pandemic has changed our lives in numerous ways. As a result of all the upheaval, many people are reassessing their priorities and thinking about early retirement. According to Pew Research, 28 million baby boomers retired in 2020 and a recent study found 39% plan to retire by 65, while 18% said they plan to retire by age 59. Before taking that step, here are four questions to ask yourself.
Can I afford to stop working?
Look at your retirement savings, your life expectancy, your projected income and annual expenditures in retirement. You'll want to consider unforeseen circumstances down the line that could be costly, such as the need to reside in a nursing home. Use the free retirement calculator and resources available at fidelity.com to help you make a realistic determination as to whether you can afford to retire now, or whether you need to keep earning your full-time salary for a few more years.
Do I need life insurance after retirement?
There is no one-size-fits-all answer here. However, those carrying debt into retirement, such as mortgages and personal loans, should consider a life insurance plan. Today, many baby boomers are financially supporting children and grandchildren and have significant debt. According to the National Council on Aging, the median consumer debt for households headed by someone aged 65 or older is 4.5 times higher now than in 1989. Paying off a mortgage is one of the most common reasons to purchase a life insurance policy. Doing so can help ensure your family is able to enjoy the home they love without the burden of outstanding payments.
"You would do anything to ensure your family has a bright future and having insurance is a simple and affordable way to protect them," says Louis Colaizzo, senior vice president of Erie Family Life. "Life insurance can help loved ones maintain the standard of living they are accustomed to."
So, how much would you need to leave behind? Calculate your needs with the life insurance calculator available at erieinsurance.com/life-insurance or contact an independent Erie Insurance agent to discuss options.
How will I get health insurance?
The current Medicare eligibility age for most people is 65, so if you plan retire before then, you'll need to find another way to get health insurance. Even after you're covered by Medicare, health care expenses can add up, especially if you're on a fixed retirement income. Some insurance companies, including Erie Insurance, offer Medicare supplemental insurance to help pay the portion of expenses not covered by Medicare.
How will I spend my time?
Retirement can come with ample newfound free time you may not be accustomed to. While that can sound amazing to those working full-time, the transition can be jarring. Whether it's volunteering, taking up new creative hobbies or traveling, planning now for how you will spend your time is a good idea to stave off boredom.
As you consider when to stop working, first ask yourself these four questions so you can take the appropriate steps to help ensure your retirement reality matches your retirement dreams.