It's the most popular age to retire, reveals an investigation

The age at which you plan to retire is one of the most important areas of retirement planning, but one that has been neglected. You may not be paying much attention to this factor, thinking that you will retire at age 65 – or maybe at age 62 when you qualify for Social Security benefits, or just when you feel ready to leave your job.

Determining the best time to retire, and what to do if you need to retire early, can have a significant impact on your retirement savings. If you retire before you are financially ready, you may have a lot of money problems.

What is the good age to retire, though? There is no perfect answer to this question, but we have an indication of the age at which most people choose to start their career in retirement.

The average age of retirement is sooner than you think

The average person currently retired has left his job at age 61, according to a 2018 Gallup poll. This may seem promising, as 61 years is a relatively early age to retire. However, according to the same survey, the average worker aged 50 to 64 said he was not planning to retire before the age of 67. A large number of workers therefore win the jackpot and can suddenly afford to retire earlier, or they retire. early because they were forced to do it.

According to a report from the Employee Benefit Research Institute, 43% of current retirees said they had to retire earlier than they had hoped, usually because of health issues or the loss of their job. Early retirement may seem like happiness, but if your savings are not strong enough to last for decades, it could get you into trouble.

Sometimes retiring, even a few years earlier than planned, can be expensive. The average person aged 65 and over spends about $ 46,000 a year, according to the US Bureau of Labor Statistics. If you spend at that rate and retire six years earlier than planned, you will save an additional $ 276,000. In addition, at the earliest you can start applying for Social Security benefits at the age of 62. Therefore, if you retire earlier, all your income will have to come from your savings.

Health care is another expense that makes early retirement extremely expensive. You are not eligible for Medicare before the age of 65 and if you lose your insurance in retirement, you will have to find coverage elsewhere or deprive yourself of it – and both options could be expensive.

Nobody plans to lose their job or face health problems that will force them to retire early, but that does not mean you can not plan for the unexpected. As you prepare for retirement, there are things you can do to prepare for all the situations that come your way.

Prepare for the possibility of early retirement

One of the best things to do to prepare for any unexpected financial situation is to create a healthy emergency fund. Then, if you lose your job or have health problems, you do not have to immediately start withdrawing money from your pension fund.

If you are nearing retirement age, it is a good idea to have a more robust emergency fund than average. Most experts recommend saving enough to cover expenses of three to six months, but you may want to save more than that. If you lose your job in your fifties or sixties, it might be harder to find another one before you retire. Having a strong emergency fund can help you if you are unemployed for a long time or if you are forced to retire early.

Another way to prepare for the potential costs of early retirement is to fund a Health Savings Account (HSA). You are eligible for an HSA only if you are currently enrolled in a high deductible health care plan (which means you have a deductible of at least $ 1,350 for individuals or 2 USD 700 for families). But if you qualify, you can contribute up to $ 3,500 a year (or $ 7,000 a year for families) and your initial contributions are tax deductible. Your savings become tax-free and you can also avoid paying taxes on your withdrawals as long as the money is used to cover eligible medical expenses. If you retire before the age of 65, when you can sign up for Medicare, an HSA can help you pay a little more for health care and insurance.

Even if you plan to continue working until the end of sixties or beyond, it is important to consider the idea that you may be forced to retire earlier than expected. You could even choose to overcharge your savings and retire at the age of 60. Then, if you are able to work a few more years, it's the icing on the cake. Whatever your strategy, make sure you have a backup plan in place if you need to retire earlier, as this could potentially save you money.