Many Americans dream of an early retirement so that they can relax and enjoy life instead of working at a tedious job. Will this be the right decision as retirement can make life more difficult financially, according to some studies it can also affect your social life and your health too?
Social security benefits are made available to you when you are 62 - though by taking these benefits the monthly pay check will be much smaller. Sara Rix senior policy advisor with AARP's Public Policy Institute said that "That's a lot of money, and I don't know that many people think that through," she says. "A lot of people are under the erroneous perception that when they hit full retirement age, their benefits will go back up, but they won't."The more money you have coming in each month, the better," Rix says.
AdvertisementAfter early retirement health care premiums will add to expenses as people are eligible for Medicare only after they are 65 so there will be 3 years where you have to pay your own health care insurance costs. Under the Affordable Care Act a continued insurance under COBRA will be available for 18 months after you leave a job though the premiums will be much higher. The coverage will not be too great according to Adria Gross, a patient advocate with MedWise Insurance Advocacy in Monroe, New York. "The people who are in that trap are the ones who have a few more years to go before they turn 65," she says. "They're getting screwed."
Early retirement will deplete your savings as you will be missing the highest earning years of your career and the additional 3 years can make a lot of difference to your savings.
You will find that social interaction also takes a backseat after retirement as you stand to lose all the friends on the job and socialization after working hours. The lack of interaction with friends and colleagues can bring you a step closer to physical and mental health problems.
Retirement can contribute to mental and physical problems and according to a research by Dr. Richard Robins from the University of California, "Retirement encompasses a confluence of factors that all seem to have small, but predictable, effects on self-esteem," he says.
Source: Sarah Cooke