Early retirement isn’t for everyone. Traditions First Bank wants you to know the pitfalls of early retirement.

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If you have saved enough money and have looked forward to retiring early, then, by all means, you should. But, if you haven’t planned far enough in advance for what you’ll need to live on after retirement, maybe you should wait.

Here are some things you might want to think about before you retire:

Health care

  • Medicare (the federal program that provides coverage doesn’t start until age 65. If you retire before then, you’ll need to find insurance, and it is not cheap.

  • Current law says your insurance costs can’t be more than 8.3 percent of your household income. 

  • That means a person making $50,000 would pay $346 a month, or $4,150 per year.

You’ll spend more than you think

  • You will typically spend about 80 percent as much in retirement as you do when you work.

  • If you retire at an early age and you’re still in good health, you’ll find you’ll be spending more money and splurge on things now that you have more free time.

Your housing expenses will stay the same after retirement

  • If you can retire without a mortgage, that’s a blessing.

  • But according to surveys, 44% of retired homeowners between ages 60 and 70 still carry a mortgage.

  • A rule of thumb is to set aside 1% of your home’s purchase price annually to cover repairs and replacement.

  • That’s $3,500 per year on a $350,000 house.

  • Learn about Tennessee’s property tax freeze.

According to AARP, there are 5 questions to ask before retiring early:

  • Can I really afford to stop working?

  • Do I need to get a part-time job to make ends meet?

  • How will I get health insurance?

  • What will I do to occupy my time?

  • Are my plans in sync with my spouse/partners?

Use this quick calculator to see how much you will receive from Social Security. Benefit Calculator

If you have any questions about budgeting or retirement accounts, we are here to help. Traditions First Bank’s mission is to provide banking services to clients based on our highest values while investing in our community. Contact Traditions First Bank today.