According to a federal analysis, three million workers left the workforce earlier than they expected because of the pandemic. Now with unprecedented labor shortages, many of those retirees are returning back to work to help fill some of those job openings. Some back to their old positions; some onto bigger and better things.
9 Things to Consider about your Retirement status
If you retired earlier than you expected, here are some things to think about:
1. Retirement will last longer than you think
According to statistics, one in seven retirees who are 65 right now will live to age 95; one in three will live to 90. Unless you planned financially for the “worst” case scenario, you might not have saved enough money to carry you through to the end, which brings us to the next one.
2. You might not have saved enough money
There are so many future unknowns when a person retires, that even the best laid plans can go awry. The market could go down significantly making your investments worth less than you anticipated.
Or inflation could rise significantly, as it has recently, resulting in you needing more money to live each month than you planned for. The common rule of thumb of having 10 times your final salary before retiring might not be enough in turbulent times.
3. Market downturns are inevitable
As history has shown, stock market fluctuations are inevitable; the Great Recession of 2008 proved just how vulnerable we can be. When that happens, a good chunk of your nest egg could go with it. Younger workers have time on their side to recover; you don’t!
4. You will be spending more money than you are taking in
When you retire, for the most part you are taking more money out of your portfolio wealth than you are putting back in. Even retiring at age 60 instead of 65 could cost you tens of thousands of dollars in portfolio growth because you do not have a constant paycheck coming in of which in part you could invest.
5. You miss out on your catch-up years
Throughout your working years, some years you were able to save or invest more than in other years that were leaner. By retiring earlier than expected, you are forfeiting many of those catch-up years where the IRS allows you to invest more than normal.
6. Your Social Security checks will be smaller
By retiring at 62 instead of at your full retirement age – generally 66-67 dependent on your birth date, your monthly checks will be smaller – by as much as 30% on average. Based on Social Security calculations, retiring at age 62 will take you 11.67 years to reach your breakeven age or the point where you are making the same as you would have if you waited until the maximum Social Security amount at age 70.
7. Healthcare costs will skyrocket if you are under age 65
If you stay working, your healthcare is covered under an employer-based group plan. If you retire before age 65, the point at which you are eligible for Medicare, you are responsible for paying your own healthcare coverage which can easily run $1,000 per month or more.
8. Your mental and physical health will suffer
Not having something to get up for in the morning takes its toll on both your mental and physical health than if you are still working. Depression is 40% higher in retirees than those of the same age but still working; diagnosed physical ailments increase by 60%. You have to have something that will fill that void if you are to stay as healthy as you can for as long as you can. That something could include returning to the workforce for a few more years.
9. It is harder for older Americans to reenter the workforce.
It is a fact that it is harder for older Americans to find a job and go back to work than it is to just keep working. According to Reuters/Isos poll, 30%, or one in three retirees, would enter back into the workforce if they had the choice.
But what if you are that one of three who could reenter the workforce. Even with being older, having veteran status, gives you an advantage of getting a job and working for a few years where you can use your military-learned skills. And if you had a security clearance while in the military, you are even more valuable than you think, because it takes less time and money to get you into a job requiring a clearance.
If you retired and change your mind and would like to reenter the workforce, consider defense contracting jobs that use your military-learned skills and clearance experience.
