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Thinking of Retiring Early?

If you're thinking about retiring early, be sure to consider the financial impact of your decision.

Do you have a pension plan with a current or previous employer? If so, is it fully vested? Would you forfeit all or part of your benefit if you retire early? Will your monthly benefit be reduced if you retire before a specified age (usually 62-67 years of age)? Will your monthly benefit increase if you work longer?

Social Security
If you begin collecting Social Security benefits before you are entitled to full benefits, your monthly compensation will be permanently reduced by 20 to 30 percent. Will this reduced amount be enough to supplement your income from pensions and personal assets? Would early retirement work if you postponed collecting Social Security benefits until you reach full retirement age or older? Or would it be to your benefit to work a little longer in order to qualify for an increased benefit?

Other Savings
Have you saved enough to allow monthly withdrawals that are adequate to meet the income needs your pension and Social Security benefits won't cover? How much could your nest egg grow if you waited a few more years to retire?

Health Insurance
Regardless of when you retire, you will not be eligible for Medicare health insurance benefits until you reach age 65. If you retire before then, will you be able to extend your employer's health insurance benefits until you are eligible for Medicare? If not, how much will private health insurance cost?

Life Insurance
What are your life insurance needs? Is a group policy through your employer your only source of life insurance? You will likely lose that benefit when you retire, so evaluate your needs and options.

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