Retiring “early” is a popular notion and many people do retire at 50 or even earlier, depending on the career. A person will frequently retire from one place of employment after 20 years, and go on to another career. A few actually retire and don’t return to any type of employment.
Rather than wait until the traditional 65th birthday, many workers choose to leave steady employment at age 62. This means that their Social Security benefits will be less than if they waited until 65, and there are other issues to face, as well. The most important difference between 62 and 65 is that of health insurance, for Medicare doesn’t “kick in” until one reaches 65. But maintaining insurance isn’t the only challenge.
Ellen Jordan, currently of South Portland but who grew up in Windham, began working in the fall of 1959, having graduated from Windham High School in June of that year. She worked in offices of Portland firms, got married in 1963 and continued to work, but her plans for family life included the belief that a “stay at home” mom was the best plan. In 1966, her husband received a promotion and they decided it was time to start a family. She quit her job and stayed home for four years until she took a part-time evening job at an insurance company. This didn’t work out quite as planned, however, because that extra income resulted in a higher tax bracket and the requirement of paying more income tax. More importantly, leaving the children was very difficult.
But other part-time jobs were pursued and Ellen’s final job was a 24-year stint in the South Portland School Department. The benefits here were many, including a matching funds/deferred compensation plan, an excellent insurance package and good working conditions.
When Ellen’s husband had to take early retirement due to health issues, Ellen continued to work. However, as she neared the age of 62, early retirement became a big temptation.
“My husband was anxious for me to retire, and as I would turn 62 in 2003, I decided it was a good time to give serious though to this. So in September that year, two months before my 62nd birthday, I started planning for June 2004 retirement,” she says.
First, Ellen made an appointment with the local Social Security office and “laid out all the facts and figures.” She would receive her first Social Security check in July, 2004.
“Other issues I faced, as I retired, included the health insurance and dental insurance,” she said. “My husband had retired from the State of Maine and when he inquired about carrying me on his health insurance until I reached 65, he was told the only way to legally do this was if I were a new spouse.”
The result was that Ellen has had her school-provided health insurance continued under the COBRA plan and pays $433 a month for that insurance. In the summer of 2005, this was increased to over $480 a month. Her husband was able to add her to his dental plan.
The first year of Social Security payments was fraught with issues including checks being held back because of rules about vacation and/or sick leave pay being factored into earnings. This is still not quite settled, resulting in yet another change in the summer of 2005. Needless to say, her health insurance payment comes out of the Social Security.
Ellen has not taken a part-time job and enjoys retirement, as she and her husband like to visit their grandchildren and pursue their hobbies. They have a routine of walking each day and taking care of their health. She says it (retiring early) has been a “learning experience,” though.
“I am very glad I did retire and have no intention of rejoining the workforce,” she said. “I’m thankful my husband doesn’t have to go out and clean the driveway during a snowstorm. My advice to anyone anticipating retirement is to make your appointment at Social Security early; have your list of questions ready. Remember that the check you receive is based on your total earnings the particular year you retire. If these figures prove to be inaccurate, checks will be withheld until it is worked out.”
And if you’re not ready to retire yet, Ellen says you should be thinking about it anyway. If your place of employment offers 401K, or other plans, put as much as you can into savings and start at a young age.
“You may think you have the rest of your life to start saving for retirement, but the years roll by quickly,” she said. “My financial advisor told me, just think, in 10 years you’ll be 72 and then, not to sound morbid, you’ll be in the downside of your life, and you need to plan ahead for the time when you will need your savings for medical bills and other expenses.”
For Ellen, early retirement has worked out, although it’s taken a lot of planning and she was fortunate in working for an employer that offered an excellent benefits package. She is able to spend her days in her “craft room” working on a variety of items which she places under consignment at local gift and craft shops.
“I love it”, she says, but is quick to add, “but I wonder what I did when I was working. Nowadays, hardly a week goes by without some kind of doctor or dentist appointment!”
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