You’ve spent decades thinking about and saving to have a relaxing and financially secure retirement. It can be more than overwhelming and a bit exciting when it’s time to finally commit. But knowing when that time should be is a major decision.
In addition to planning at what age you’ll retire, it’s also a good idea to think about specifics, like the time of year. The date you begin your retirement could impact a variety of things such as taxes and Social Security, just to name a few.
Here are some of the factors you should consider when thinking about the best time to retire:
1. Will You Receive a Pension?
If you work for the government or an employer that offers a pension plan, you wish to time your retirement following your service anniversary so that you receive an extra year of credit towards your retirement benefits.
2. Do You Have Additional Savings?
How much you have in additional savings will also play a role in what you will have to carry you through those first few years of retirement before you begin drawing from Social Security or other designated accounts.
3. Will You Be Retiring Early?
Most people think of age 65 as the typical retirement age, but some want to retire much sooner. If you are planning on retiring early, don’t forget that you will be assessed penalties on any withdrawals you make from a 401k or traditional IRA before the age of 59 ½.
4. Will You Have to Take Required Minimum Distributions (RMDs)?
The SECURE Act changed the age at which people are required to start withdrawing money from their retirement accounts back from 70 ½ to 72. You can even continue to contribute to those accounts past the age of 70 ½. Further, the CARES Act suspended the Required Minimum Distributions for 2020. You might be able to return those funds to your IRA if you took distributions that year.
5. Do You Plan to Work Part-Time During Retirement?
If you want to continue working during retirement, your Social Security benefits may be reduced based on your earnings. For example, if you reach full retirement age (FRA) in 2021, which is between 66 and 67 years old, you are still considered “retired” if your earnings are $1,580 or less in a month.
6. When Will You Turn 70 Years Old?
If you wait to retire until after you reach FRA to start collecting Social Security benefits, you can increase the amount you collect each month. This is only the case until you reach age 70.
7. Do You Have Any Accrued Vacation Time?
If you’ve accrued a lot of unused vacation time with your employer, consider how you can address this before you retire. Do you have to use it or lose it? Or will your employer pay this out? If it is paid, how will those earnings impact your Social Security benefits?
Thinking About Retiring in Coastal North Carolina?
If you’re nearing retirement or have already made the leap, you may be looking for the perfect place to call home. The southeastern region of North Carolina offers a variety of benefits to retirees, including tons of amenities, a temperate climate, white sand beaches, and plenty of different housing options.
At Creekmore Realty Group, Chris Creekmore specializes in helping retirees find the ideal home to spend their retirement years. With his in-depth knowledge of the Brunswick and New Hanover county areas, resources, and commitment to personalized service, Chris Creekmore will deliver the care and attention you need and deserve. Contact our office today for more information.