What Happens if You Don’t Retire at 65? The Shocking Truth

For most in the United States, retiring at the ripe age of 65 is the dream. Of course, several people are unable to retire based on the lack of retirement income. But what happens when you put up your feet and begin to enjoy the life of a retiree earlier than that?

If you don’t retire at 65 you may lose some social security benefits, miss out on access to medicare, and face the risk of running out of retirement funds later in life. Retirement at 65 is recommended due to the possibility of enjoying these benefits. 

This article will explain all you need to know about not retiring at 65.

What Happens if You Retire Early Instead of at 65

The average age of retirement in the United States is 61. But as the economy changes, some find that 61 is no longer a feasible age to retire.

According to a report in U.S. News, retiring at 65 is a much better option since you qualify for multiple benefits. You aren't encouraged to start retirement account withdrawals, and you get the correct social security benefits, provided that you retired at the right time. 

However, if you retire early on, you run out of money faster, especially if you're paying a mortgage or are still supporting family members.

You Might Not Positively Gain From Your Social Security Benefits

How much you get from your social security payments depends on when you were born.

According to the United States law, the full retirement age for people born from 1937 to 1942 is 65. But this was increased for baby boomers to 66 and 67 for those born in and after 1960.

Let's say you don't retire at 65. Instead, according to the right retirement age, you work for a year or two. Doing so will prevent the government from reducing your monthly payments.

Retiring before the official retirement age causes the monthly payment to be reduced significantly. Some even end up getting only 50 percent of the higher earner's payment in the case of spouses.

However, if you retire at the right age of 65 and have the documentation to prove it, you won't likely face any problems.

You Might Not Have Access to Medicare

Retiring at 65 opens up the path for Medicare, as it is the age of eligibility. Once you reach that age, you can easily retire and not worry about coverage for health insurance.

The typical time of enrolling for Medicare is within the next six months after your birthday. But many recommend enrolling for Medicare as soon as you turn 65. Enrolling later prevents you from buying Medigap policies and increases premium charges on Medicare Part B and D.

Signing up later also leads to increased premiums. Medicare may even deny your coverage.

You Might Run Out of Money

Running out or running short of money is a genuine fear among most retirees.

Assuming you or your spouse live until 90, that is an extra 27-30 years in which you'll want to live a life of leisure. You'll want to have enough so you can pay your way for more than two decades.

Given the state of the economy, many fear that retiring at 65 or before might put them in debt.  However, it pays to have this knowledge beforehand.

If you retire at 65 and have invested enough in stocks or Social Security, this benefits you in the long run. Even retiring a couple of years later gives your investments enough time to grow more.

So, if you're contemplating retirement before 65 and have not made as many monetary investments, it might help to rethink your tactics.

Should I Retire at 65?

You should retire at age 65 if you have a healthy retirement pot that can potentially sustain you for two decades. You’re also at risk of developing certain ailments if you keep working longer.

In that scenario, you may also be able to afford earlier retirement without worrying about the demerits as we’ve covered above. 

If you're passionate about what you do or want to continue building your retirement savings, retiring at 65 may not look attractive. Nevertheless, you have to consider your circumstances overall.

The World Health Organization states that health problems among the world's population over 60 years have doubled. Heart problems, geriatric syndromes, and mental health issues are prevalent.

And unless you have optimum health, you won't be able to carry on past the prime of your life without facing health issues.  If your job is physically or mentally demanding, 65 might be the ideal age at which you should hang your cap.

Working Past the Retirement Age

It's perfectly normal to think that you'll end up getting frustrated, bored, and unengaged after you retire. But this does not mean that working continuously will prevent that.

Working at your older age is not always fun, especially if you've given a significant portion of your life to your industry. However, if you want to stay active, there are plenty of ways through which you can stay connected to your industry.

Supporting organizations that help with worthy causes, teaching classes on your industry, even working as a consultant for your previous organization will keep you busy and help you stay engaged.

If that's not an option, retiring and having plenty of time can also open many doors.

You can try another field of work, maybe volunteer at a shelter for people or animals. There are plenty of part-time retirement jobs that pay well and are fulfilling.

What Are the Benefits of Working Past Retirement?

If you continue to work past your retirement age, you can continue to build your retirement pot and become much stronger financially.  Most over 70 still work because they want to increase their pension savings or have more money saved up.

However, if you are financially secure and do not need to work, there is no need to stay on the payroll. You can stay busy with other things you love as I already pointed out. 

How Do You Have a Better Retirement?

To have a better retirement, you need to ensure you are investing the right amount of money into your retirement fund during your working years. You also need to ensure your retirement savings are invested in healthy vehicles delivering consistent growth each year.

Speak to a financial advisor and set out a money goal. 

Create an action plan which will support you by the time you reach your age of retirement. If you have any debt, you'll want to be rid of it by the time you're 65, or at least you'll need to have a nominal amount left to pay.

It’s also a good idea to keep fine-tuning your financial habits. We live in a fast culture, one in which fashion, technology, and even eating habits change each day. If you're spending more money trying to keep up with the trends, you'll want to reevaluate your habits. 

Live for the moment for yourself, not for everyone else. Do not let commercial trends distract you from your personal goals.

Summing It All Up

Retiring at 65 is the norm for older adults in the work industry. However, your retirement should be a positive event in your life, not one that gives you more problems to handle.

If you're of an age at which you can prepare for your retirement, be smart and speak to a professional on how you can prepare a pension fund. Even if you're older, don't worry. There's still time to invest in your future and take care of yourself in the long run.

Come retirement time, you'll be thanking your past self for taking pre-emptive action.