Early retirement: Smart moves and common mistakes

ORLANDO, FL — The average retirement age in the U.S. is 62, but many people hope to clock out years earlier.

Financial freedom, more travel, less stress, sounds ideal. But experts warn: if you’re not prepared, early retirement can turn into a financial mistake.

Most people already have big dreams for retirement, but turning those dreams into a reality, especially early, takes planning.

“The biggest one is going to be not considering where you’re going to get health insurance in retirement,” explained Chet Cowart, Financial Planner.

Medicare doesn’t kick in until age 65, and private insurance can be a big expense each month, and...“Consider the tax nature of everything,” said Cowart.

Many retirement plans have a penalty for withdrawals made before age 59 and a half.

“We all know the power of compound interest,” said Cowart

Retiring early means sacrificing more years of interest earned on investments.

“Don’t treat your retirement fund as a cookie jar,” said Cowart.

AARP warns that younger retirees can be tempted to spend more on travel, home renovations, and hobbies to occupy extra time. And what about social security?

“If you’re not working anymore, it is beneficial to go ahead and just take that Social Security as early as you can,” explained Cowart.

While waiting until age 70 will maximize benefits, taking it earlier may help stretch retirement savings. But before calling it quits, you may want to practice living on your retirement budget for six to 12 months while you’re still working and consider a bridge job. Rather than quitting cold turkey, take part-time work or consulting jobs to reduce stress, while keeping income coming in.

Experts say it’s crucial to start saving for retirement as early as possible. Paying off your home, considering a phased retirement approach, and avoiding massive student loan debt for your child’s education can also help pave the way for financial success.

Contributors to this news report include: Lindsay Dailey, Producer; Bob Walko, Editor.

This is a developing story. Check back for updates as more information becomes available.

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