Will Retirement Come Too Soon?
Have you considered contingency plans in the event that retirement comes prematurely due to a job loss, an unanticipated illness, or a disability that prevents you from doing your own line of work – or moves you from full-time to part-time? Regardless of the event, most people never imagined it could happen to them and weren’t prepared for the effects. Unfortunately, some remedies for such a situation may not be in their best interest:
“I’ll just dip into my 401(k) early.” Withdrawing from a 401(k) early may result in penalties if you’re younger than age 59 ½. Also, a premature withdrawal may require reducing your future monthly withdrawals to make sure enough money remains for the rest of your retirement.
“I’ll just take early Social Security.” Although it’s available at age 62, you will incur significant early-retirement reductions, which will affect your retirement forever.
Whatever you consider, make sure you think through all of the implications to avoid a long-lasting financial hardship. Ask for information on alternatives that may be far more favorable than early 401(k) withdrawals or applying for early Social Security. Remember the adage about an ounce of prevention? Ask for the facts before such an event leaves you with limited choices.