“Great Resignation” Leads to the “Great Retirement”

The pandemic has had a profound effect on many employees. Many Americans wanted to explore new career opportunities that offered more money, flexibility, and often a shorter commute, while many others simply chose an early retirement.

In fact, of the 5 million people who left the labor force during the pandemic, 2.5 million people retired. Of that 2.5 million, roughly 1.5 million were early retirements.¹

The reasons people retire early vary. According to a 2019 Retirement Confidence Survey, 43% of respondents said they retired earlier than they had planned. The reasons are included in the chart to the right.

If you or someone you know has retired early, or you are planning an early retirement, here are a few things to consider:

Receiving Social Security

The retirement age when you can start receiving full Social Security benefits depends on when you were born. You can start taking Social Security at age 62 but your benefit amount will be smaller throughout the duration of your life. You can expect that your monthly benefit may be reduced by 30% if you begin receiving benefits at age 62 . If you wait until age 70 to receive your Social Security benefits, your amount will be much higher. (For more information, please visit www.ssa.gov/benefits/retirement/planner/agereduction.)

Review Your Healthcare Options

It’s important to understand your healthcare options and costs if you are younger than 65 — the age you become eligible for Medicare. If you do not have access to a spouse’s healthcare plan, then COBRA (Consolidated Omnibus Budget Reconciliation Act) could be the next best option. You are eligible for COBRA if you were enrolled in your employer’s health plan when you were working and the health plan is still available for active employees.

Reevaluate Inflows and Outflows

You may soon be transitioning from receiving a regular paycheck to partially relying on your savings to cover bills. Aggregating your retirement and/or investment accounts can help define the amount and where the money can come from. An updated budget will help provide insight on the amount of any anticipated shortfall.

Understand Potential Tax Consequences

Investing in a retirement account can offer tax-deferred savings and are excellent ways to build up your nest egg over time. However, there may be potential tax consequences if you withdraw the funds too early. Alternatively, you may want to plan on using other sources of income from non-retirement assets.

Speak with Your Jemma Financial Advisor

Planning on retiring sooner than expected? Working with your Jemma Financial Advisor can provide you with a roadmap on how to navigate this new journey.

1. “Goldman just figured out why the labor shortage will last for a long time: 60% of the missing workers retired, many for good,” businessinsider.com. 2. ssa.gov