May 20, 2019

Unplanned Early Retirement?

How to bridge the gap between when your paycheck stops and Social Security starts.

Key takeaways

  • Review your essential and discretionary expenses.
  • Make smart use of unemployment and savings, severance, or disability money.
  • Formulate a withdrawal strategy that is sensitive to tax considerations.

For some, retiring early is a dream. But for those faced with an unplanned early retirement—they are laid off late in their career or have a medical disability—it may be a different story, especially if you are not yet eligible to claim Social Security beginning at age 62.

“Many people plan to work well into their 60s, but the reality is that you don’t always have control over when you retire,” says Ken Hevert, senior vice president of retirement products at Fidelity. “That’s why careful planning is so critical if you find yourself in this situation, especially when it comes to timing your Social Security benefits.”

The good news is that there are ways to help bridge the gap between when your paycheck stops and when you start taking Social Security—or go back to work.

While you may be eligible to begin taking Social Security at age 62, that might not be the best decision, even if you aren’t working. That’s because after you reach age 62, every year that you delay taking Social Security (up to age 70), you could receive up to 8% more in future monthly payments. (Once you reach age 70, increases stop, so there is no benefit to waiting past age 70.) Also, delaying your own Social Security may increase your spouse’s survivor benefit.

If you find yourself unintentionally retired for any reason, first use the 3 key steps outlined below to assess your situation and income options. Then, take a look at 2 “bridge” strategies—one if you are disabled, and the other if you are laid off. Important note: If you’re in this situation, you’ll be making significant financial decisions and should consult with a financial advisor, like us here at Blue Ocean Strategic Capital, LLC.


To read the original article, please visit Fidelity Viewpoints.