The Exchange Theory of Aging
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Early retirement is a term that has more than one meaning. Early retirement can refer to the age an individual can start to receive Social Security benefits. The term can also refer to the practice of retiring before reaching an employer’s official retirement age. As applied to Social Security, early retirement refers to the practice of retiring before reaching 65. Individuals who wish to retire early can start receiving their Social Security benefits after turning 62. However, when individuals start to receive their benefits before the age of 65, their benefits will be reduced a fraction of a percent for each month before their full retirement age. Thus, as a general rule, early retirement will provide about the same total of Social Security benefits over an individual’s lifetime, but they will be paid out in smaller amounts. The advantage to early retirement is that an individual can collect benefits for a longer period of time. The disadvantage, however, is that the individual’s benefit is permanently reduced. As stated, when applied to an individual’s employer, early retirement refers to the practice of retiring before reaching the employer’s official retirement age. Many businesses offer early retirement packages meant to encourage employees to opt for early retirement. For example, a company may offer a package that includes an enhanced pension or up‐front lump‐sum payments. Many individuals dream of an early retirement. However, early retirement often requires that the individual manage his or her expenses. This includes either reducing or eliminating debt. Individuals who wish to retire early must also invest wisely, save, and accumulate capital. Early retirees are often super‐savers that put away at least one‐third of their income. It is also common for early retirees to have no children, own their home, pay off their credit card charges monthly, and have a history of living simply. When deciding whether to retire early, the individual must weigh different considerations. For example, individuals must consider whether they enjoy going to work every day and whether they can afford to go without their current income and/or job benefits.
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Springer-Verlag Berlin Heidelberg 2008
Health insurance is important. As Medicare does not provide coverage until an individual turns 65, individuals should consider what health insurance is available to them. By retiring early, a retiree will suddenly find himself or herself with a lot of free time. The individual should consider what he or she would like to do with this time and whether he or she can afford to do these things. Early retirement can be a double‐edged sword. While an individual may love the idea of being free to spend every day engaging in his or her favorite activities, the reality of early retirement may turn out to be completely different. Therefore, before choosing early retirement, individuals have to examine what they do for a living, their relationship with their employer and co‐workers, the amount of money they make, and whether they can live with
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