Retirement: the wonderful time of life when you no longer have to work for your money. Instead, your money is finally working for you. If you’re well on your way to retirement, kudos to you.
Today, more Americans are retiring than ever before.
According to the Alliance for Lifetime Income (ALI), 2024 marks the start of the “Peak 65 Zone” which is the largest surge of retirement-age Americans turning 65 in U.S. history. Over 4.1 million Americans will turn 65 each year through 2027 — that’s more than 11,200 every day.
However, if you’re planning to retire as soon as next year, there are several reasons why your current retirement plan may not be sufficient, according to GOBankingRates and The Motley Fool.
You Don’t Have Enough Money Saved
If you haven’t saved enough money, this is the first sign that your current retirement plan is not sufficient. As a general rule of thumb, it’s advisable to save 10 to 15% of your income annually during your full-time working years (more if you can). If you started saving too late, you would have needed to save an even higher percentage of your income to be on track for retirement.
If you’re not sure, check out Fidelity’s retirement calculators to figure out how much money you’d need to retire comfortably next year and whether you’re actually on track to do so.
You Have Too Much Debt
If you still haven’t paid off your mortgage, you still have student loans to pay off or you’re deep in credit card debt, it may not be the best idea to retire next year. Debt burns a hole in your wallet and makes it difficult to save and invest money. Focus on reducing and eliminating your debts now before you enter your golden years.
You Aren’t 59 1/2 Yet
According to the IRS, in 2024 the earliest you can withdraw funds from your 401(k) without penalties is age 59 1/2. If you choose to withdraw funds before this age, you’ll be subject to a 10% tax on any distributions. You may be exempt from the 10% tax under certain circumstances such as becoming disabled or if you’re using the funds for qualifying medical expenses. Otherwise, you’ll end up spending a lot more of your retirement fund, which could mean that your money doesn’t last for the rest of your life.
https://finance.yahoo.com/news/why-current-retirement-plan-may-130049890.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAJjqY86iwgc6ACkf1KF-caeTxlfdaaoxcCGh5cLmQZRLImki4uvhteZQsrY0HPg4BO-DjRRPZl6eBp_03IBvJMUeWSPmSrngeKAaean2HaxX0soj8o80OWnl2tlxoasYwKNXG5V8QxxgFGaNmsrlE4odznuLzclPSFkPHQRVJgeN