Retirement Considerations

History

After the Great Depression, Congress and President Franklin D. Roosevelt saw the need for a retirement system that would provide Americans with an income in old age. The Social Security retirement system, developed in 1935, was the result. Regulations have changed over the years, but the Social Security Administration estimates that about 96 percent of Americans participate in the Social Security retirement system. Many individuals covered by Social Security also have a pension plan, a 401(k) retirement plan, an investment retirement account and a savings account to assist in retirement years.

Retirement often begins at age 62 for early retirees, who accept about 25 percent less income each month in Social Security benefits than those who wait until full retirement age. Full retirement age under Social Security regulations for those born between 1943 and 1954 is age 66, as of October 2010. Social Security benefits reach the maximum at age 70.

You may retire from full-time employment as early as age 62 to enjoy your golden years. Since Social Security provides about half of the income needed for retirement, you must consider other sources of income to supplement their new lifestyle. Your daily needs may cost less with this pared-down lifestyle and expectations. You can work at a hobby or part-time job for additional income and still have flexibility for travel and other recreational activities.

As a retiree, you'll have more time to socialize, as well as the freedom to travel or pursue a hobby. With sufficient income or a means of support thanks to Social Security, pension plans or investments, and part-time employment, you can do whatever you can afford. Since employment is no longer your focus, you can turn to friends and family or to senior groups for socializing.

You need to make plans for a healthy lifestyle as a retiree, including making exercise and a healthy diet a priority. Consider scheduling regular exercise, such as walking with a friend or a local senior's group. Mental health is equally important --- too much free time can be overwhelming or depressing when you first retire. In addition to Social Security, seniors in the United States have Medicare once they reach age 65 to cover about 80 percent of the expenses of most medical care. You may need Medigap coverage for the 20 percent not covered by Medicare.

If you hope to economize and live on less, your location may be important. Federal taxation is the same in every state, but state taxes are different. You may want to review sales tax and property tax for any new location you're eying for retirement. Consider whether that state taxes Social Security benefits, too.