The gap between retirement and "retirement"

A lot of people are stuck without work before age 59 1/2

This week, former NPR and Al Jazeera anchor Ray Suarez wrote about his financial situation on

Oldster Magazine

. For years, he made good money, did things that seemed responsible with it, and then found himself forced into retirement at the start of the pandemic, when he was 63.

High earners like Suarez can fall into the trap of assuming that they can work longer at their high-paying job than their employer wants them to. They figure that working longer will allow their retirement accounts to grow and that the paychecks from the last few years of work can fund even larger retirement savings. Suarez worked in a field where a lot of people keep their jobs well into their 70s, so it seemed reasonable for him to assume that he had some time. But “reasonable” and “certain” are very different things.

This is especially true for people also paying for their children’s college education. The biggest raise you’ll ever get is when your youngest child graduates. So many people make the calculation that once their kids are out of school, they can focus on saving big bucks.

But what if you lose your job?

• For the most part, you can’t withdraw money in your retirement accounts until you turn age 59 ½ without paying tax penalties.

• You can’t start taking Social Security until age 62. Of course, it’s better to wait, both to receive a larger monthly payment and have more years of income to calculate your benefit.

• Medicare, America’s national health insurance plan, doesn’t kick in until age 65.

• The ACA health insurance marketplace has subsidies that favor people with little or no earned income, such as early retirees, but that doesn’t help people who take on freelance gigs or part-time work.

All of this means that early retirement, by choice or by force, carries very real costs in addition to the income given up by not working.

My best advice is to prepare for the worst while hoping for the best. If your retirement account is close to fully funded, start putting money in regular, taxable accounts that you can draw on without any penalties or restrictions. Remember that you might not control your retirement date.

Early retirement can be especially expensive, not to mention surprising. But it’s the reality that many Americans find themselves in.

What would you tell Ray Suarez to do?