Should I Retire Early?

Americans are choosing to retire early.

Economists Olivier Coibion, Yuriy Gorodnichenko, and Michael Weber associated with the National Bureau of Economic Research (NBER) have been comparing data gathered in January and April 2020 to learn how labor markets were affected by the crisis.1

They shared their work in Labor Markets During the COVID-19 Crisis: A Preliminary View. The economists reported the employment-to-population ratio declined sharply from January to early April. In January, 60 percent of Americans participating in a survey were working. By early April, that number had declined to 52.2 percent. The authors explained:1

“…this decline in employment is enormous by historical standards and is larger than the entire decline in the employment to population ratio experienced during the Great Recession…

…we see a large increase in those who claim to be retired, going from 53 percent to 60 percent. This makes early retirement a major force in accounting for the decline in the labor-force participation…

…for each part of the age distribution, a larger fraction of the survey population now claims being retired. Hence, even for those that are well before retirement age, we see a large increase in early retirement. Moreover, a notable jump in the difference occurs at age 66 which is the first year people can claim retirement benefits without penalty from the Social Security Administration (SSA).”

Some issues to consider

It’s not difficult to understand why Americans are considering or pursuing early retirement. During the past few months, many have become comfortable at home. In addition, the risks associated with many types of work in the midst of the COVID-19 pandemic are unappealing. It’s possible companies, which are offering early retirement packages to reduce overhead, also contribute to the decision.

Before deciding to retire early, anyone contemplating that course of action should carefully consider these issues:

  1. How much will health insurance cost? For anyone too young to be eligible for Medicare, health insurance is a serious concern, especially during a pandemic. Options available to younger Americans include:
  • A spouse’s employer-sponsored plan. People with employed spouses may have the option to participate in their partners’ employer-sponsored health plan.
  • Federal Health Exchanges. Open enrollment for 2020 is over, but people who are newly out-of-work may qualify for a special enrollment period.2
  • Continuation of health coverage. The federal government requires companies with 20 or more employees to offer health coverage identical to that offered to an employee while employed. This option, known as COBRA, can be quite expensive.3
  1. How much income will Social Security benefits provide? Anyone who was born after 1960 has a full retirement age of 67. It is possible to claim Social Security benefits early though, after age 62. Early claimants typically receive lower monthly benefits. For example, a person who would have received $1,000 a month (full retirement benefit) at age 67 and decides to retire at age 62, may receive $700 a month, reports the Social Security Administration.4
  2. How much income will your savings generate? It’s important to assess how much income your retirement and other savings will provide if you retire early. Sources of retirement income may include benefits from pension plans, distributions from 401(k) plan and IRA accounts, withdrawals from non-qualified savings accounts, and income from Social Security benefits. Some people have other sources of income as well.

If you need help deciding how much income to safely withdraw so you don’t run out of money during retirement, or you’re uncertain which accounts to tap into first, get in touch with financial professional.

  1. Can you take withdrawals without owing a penalty tax? When people take distributions from 401(k) plan accounts, IRAs, and other qualified savings plans before age 59½, they may owe penalty taxes – and that can lower the amount of income their savings will generate over the long term.

The CARES Act made it possible for plan sponsors to loosen these restrictions temporarily. As a result, retirees who are younger than full retirement age may be able to take distributions without paying penalty taxes for a limited period of time.5

Contributions to Roth IRAs may be withdrawn at any time tax-free and penalty-free at any time, as long as certain requirements are met. However, when earnings are distributed before age 59½, taxes and penalties may be owed.6

  1. How much tax will be owed each year during retirement? The amount of tax owed may vary from year-to-year depending on the distribution strategy adopted. Also, the amount of income taken each year may affect the tax status of Social Security benefits.7
  2. What does the company’s early retirement package offer? If your company offers an early retirement package, evaluate it carefully. Be certain you understand exactly what is included. The possibilities include:8, 9
  • Severance pay
  • Salary continuation
  • Bridging payment
  • Pension lump sum payout
  • Health insurance coverage
  • Life or disability insurance coverage
  • Any accrued vacation
  • Any unused sick leave
  • Outplacement services

In addition, ask about the consequences of not accepting the package. If your company is in financial straits and early retirement is an effort to remain solvent, it’s possible you may experience a layoff with less generous benefits in the future.8

If you think early retirement may be the right choice for you, let us know. We’ll help analyze your Social Security and Medicare options so you may make an informed decision. We can also help you understand investment, cash flow, and tax planning choices, so you are confident about your retirement decision.


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This material was prepared with Carson Coaching. Carson Coaching is not affiliated with the named broker/dealer or firm.

Midyear Outlook 2020: The Trail to Recovery

LPL Research’s Midyear Outlook 2020: The Trail to Recovery, provides investment insights and market guidance for the year ahead in a digital-friendly, printer-friendly format.

Digital version 

Printer-friendly version

Market Signals Podcast:
The LPL Research strategists discuss the new Midyear Outlook 2020: The Trail to Recovery with insights on charting a path to eventual economic and market recovery and updated forecasts for the rest of 2020.


Digital Assets

How many password-protected accounts do you have?

If you keep mental inventory, use a password manager, or have a written record of your passwords (which is not recommended by anyone), take a quick count. You’re likely to find you may have some or all of the below types of accounts:

  • Email accounts
  • Online bank accounts
  • Online brokerage accounts
  • Online shopping accounts
  • Online bill paying
  • Social media accounts
  • Photo and video sharing accounts
  • Gaming accounts
  • Online storage accounts
  • A website or blog
  • A domain name
  • Materials and coding that are copyrighted

These are digital assets. They are part of your virtual life, as is any digital property you own, such as computers, external drives, storage devices, smart phones, digital cameras, e-readers, and other devices.

Digital assets should be part of your estate plan

Unless you live off the grid, it’s likely your digital life will outlive you and become a part of your legacy. Your digital assets may have significant financial or personal value for your heirs. Consequently, you should give some thought to how these assets should be managed after your death.1

The catch is digital estate planning can be tricky. Many digital accounts and assets cannot be transferred to a new owner because they are not your property. Assets that fall into this category are subject to contracts and licensing agreements established with a service provider.1

For example, if you’ve spent significant sums accumulating a virtual music library, you may not be able to pass it on through a will or another estate planning tool because you do not own the digital music files, according to This may also be true with other types of accounts.1

“Social network accounts, domain name registrations, email accounts, and most other types of online accounts are ‘yours’ by license only. When you die, the contract is over and the business that administers the account controls what happens to it,” explained Betsy Simmons Hannibal on

This doesn’t mean you have no control over what happens to these accounts. Your estate can leave instructions about account management and should provide a complete record for your executor. Jeffrey Salas offered an opinion about best practices on He recommended:2

  1. Checking the account providers’ Terms of Service/Terms of Use. Work with your estate planning attorney and the digital executor you’ve appointed to review requirements for different types of accounts. For example:
  • Leave usernames and passwords for any online financial accounts – banking, utilities, brokerage, mortgage, retirement plan, life insurance, tax preparation, or others – to the executor as they will need this information to pay bills, close accounts, and administer your estate.1
  • Social media companies have diverse policies regarding the management of digital assets upon the death of the user. Some delete or deactivate accounts after being notified of a death. Others put accounts into ‘memorial’ status.1
  • In general, companies will not know about the death until they’re notified. As a result, a digital executor who is armed with passwords may be able to access your account to post final updates, delete items (per estate instructions), or delete/deactivate accounts.1
  • Email accounts, online communities, and blog management may also be guided by provider agreements. However, your executor may be allowed to notify friends or followers of your death and then delete, print, or archive your communications.1
  • Digital photos that are stored online may be passed on through a will or another estate planning tool.1
  • If you have one or more websites, domain names may have value and they may be transferrable.1
  • If you have an online store, you may want to leave instructions about what should happen to the store, the items for sale, and any income or profits that may continue to arrive.
  1. Add language regarding digital assets to your will and/or trust. Currently, there is no uniform federal law to guide the management of digital assets.2 At the start of 2017, Kiplinger reported, “Federal law regulating access to digital property does not yet exist. At this time, 29 states have established legislation or laws to protect digital assets and to provide a deceased person’s family procedures and rights to manage those accounts and assets after death.”3

Regardless, it can still be a good idea to include language that specifies your wishes for the treatment of each of your digital accounts.2

  1. Check the law in your state. Talk with your attorney or advisor about whether any laws your state has that apply to digital assets, and make sure your estate plan is consistent with these laws.2

While estate and inheritance laws are behind the curve when it comes to digital assets, it is important to inventory your digital assets and decide how they should be managed upon your death. If you would like additional information about estate planning, please give us a call.





This material was prepared by Carson Coaching. Carson Coaching is not affiliated with the named broker/dealer.