Have You Planned for Early Retirement
A Few Reasons to Consider When Planning for Early Retirement
Early retirement is desired by everyone, but can you achieve it? And if so, do you really want it? These are the questions to ask when planning for your early retirement.
Do I have enough money to retire? The most important thing to question is whether or not you have enough money saved to retire early. To perform rough calculations of how much money you may need, visit our pages on retiring early and our retirement calculator. The calculators and charts can give you an estimate of how much money you'll need, but they are based on your estimates. The earlier you want to retire, the bigger cushion you'll need in your retirement savings in order to reach your goals. Also, the more money you have saved, the better you'll sleep at night during retirement. After all, once you retire from your job, it is going to be very difficult to find another job that would pay anything close to your old job.
Do I want to retire? This question may seem a little ridiculous, but many people retire only to find out that they weren't ready. Think about how you define yourself and what you will do during retirement. If you really want to travel, remember that you will probably only travel for a few months before you get tired of it. If that's the case, you could consider asking for unpaid leave for a few months to travel and then see if you still have the strong desire.
What will I do during retirement? Similar to the above question, you should ask yourself what you're going to do during retirement. Golf and travel only take up so much time. Do you have other hobbies? Do you want to volunteer your time to a charity? Spend more time with family? Fish? Woodwork? Whatever it is, make sure that you have things planned that will be a real use of your time. Once you retire and get bored it will be too late to go back.
Where will I live? You may want to move to a warm weather coastal area to retire. This can be expensive. Not just in housing costs but everything costs more in these tourist areas. Maybe you'll want to buy a second home next to your children and grandchildren. Or maybe you'll want to move to a retirement community. Do your research now and find out if it will be more or less expensive than your current home. And when you get old and need assisted living, it can also be expensive. You can probably use money from selling your house to cover your assisted living expenses, but think about your spouse and how much safety cushion you may need for future living expenses.
Have I planned for the unplanned? Terrible things happen. And they are almost always very expensive. Here are some of the common bad things that happen to people all the time.
- Your employer drops some or all of your healthcare coverage.
- Your pension payments are reduced.
- Social security is reduced or does not keep up with inflation.
- An illness that requires long term care or other expensive treatment strikes you, your spouse, or someone else in your family that you need to help pay for.
- Your kids get into financial trouble and need to be bailed out.
Make sure that you have enough money in your nest egg to cover these expenses. If not, you may want to buy insurance against some of them (like long term care insurance).
See Also: Free Retirement Advice
