If you’re over 30 you should’ve started at least thinking about retirement. If you’re really motivated, you should not only be thinking, but also planning for early retirement. As far as I know, everyone wants an early retirement. However, if you’re lucky enough to save for one, should you really take it? Let’s look at some of the questions you should ask yourself when planning for an early retirement.
Do I have enough money saved to retire early? This is perhaps the hardest question to answer. Personally, I can run through hundreds of calculations and scenarios and still not feel comfortable that I would have enough money to retire comfortably. Be conservative when making this calculation and add a cushion of safety to your retirement savings goal to make sure you really do have enough money to retire.
What kind of lifestyle do I need to support? Are you planning to travel a lot? Buy a vacation home? Get a second home or apartment next to your children? Move into a retirement community? Buy a motorhome and tour the country? Dine out every night? Whatever lifestyle you think you’d like to live during retirement should be taken into account and factored in to your retirement goal.
Am I mentally ready to retire? Many people define themselves by their jobs, and feel a sense of accomplishment and worth from their career. Are you really ready to retire early? Maybe you just need to take a month or two vacation or leave of absence to get some of the retirement desires out of your mind.
What will I do when I retire? Do you have hobbies? Do you get bored easy? Golf and travel only take up a small percent of your time during retirement. Make sure you have plenty to do to keep you busy. If not, start looking for clubs, charities or events to join.
Am I prepared for the unplanned? Part of plannig for early retirement, or any retirement for that matter, is planning for the unplanned. Bad things happen to a lot of people. And they are almost always expensive when they do happen. Whether its your employer taking away insurance benefits, a drop in pension or social security benefits, high inflation, or unforeseen medical expenses for you or someone in your family, make sure you have factored in a cushion or bought insurance to protect yourself from the unplanned.
What are the benefits of retiring later? While retiring early can be rewarding, waiting can be very prosperous. For example, retiring a few years later can boost your monthly social security payments by almost 50%. It can also boost any pension you may recieve, allow you to save more money for retirement, and allow your retirement investment portfolio to grow even further.