Should You Retire Early? September 26, 2014My LifeOff

Retiring early is a lofty goal that most people probably haven’t considered, but it will still be an option for some. People are living longer, but are also choosing to retire younger than ever before. But just how early is early? Jeff Curie, an advisor for Icon Financial Services in Boise, Idaho, said “In most cases, the early 50s is about the most realistic and early I have seen. It usually involves an inheritance to boost a person’s normal assets.” Whether you’ve got this extra boost or not, an early retirement could be possible for you.

Being Ready: Financially and Emotionally
When considering an early retirement, there are two main areas you’ll need to focus on: your finances, and your personal, emotional life. Let’s deal with the money situation first.

Your expenses will obviously change when you retire, and you’ll need to be prepared for this in as much detail as possible. It’s a good idea to create a ‘retirement budget,’ which factors in all of your income and your predicted expenses while being retired. Will you be receiving a pension? Are you going to go for Social Security, which now begins at age 62? Do you have debt to consider, and what are your savings like?

Put as much detail as you can into your retirement budget, and then try an experiment: live on that budget for 6 to 12 months, and then re-examine your situation. Does it work as well as you expected? What surprise costs have sprung up, and where are you saving money you thought you’d have to spend? Adjust your plan to fit what you’ve learned. This is a great way to get a financial taste of retirement, to see if your bank account and lifestyle can handle it. If you’re coming out on the low end, consider some financial tools used by retirees, such as investment rewards credit cards which funnel your earnings into an investment account.

With retirement on the horizon, most people become concerned about their finances, but this is not the only important aspect. Too many people don’t take their emotional lives into account along with their bank balance. Ask yourself honestly: are you ready to quit working? What will you do when you don’t have to work? (Or at least work at your current job?) If you don’t have some concrete plans to keep yourself physically, mentally, and emotionally active, you might find yourself wishing you could go back to work just so you have something to do.

The key to a successful early retirement is preparation. If you’re thinking about getting ahead of schedule yourself, try putting your info into an early retirement calculator to see how you do.

By Brendan Harkness
Photo by Andrey Popov

 

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