Five Things to Consider When Retiring Early
Retiring early sounds like a dream for some people. Sleeping in, sipping coffee without a clock ticking, and finally finishing that novel you started in 2007. But before you hand in your resignation and start planning brunch dates, there are a few things that you should be thinking about first. Early retirement can be amazing, but it can only be amazing if you plan for it. Here are five key considerations to make to ensure that your golden years stay golden.
Money, money, money.
This is a biggie. Retiring early means that your money has to last longer and you won’t have that steady paycheck coming in. Take a close look at your savings, your investments and any passive income streams. Some people also ask themselves how much life insurance do I need at this stage to make sure loved ones are protected, especially if you’ve got debt or family depending on you. It’s not a glamorous thing to think about, but knowing your numbers is essential.
Healthcare costs.
When you retire before your employer’s health coverage ends, insurance becomes your responsibility. Medical bills can add up quickly, especially as you get older, so budget for regular check ups and medications and unexpected emergencies. It may not be as fun to think about as beach days, but skipping this step is like going on a road trip without gas. It can absolutely ruin everything.
Lifestyle choices.
Early retirement is great and all if you enjoy it, but ask yourself how you plan to enjoy it. What do you want your days to look like? Will you travel? Take up new hobbies? Volunteer. Start a small business? Lifestyle planning helps you to estimate your costs realistically and ensures that you won’t get bored or feel restless. Retirement is about living on your terms rather than just stopping work.
Inflation and long-term planning.
Your money today will not stretch as far as it will in 10, 20, or 30 years. Inflation is sneaky, and it quietly eats away at savings if you’re not careful. Make sure that your investments are structured to grow over time and think about potential changes in the economy. The goal here is to keep your purchasing power strong so that you can enjoy retirement without constantly worrying about the pennies.
Social connections and purpose.
Work often gives people structure and routine, but it also gives them social interaction opportunities. Leaving it early can feel liberating, but can also feel isolating if you don’t plan accordingly. You need to think about ways that you can stay engaged with people and connected to others while being mentally active. Clubs, volunteering, classes, or even part time work keep you sharp and fulfilled. Retirement is a phase of life, not a vacation from living.
Early retirement is a very exciting goal, but you do need to think about it and prepare properly. You don’t want your health, your money or your lifestyle to take a nosedive. Take the time to plan carefully, and your early retirement can be one of the smartest and most enjoyable decisions that you ever make.
