4 Things to Consider If You Retire Early

Society tells us the desirable age to retire is 65 years old. However, more young adults are making it their goal to retire early.

Whether you’re retiring early to pursue passions or to enjoy personal time to travel, retiring takes time and planning.

Before you send in your two-week notice and withdraw cash, here are four things you should consider before retiring early to help you plan accordingly and make smart financial decisions.

Your Post-Retirement Lifestyle

Your current lifestyle can significantly impact your retirement expenses and lifestyle. Early retirement filled with expensive habits and hobbies requires more focus on saving.

It would help if you shared a detailed lifestyle outline with a professional financial advisor. Consider which habits cost the most and what habits you can reduce.

Strategy for Retirement Savings

Early retirees have fewer years of working, which means they have less time to save for their retirement than someone who worked for 40 to 50 years.

For that reason, you should have a strategy to save retirement money. You should set up a self-directed retirement account and contribute the maximum yearly.

Working with financial advisors to help create a plan for you is essential.

Sources of Income After Retirement

It’s always wise to have multiple income streams, especially if you retire early. If you retire before the age of 59.5, then you can’t tap into your 401(k) or claim your social security.

So if you decide to retire early, you should have a side hobby or business for additional income.

Put a portion of this extra cash into an emergency fund that can last you through retirement or use that money to pay off any debts or bills.

How To Cover Your Medical Expenses

Health care planning is different for someone who retired early. Many early retirees are not covered by employer-sponsored health insurance and are too young for Medicare.

When you retire early, you should consider how you will pay for health expenses and what coverage you can afford.

You must remember that you’re paying out of pocket for monthly premiums and additional fees.