Early retirement can be to retire at age 55 but before you go into such an early retirement, there are some things you should consider that people who retire later will not have time to think about. Let’s see some of the things you need to consider if you are really serious about an early retirement:
Longevity – For someone retiring at an early age, such a person should have assets that will produce more income for a longer period. This is to take care of the remaining time such person should use at work. To do this, you need to calculate and assume the total amount you will spend each year. You can then compare this with the income you will be getting from your assets. You will not have access to Social Security until you the age of sixty-two and there are restrictions and penalties for accessing your retirement money before the age of fifty-nine and a half. This means that you will need other sources of income to sustain you for a few years.
Health Care Costs – Please note that your health care will not be covered by Medicare until age sixty-five. If you are planning on retiring earlier, you should have an alternative source of income that will cover your health insurance before you are eligible for Medicare. Medicare is very useful and helps people pay their health expenses. You may find these expenses very expensive if you are retiring early – depending on the health plan you choose; the health care cost is between $400 to $1,000. Many early retirees are shocked when they hear their health care costs; little did they know that their current employer is paying 75% or more of their health care cost when they are in service. Plan very well for this or simply add a part-time work with a health insurance policy.
Retire free of debt – The best time to retire, according to advisors’ counsel clients, is when you have little or no debt to pay. Before you begin your retirement, make sure that you have no credit card debt or any other form of debts and that you have paid down your mortgage. If you still have a larger portion of your mortgage pending and you are entering into early retirement, you may want to push back your retirement. A successful retirement can be hampered or derailed by paying more debt from your hard-earned income. Calculate your nest egg and see whether it will support your lifestyle or not (and whether it will care for the little debt you have or not). This will give you a clue to whether to retire early or not.
Filling Up Your Time – For you to think about early retirement, think about what you will like to do with your time and money. An extended vacation may sound nice but the experience may not be as fulfilling as you thought it would be. If you don’t like taking vacations, you might think of starting a small business. One-fourth of all startups are entrepreneurs in the age range of 55 – 65. You may also want to volunteer or help to raise your grandchildren. Whatever it is, think of what to do with your time and money before going into early retirement.