Early retirement might seem like a dream. But it’s one that you can probably achieve. Retire at 48, 50? 55? 60? Why not!
If an early retirement intrigues you, this article is not intended to slow you down. Where there is a will, there IS a way. Use the NewRetirement Planner to find your path to the early retirement you want.
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Here are 7 things to do now to achieve your secure and happy early retirement.
#1: Plan what you need (and want) to spend in retirement
Do you need $1 million to retire? Definitely NOT. Well, maybe. The truth is, you won’t know until you figure out how much you need (or want) to spend.
You see, you can’t know how much in savings you need until you know how much your lifetime retirement expenses will be. Remember that what you want to spend in your first year of retirement will be very different than in later years.
The most important thing you can do right now is to think through a detailed future budget.
One of the most useful and unique aspects of the NewRetirement Planner is that the platform helps you create a detailed future budget. Vary your income and expenses over time. Afterall, it is likely that what you spend will change dramatically for different phases of retirement. The platform even enables you to track your necessary expenses separate from your desired expenses.
By plotting how much you need (and want) to spend, the NewRetirement Planner gives you a personalized answer about how much in savings YOU really need for an early retirement.
#2: Don’t forget healthcare
Healthcare is the third biggest expense in retirement and will cost the average 65-year-old couple almost $300,000 in retirement — not even including long term care, if needed.
No one wants to retire feeling like they can’t afford healthcare. And insurance is even more expensive if you are retiring before you qualify for Medicare.
The NewRetirement Planner will help you estimate your personal costs and visualize when they might occur.
#3: Boost your savings rate
Alarmed by how much in savings you might need? You might be surprised by how much you can save when you are a few years from retirement.
Cut expenses, consider a side gig, explore ways to create passive income, save all tax returns, bonuses, and other surprise money. Once you have an early retirement in your sights, it becomes much easier to save more.
You can do this.
Okay, let’s say you’ve bumped your savings up, but are still short for what you think you need for an early retirement. It’s not a problem, you’ll just need to figure out where you can compromise.
Now is the time to get creative and make trade-offs. Here are a few areas where people often make a prioritize in order to retire early:
Housing
Housing may be a big opportunity to cut costs and retire early. Can you downsize and release home equity that could be used for an early retirement? Use the NewRetirement Planner to run scenarios for downsizing, refinancing your mortgage, renting out a room in your home, and more. What about retiring abroad?
Starting Social Security
Starting Social Security as soon as you retire might not be your best financial decision. You will likely get a bigger lifetime payout — and a more secure retirement — by waiting.
One of the tools in the NewRetirement Planner is the Social Security Explorer. Find your optimal time to start.
Revisit your work and spending plans
If your savings accounts aren’t quite ready to fund a long life, you might want to simply expand your definition of retirement.
You see, you don’t necessarily need to stop working to retire early. Many retirees work part-time. Others find a less stressful job they really love. You have loads of options. Could you start your own small business? Have you considered taking a sabbatical then going back to work?
Use the NewRetirement Planner to run scenarios for retiring early — cold turkey — and scenarios continuing with some kind of work.
Revisit spending
As discussed above, you have options for an earlier retirement if you can cut expenses now or at some point in the future. Consider where you can compromise.
#5: Married? Get on the same page as your spouse
Research suggests that only 38% of couples jointly discuss their strategies and vision for retirement. Um… If you haven’t yet, it is time to get on the same page.
These conversations can be difficult. Try sitting down together with an online retirement planning system. This is a great way to formulate a plan that you both can live with.
#6: Understand how you want to turn your assets into income
Retirement turns your finances upside down. You go from working and saving to leisure and spending. It can be tricky.
What many people find most difficult is figuring out how to safely withdraw from savings without running out.
The NewRetirement Planner can help you visualize your withdrawals and give you personalized strategies for making your money last.
#7: Know what you want to do next
Money is a big part of your ability to retire early.
However, how you want to be spending your time is maybe an even more important consideration.
They say that no one ever reached very old age regretting the things that they did. What’s regretted are the things not tried, the chances not taken, the dreams left dusty and neglected on a shelf. If you are able, retiring early can give you many years to seek out that dream and really enjoy it.
Besides, to stay mentally, emotionally, and even physically healthy in retirement, you need to retire to something — not just away from your job.
The NewRetirement Planner will help you figure out how to have a wealthy and secure early retirement. How you want to spend that time is entirely up to you.
Plan your early retirement
