Will you be ready to switch direction when the time comes?
You might not earn as much as a professional athlete, but if you want to retire early you could face some of the same challenges. Traditional retirement planning advice doesn’t lean toward deliberately short careers and long retirements. It’s usually just the opposite.
So if you’re a high earner and do want to leave the workforce early, here is how you can stretch your dollars and use them wisely.
Determine What You’ll Need to Retire
Retirement plans seem to all begin at the beginning, and that’s with determining need. Unlike many pro athletes, you’re fully aware that retirement isn’t far away. But like those same athletes, you still might not have a defined goal.
The only way to retire early is with a goal that’s been met. The longer you’ll be in retirement the more retirement income you’ll need. So start with a retirement calculator, and that will give you a number to aim for.
Piggy Should be Your Best Friend
Ditch Bad Habits Now
Most professional athletes come into their fortunes at an age that’s so young they haven’t yet developed any money management skills. Spending is easy, especially when there’ s a seemingly bottomless pool of wealth. Jay Liberman, financial advisor with RBC Wealth Management, tells Forbes that sustainable income means learning to manage money, and fast.
While your wealth might not be bottomless, high earners whose income is more like 6 figures instead of 7 also sometimes fall into the trap of spending more than they should. If you want to retire early, you’ll have to curb that habit soon. Saving, not spending, should be the most important thing that you do. Stretch your money with pre-tax savings, such as a Roth, suggests Erik Carter for Forbes.
With a longer retirement lifetime ahead, you’ll need the guidance of someone who knows the waters better than you do.
Learn to Live on Less Now
One of the biggest pitfalls that pro athlete financial advisors see is a lavish lifestyle that’s completely unsustainable. Without enough time to build wealth for retirement income in safe investments, relying on the short term burst of wealth to last through retirement means a major lifestyle adjustment.
If you plan to retire early, you’ll need to invest more safely, too. Although you could go back into the workforce to offset a loss, that defeats the purpose of retiring early. Learn to live on less now to create a lifestyle that your savings and investments can sustain later.
Work with a Financial Advisor
If any professional athlete or average person who just wants to retire early needs anything, it’s the guidance of a good financial advisor. When you spend a lifetime planning, you have a lifetime to learn valuable financial lessons. But if you want to retire early, it’s crunch time.
Bradley recommends working with a financial advisor who has a great reputation and lots of experience. You don’t need an advisor who is just getting his feet wet, too. Not when you’re counting on him to know the best ways to use your money to plan a sustainable retirement income.
NewRetirement helps people from all walks of life and different types of retirement plans meet their goals. Whether you’re a million dollar athlete or something more modest, your plan begins with knowing what you need to retire. And that begins here, too.
Check out our retirement calculator, and see how quickly you can chart a path toward early retirement.
