While many retirees have to stop working earlier than they’d planned due to health or employer issues, an early retirement continues to be a longstanding dream for many people.
The upside of early retirement is easy to understand – more time to pursue your interests, and to do so while you are still in good health. The downside risk centers on whether it will create a and the emotional impact of changing your routine.
Keep in mind that given today’s life expectancies, anybody who retires prior to age 65 or 66 could easily spend two to three decades or more in retirement. Given questions you should answer before you decide to retire early:
Do you have a realistic plan?
Accounting for all potential sources of revenue and making realistic projections about how much income you can draw from it over a lifetime really matters.
Keep in mind that living costs will likely increase over time, requiring you to withdraw more from your nest egg in the future.
challenge, you need to have saved diligently for years and invested wisely.
You also should account for other sources of retirement income – Social Security, access to a pension from your workplace and inheritance you have received or can count on receiving.
Do you have outstanding debts? If you continue to carry a home mortgage, automobile loan, credit card debt or home equity loan into retirement, ongoing payments need to be accounted for in your monthly budget.
The ideal situation is to have little or no debt when you head into retirement so in the use of your available
Are you going to claim early?
gible to claim Social Security 62. However, the monthly gin collecting Social Security before your full retirement age (which varies between 65 and 67, depending on your year of birth).
As you develop your income strategy for early retirement, you either need to substitute for Social Security prepared to accept smaller Social Security payments throughout your life.
What is your plan for health care?
One of the costliest aspects of early retirement is paying for health insurance and related expenses.
You aren’t eligible to enroll in Medicare until age 65 form of insurance coverage in the meantime.
Explore your options on health care exchanges and through private insurers. You may be fortunate enough to be covered under a former employer’s plan for retirees.
Keep in mind that those in their 50s and 60s may be paying the highest premiums for health insurance, so it will likely repre-
Are you emotionally prepared for change?
Leaving the workforce and the day-to-day routine you’ve been living for decades can require a sig- mindset.
Before you retire, try to envision what you want your life to be like after leaving the workforce. Have a plan to stay active and connected to people.
Make sure you have outlets available that will provide the kind of stimulation you became accustomed to while you worked. But be sure to put some thought into this in advance.
Early retirement is likely to work out best for those who plan ahead. Answering honest and comprehensive way is a good starting point.
Mark P. Tolan is a Private Wealth Advisor with Ameriprise Financial, Inc., 373 E. Foothill Blvd., Ste. 100 San Dimas; 909- 394-0409. This communication is published in the United States for residents of California only and this advisor is licensed only in the state of California.
