Retiring early is a common goal, but one that is not necessarily easy to achieve. In today’s world, early retirees have a different vision of retirement than their predecessors. Their focus is to devote themselves to activities in retirement, whether traveling the world or pursuing a hobby or something similar, rather than simply relaxing.
Whatever your objectives for retirement, retiring early requires a comprehensive retirement plan to help you amass the resources necessary to fund it. A financial plan is essential to help manage all the variables involved in setting aside enough money to finance early retirement. A plan allows you to crunch all the numbers applicable to support yourself in retirement and to evaluate whether your resources are likely to be sufficient to allow you to stop working at a relatively early age.
Your plan should take into account the expected inflation rate, taxes, hypothetical rates of return, and other factors that are likely to impact investment performance. Adjustments can be made to your plan to accommodate any changes in circumstances or in your desired retirement date. Generally speaking, the earlier you plan to retire, the more you must set aside from current spending to help meet your retirement goal.
Following are four steps you can take to help pull forward your retirement date:
Change your Locale: Individuals living in expensive areas may find that moving to a lower-cost, often less populated location can reduce their cost of living. If you no longer need to live in a certain area for work, lowering your expenses by moving elsewhere may be an option worth considering.
An example of this is the phenomenon of “equity refugees” selling high-priced homes in California and moving to lower cost areas such as Arizona, Nevada, or some areas of the Pacific Northwest. By doing so, an investor can stretch out his or her income over a longer period of time in retirement or start the process earlier. To make sure that a new the area is right for you if you are considering moving to a different locale in retirement you may want to rent in the area for a time before purchasing a new house to make sure the area is right for you.
Move to a smaller residence: With a person’s home typically comprising their single greatest expense, entering retirement with an outsize mortgage can be a situation that is dangerous to your wealth. It can also cut into funds that might be better used to travel or pursue hobbies. By downsizing your residence you free up funds that would otherwise be spent on a mortgage. Doing so may even allow you to bring forward your retirement date.
Pursue part time employment: Keeping active in retirement can be a challenge, and accepting a part time job can be a good way to stay busy and social. The perfect situation is to find a job you enjoy doing that also provides some welcome extra income. In addition to helping make retiring early a more attainable goal, the experience of doing work that provides mental and physical stimulation can provide a variety of wellness-related benefits.
Retire overseas: When contrasted to other countries, it can be expensive to live in the U.S. While living abroad is not for everyone, some retirees find that their dollars go further at lower cost foreign destinations than they do here. The availability of healthcare should be considered as well as the language spoken in a country when contemplating this option.
Anyone considering early retirement should carefully evaluate his or her financial resources to see if such a goal is attainable. Constructing a detailed plan can offer significant assistance in planning for retirement whether or not you ultimately decide that retiring early is feasible. Contact us if you have any questions about building or evaluating your financial plan in regards to retirement or any other objective – we are happy to assist you.
Hope the strategies discussed in the blog will help you to plan a early retirement effortlessly. Contact now to Schedule Your Free Financial Planning Session with the best financial advisor Samuel Rad, and explore more about early retirement planning.