If you have considered retiring early, you must have thought so in order to escape the daily grind of work. But in addition to that, if you retire, you lose the opportunity to make the additional money to make your retired life comfortable. If you are still in a dilemma, let us put that to rest by listing the 6 signs that signify that you are ready to retire early.
Debts are Paid Off
You have no outstanding loans, credit lines or credit card debt. You have no large payment to make during your retirement. You can freely use your savings and retirement income to enjoy your retired life or use it in an emergency rather than paying off debt. If this is your situation, you can definitely consider retiring early.
Savings > Retirement Goals
You have always kept yourself aligned with your financial goals, especially the goal for retirement savings. However, your investments have paid off and you have more than the amount that you wanted to save up. This is another tell-tale sign that you can opt for early retirement. But what you have to keep in mind at all points of time is the fact that if you leave work so early, you will also have to cover a few extra years with your savings, which was not part of your original goal.
Retirement Plans Don’t Have an Early Withdrawal Penalty
If you are retiring early, make sure that your retirement plans do not have an early withdrawal penalty. But you should note that you will still have to pay taxes on your retirement withdrawals. In order to set up penalty free retirement plan withdrawals, you should set up a series of equal withdrawals over the period of five years.
Healthcare is Covered
Healthcare costs are extremely dear in your old age and you should make sure that you have a plan in place to cover all your medical costs. Early retirement should be considered if you are covered by your spouse’s healthcare plans or your former employer still continues to cover you. Of course, if you are an early retiree you can also consider buying private health insurance.
Can Live on Retirement Budget
If you are a retiree, you will have to live on a pre-fixed income that comprises of pensions and retirement plans. If you can already stick to your retirement income budget, then you can opt for early retirement. However, think twice before taking a decision because living on a fixed income can prove to be problematic at times.
Have A New Plan for Retirement
If you are leaving your work to spend your early retirement doing nothing, boredom will lead to unhappiness. That in turn will increase your spending habits. If you have a defined lifestyle that includes travelling habits, hobbies, some sort of part time employment, then you can easily slide into early retirement mode. It is easy to get nasty in retirement because you will get bored easily during retirement especially if your work was extremely demanding and took up a lot of your time.
Have a talk with your financial advisor to understand more about early retirement plans, if you want to opt for one!