Retirement can be a tricky topic in general, and early retirement can sometimes feel like a sensitive one. Early retirement for so long has felt like such a pipe dream for many of us, and with the uncertainty of the current economy, it feels more like a fantasy than a reality.
But that’s not necessarily true. While it would be nice to retire in our 40s, realistically most of us don’t have that option — yet that doesn’t mean we can’t retire early. We just have to redefine “early” when it comes to early retirement. Let’s say this, early retirement will simply mean retiring earlier than expected. That is something we can all achieve, however it’ll take a little know-how, planning, and some advice, as CNBC’s Ryan Ermey reports.
Key Considerations for Earlier Retirement
There’s no single way to achieve early retirement. Everyone is different and some people may want to explore other retirement options like a half-retirement. Regardless of how you want to retire or what type of retirement you wish to have, there are two things to consider before early retirement, according to self-made millionaire and financial advisor Grant Sabatier:
- Personal — Understanding Your Post-Retirement Identity
- Financial — Knowing How Much You’ll Need in Retirement
First, understanding post-retirement identity is just another way of saying it helps to have an idea of what you want to do once retired. After decades on the job, seniors may need time to reconnect with their passions or find new ones to offer some satisfaction and joy outside of the job. Knowing this ahead of time can help you plan and redirect any retirement strategy to get a jump on accomplishing your goals.
Secondly, and arguably more importantly, is knowing how much you need to retire in the first place. A reason many seniors don’t retire early is because they need a source of income to help save for retirement. Benefits provide some type of income, but are not meant to replace our full yearly earnings. Calculating your costs and the length of time you plan to be retired, which is increased if you plan on early retirement, will help you get an estimate of how much you’ll need. Looking into alternative types of retirement income can allow you to re-visualize any retirement plan and rework your retirement timeline.
For more retirement tips and tricks, follow along with the Council for Retirement Security.