Exploring Early Retirement As An Option
As time goes on, more and more people are looking at early retirement as a possibility when they get older. Sometimes this comes from a desire to take some extra years to enjoy yourself, and sometimes a company presents the option as a way to reduce the workforce without forcing people into layoffs. There are a number of factors to consider in whether or not early retirement is the option that you want. With both good things and bad in the mix, the pros and cons should be weighed carefully.
The Money Problem
The big issue that comes from early retirement, or indeed any retirement, is the need to be able to support yourself throughout that retirement. You have little help from the government in this matter, since most forms of retirement savings plans, like 401k plans, IRAs, and social security payments, don’t give you funds until you’ve already hit your 60s. If you’re looking towards an early retirement, you need to have a plan to ensure that you’re supporting yourself without running out of money.
Working In Retirement?
One option for those taking early retirement is to find new work, which is particularly common for those who are offered early retirement as a cost-cutting measure by a company. Early retirement makes a great excuse to try a different career for your last working years, or to start your own business, doing something that’s personally fulfilling. It also keeps the bank account full so you don’t have a forced return to the workforce later in life.
Planning It All
For those who approach early retirement as something that they want to do in the future, but still have decades to do so, a retirement plan should be prepared. The first part of this plan should consist of ensuring that you have enough funds in things like your 401k to support yourself once you hit 60 or so, when you can withdraw funds without penalties. This will ensure that even if the early retirement plans fall through, you can still have a traditional retirement.
The rest of the planning consists of bridging the gap between your early retirement and that age. To accomplish this, you will have to pack away extra savings, which means less disposable income for your personal living. However, learning to be happy on less will also ensure that when retirement does hit, you don’t bleed money faster than is safe. Again, keep working at least part time open as an option, since there’s a lot less stress when you’re working not because you have to, but because you want to, and in taking something less than 40 hours a week. But with careful planning, you’ll be able to enjoy your retirement years before you would normally expect to.