How To Know If You Are Ready For An Early Retirement?

Advisor December 21, 2017

We leave the world just as we came, without anything. That is the reason why we have to make our lives worthwhile in between life and death. That space in between will matter since it’s the only time we can achieve all our goals.

We are born to be competitive and to fight for survival. We may have become more civilized and more modern but the life instinct still burns inside us. We learn to walk, to talk, to get a degree, and hold down a stable and a good-paying job. For what? To have a quality life in between. We plan things according to our goals! And a goal people commonly have the same plan, to have a good retirement.

Derek Foster retired at the age of 34, earning the title “Canada’s Youngest Retiree”

Retirement is the thing that somehow motivates people to have good careers. It would be impractical to be always on vacation that is why they work hard to be able to experience the wonders of the world later in life. It is somehow a bonus time for us to finally do what makes us happy or what we truly want to do. Some of the younger generation is already taking action on what their retirement is going to be like. They save and invest money at a young age so they can retire earlier. Thus, giving them more time to enjoy life.

It’s always easier said than done. That is why we have compiled possible checklist that will help people realize if an early retirement is good for them.

Debt-free retirement

One of the most important things to consider when planning for retirement is the financial side of it. Monthly income will now be gone and the subsidy will be lesser than what we used to. That is why it’s important to know that retiring without debts and mortgages is a necessity. If a person still has a loan, no matter how small it is, then, retiring is not yet an option. It’s better to clean all the slate before opening a new chapter of our lives.

Full-proof retirement budget

We have 401(k) plan and other insurances that will help our retirement plan. But before carrying out this plan, having a dry run is much needed. So what does this dry run exactly mean? It means that the person should draft his/her retirement budget and will live with it for about six months. The budget will include the monthly bills, groceries, and extra expenses like movies or dine out.

A person must be able to stick to a proposed retirement budget first before retiring

We should also take into consideration the future hospital bills and medications. These things can be pretty expensive, that is why we should allocate a good sum in our health. The company insurance will not be at our disposal, so better make adjustments in the budget and include these health-related emergencies.

If a person can live with the budget for six months without having any troubles, then, retiring will become a more accepted idea.

Life direction

Some retirees go back to work to feel purpose and direction again

Most people only pay attention to money and budget during retirement, and although this is a major factor, it is not the only one. One thing that people should also plan is how they’re going to spend the rest of the day. Sure, traveling is one of the most common trends, but what will happen after the trip? Are these people considering an early retirement are already okay letting go their 8-hour routine every day? Most retirees get shocked by the many vacant hours they have. So when the retirement clock is fast approaching, better think of the pursuits to be taken.

It will not serve as an escape

Never let someone who sees retirement as a way to escape a mean boss. There are many solutions to that but retiring is not one of them. It’s better to resign, not retire, and look for another job. Never compromise the future just because someone in the present is too much to handle. At the same time, it should also not to be seen as a rest of the exhausting job- we have work leaves for that. Remember, only retire when we are already able, not because we just want to.