Picture sitting on your back patio, coffee in hand, reading an exciting book. With no Zoom meetings to log into and no deadlines to meet, you can truly relax. No, this isn’t just Sunday. It’s early retirement. At DEXSTA, we know you’ve worked hard to get where you are and that you deserve to enjoy retirement before the golden years. Here’s how to plan accordingly.
Advantages and disadvantages of early retirement
Before we get into the pros and cons, retirement falls into the ‘early’ category any age before 65. While men tend to retire at 64 and women at 62, Medicare benefits aren’t available until after 65. Retiring even earlier––at around 55 years old––requires planning and comes with its own advantages and disadvantages.
Advantages: Life expectancy in the U.S. is about 78 years. If we’re looking at averages, retiring at or over 65 doesn’t leave much time for enjoyment post-career. Retiring early gives you more time to travel the world, pursue hobbies, and improve your overall health. If you plan correctly, you can enjoy the fruits of your decades of labor.
Disadvantages: The big blocking factors to early retirement are access to Social Security benefits, losing health insurance, and dwindling savings. SS payments, for example, decrease by 30 percent from 62 to 67. However, you can alleviate many of these by planning for early retirement.
Planning for early retirement 101
Whether you’re just starting your career in your 20s or mid-career in your 40s, it’s never really too early (or too late) to plan for early retirement. But, as with all things in life, it’s important to remain flexible.
Invest in the future
You’ve heard the saying: no risk, no reward. And while it may seem shocking to gamble your future, investing can help you retire early. Let’s say you plan to retire at 55. If you invest in the years before that, the returns can help fund your ventures. Your best bet is to have a “balanced portfolio geared toward long-term growth” with low-cost index funds.
Figure out annual retirement spending
If you want to make an informed decision about early retirement, you need to know what your spending will look like. How will your monthly finances change? What are some things you can cut from your budget? Estimates are fine here, but to get that number you’ll have to multiply the amount needed by the number of years you’ll be retired. This early retirement calculator is useful.
Get creative with your goals and savings
Finances are personal because of the goals set. Some may prioritize early retirement, while others want to focus their savings on traveling the world or building their dream home. Some can do both. If you want to retire early, you’ll need to get creative with your goals and savings. Maybe this means tracking each expense, starting a side hustle, asking for a raise, or holding off on travel for a year or two.
For all your savings and financial help, we’re here
Early retirement doesn’t have to be a pipe dream. It just takes careful goal-setting, planning, and a financial institution you can trust. In the meantime, picture the days where you can enjoy the whole cup of coffee uninterrupted.