How Early Can you Retire?
Someone rightly said that “Retiring is inviting a world of new adventures ” but the question is; are you fully prepared to undertake this leisurely adventure? Or is it a phrase taken vaguely? We will seek to answer that question using certain points explained below.
Age of Retirement
One factor to put into consideration is the age at which you intend to retire. In real life, many people foresee that they will retire quicker than they actually do and uncertain issues, such as health constraints or changes in workplace (Re-structuring, demotion etc.), tend to come on the way and hence resulting in an early retirement.
And remember the earlier you seem to retire, the bigger bank balance you will need to last throughout the life after retirement. It’s very crucial to prepare for unseen events that could force you to bid farewell to your work life.
It is generally accepted that you can’t predict how long you will live, but there are a few factors that may give you strong hints and with which you can plan your days.
You should consider your family background in terms of health and life expectancy—how long people in your family have lived. This can be seen in how long your ancestors have lived and the ailments that they have suffered from if any. Also, your own health comes into question here.
After that, you would have to take into account the fact that life spans are becoming longer with the developments in medical sciences. Nowadays, there are chances that a good number of people will live up to 100 years or even longer. Now calculate the amount that you need to survive through these years
Health care needed in the future
Another major thing to consider is the amount of money involved in health care. These days, this cost is rising at a much faster pace than the general inflation, and very few employers are generous enough to offer health benefits to the retiring people.
Care in the long-term is another factor, and this expense could surely dip into your savings account and even lead to filing for bankruptcy if the need for care is elongated and constant. Therefore, factoring the costs involved in health care after you leave your work is very important.
Your current lifestyle
Now what you should be thinking about while thinking of retirement is lifestyle that you want for the rest of your life. Would you travel frequently or you want to get involved in community service? Would you sign up for an expensive club membership or is there any hobby that you want to take up? Your honest answer to these questions can aid you in deciding what surplus costs your dream retirement will require.
Many enthusiastic people expect that they would like to work part-time in retirement. However, if this is your intention you will still need some funds to enhance your retirement lifestyle.
If you have analyzed and accounted for every certainty while constructing a savings fund, then forget this vital factor as you will have a good buffer to head into retirement. Inflation lowers the value of your savings from year to year, heavily decreasing your purchasing power over the years. It is crucial and vital for your savings to be on pace with inflation.
And the Sum-up of all the above
After considering all these factors, you should have a mirror image of how much you need to earn and save for your retirement.
But after you calculate your retirement savings fund and apply all the factors to how much savings you have currently, you will be able to analyze how much is required from your end to save each year and reach your savings goal. The most important thing is to make a goal and then strategize how that will help you to reach it.
Remember, the earlier you initiate savings and invest to reach your goal, the better you will realize your dream retirement.
Have a happy retirement ahead!