Dreaming of an early retirement, where you can bid farewell to the daily grind and embrace a life of your choosing? It’s an exciting prospect, but achieving it requires more than wishful thinking. A realistic early retirement plan requires careful planning and deliberate action. If you are intrigued by the idea of retiring early, follow these steps on how to assess if moving up your retirement date is something within your reach.
Envision your dream retirement.
Before you dive into the numbers, take a moment, and paint a vivid picture of your dream retirement. Where do you see yourself living? What adventures do you want to embark on? Your vision will be the cornerstone of your plan, helping you define what you want your retirement to be like while guiding your decisions.
Set your financial target.
Many retirees find that retirement often means more freedom to pursue travel and hobbies which usually leads to more spending. If this aligns with your vision of retirement, make sure to calculate a generous estimate of your annual expenses. This will serve as your financial target and will help you map the steps you’ll need to take to achieve your goal.
Prioritize your income sources.
Once you know how much your early retirement will cost, you’ll want to line up the order in which you will tap into your investments. Consider your retirement savings, investments, and potential Social Security benefits while being mindful of tax implications and timing.
Adjust your current saving and spending.
To achieve your retirement goal, it might be necessary to tweak your current financial habits. This could mean reducing unnecessary spending while ramping up your savings efforts.
Maintain investing for growth.
It’s common for retirees to adjust their investment allocation to be more conservative in order to help shield their principal from potential market downturns or increased volatility. While preserving your investments is essential, it’s important for your portfolio to at least keep on pace with inflation. Factoring inflation into your projections can help to maintain your purchasing power throughout your retirement.
Factor in health care expenses.
Many retirees are surprised by how much of their budget goes toward medical expenses. Make finding a solid health insurance plan a top priority and consider the benefits of a long-term care insurance.
Stay flexible.
Life can be unpredictable and there are no guarantees. This is why it’s important to be prepared for unexpected events that may impact your finances.
Early retirement can be an achievable dream with careful planning and adaptation. At affirm Wealth Advisors, we have been helping clients with their retirement and financial goals for over 30 years. We know a lot of people struggle to feel confident about their financial future. That’s why we guide people with a 7-Step Financial Planning Process to help those unsure about their financial future gain more confidence. If you would like to discuss your retirement and ensure you are on the right track to making wise decisions, contact our office and we’d be happy to set up a complimentary initial consultation.
Together, we can work to keep you on-track towards your financial goals.
Request a consultation with us to learn more.
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