Ask ten people about their retirement plans, and you’re likely to receive ten different answers. But many of those answers will include concerns about retirement. Some might worry that they’ll never be able to retire, while others already know that they will need to work well into their sixties or even seventies. So how are some people actually retiring early?
In some cases, retirees had to end their careers early due to health concerns. And sometimes things happen that are simply out of our control, such as the Covid pandemic. When businesses shut down, many older workers decided to simply call it quits for good. But when early retirement is not a choice, those retirees often end up living on budgets somewhat smaller than they had once hoped.
What about people who planned to retire early, and actually succeeded? What’s their secret?
They plan early. Many early retirees planned it that way, decades ago. They started saving early in their careers, and made other wise moves with their money. Their retirement plans account for things like healthcare, because they know they won’t reach Medicare eligibility until age 65.
Due to the power of compound interest, early saving and investing means your money will go much farther than if you got a late start.
They have realistic expectations. Most early retirees are not sailing the globe on a private yacht. They’re no longer working, but are also living relatively modest lifestyles.
They lived on a budget. Most early retirees made saving a priority over all over lifestyle desires, so that they could devote as much money to the future as possible.
They diversified their incomes. Both during their working years and after retirement, those who successfully retired early tend to establish more than one stream of income.
They saved and invested. Stashing money in a retirement savings account is one obvious route to retirement, but you also need to earn a significant amount in order to save a lot of money. Those who managed to retire early also focused on growing their savings, by investing their money in assets that gained value over time.
They strategize their taxes. Taxes can eat up a significant portion of your earnings, so financial decisions should always account for tax impacts. In many cases you can actually strategize to take advantage of certain tax breaks.
They stay on top of their plans. Fluctuations in the market can create stress, and often change your retirement plans dramatically. Those who succeed with a solid retirement plan manage it continuously, by staying in touch with their financial advisor and making adjustments along the way.
And on that note, call us if we haven’t discussed your retirement plans lately. We should stay in touch and meet regularly to review your strategy, so that we can help you make the necessary adjustments in any situation.