Everyone who wants to retire and enjoy their golden years should realize that doing so, even at the traditional retirement age of 65 or the retirement age of 70 that is fast becoming common these days, should understand that leaving a full-time job requires a careful long-term planning and financial management, which should begin relatively early. Following are some essential concepts that can spell a difference between being able to retire early or being unable to retire at all. Pay attention to these, and you will at least have a chance at retiring early.
1. Start Immediately & Set Periodic Goals
Whether you are 19, 25 or 55, you have to start planning your retirement immediately. You may want to retire as a millionaire, but unless you’re able to inherit millions or win a lottery jackpot, you will have to both save and earn diligently. Retiring as a millionaire will take many years and a lot of planning. Everything worth having can only be obtained using hard work and careful planning. Luck is never a valid basis for planning. Then, as part of your plan, set realistic goals for yourself.
2. Budget & Control Your Expenses
Decide when you want to retire. Some people can collect Social Security benefits at age 65, but many people won’t collect until 68 now. You may love your job enough to want to hold off until 70 or beyond. Then, use your resources to figure out how much you’d like to have saved by that age, and set up other goals in the interim, to keep you on track to your early retirement, or even your late retirement. As soon as you know what you need, take steps to do everything possible to meet that goal. Cut all unnecessary expenses out of your life, set a stringent budget for yourself and your family and commit yourself to stick to it. Put as much money as possible into savings or your retirement account. Don’t think of it as an asset because many people who do that borrow from that asset whenever they fall behind and need some cash.
3. Pay Off as Much Debt as Possible
Face it: even if you save a perfect amount to allow early retirement, retiring with a mountain of debt will increase the possibility of running out of money. Therefore, during the run-up to your retirement, part of your plan should include a plan to pay off as many of your debts as possible.
4. Don’t Underestimate Healthcare Costs During Retirement
For many retirees, health care costs turn out to be the most daunting expenses during their retirement. According to some experts, out-of-pocket healthcare costs during retirement can run as much as $300,000. While Medicare forms a great foundation for controlling medical costs, it only covers 80% of major medical expenses and doesn’t cover many things seniors often need, such as eyewear and hearing aids.
5. Hire a Retirement Planner
Retirement planners’ skills go well beyond merely adding up dollars and cents. An experienced and highly skilled financial planner will always assess your current wants and needs and tailor a financial plan accordingly. A retirement planner will strive to understand your current financial needs, project them into the future and give you the best advice needed to plan for all of that.
A successful retirement planner has a strong working knowledge of all applicable rules and laws regarding taxes, Social Security and Medicare and the multiple rules regarding retirement plans. This type of knowledge can only be acquired through education and experience. A retirement planner can assist you with all sorts of potentially complex decisions you will have to make at some point.
Your Investment Decisions
Retirement planner can advise you as to whether taking Social Security a few years early is a good move, or one that will cost you in the long run. They can advise you what annuity is best for you and when you should start taking money from your various retirement accounts, or even if having several retirement accounts is a good idea. They can show you how to apportion your investments to get the best return for you and the tax consequences of all investment decisions.
The best retirement planners will not make decisions for you; they will make recommendations for investments and strategies to maximize your retirement income in a way that meets your needs. They will want to know everything about how you envision retirement and where your current investments are.References and Sources
1. Health Care Cost Control: Where Do We Go From Here? Retrieved from https://www.healthaffairs.org/do/10.1377/hblog20180705.24704/full/
2. Why Doesn’t Medicare Cover Dental Care, Hearing Aids, and Eyeglasses? Retrieved from https://www.ehealthmedicare.com/faq/why-doesnt-medicare-cover-dental-care-hearing-aids-eyeglasses/
3. What Will a Good Retirement Planner Do for Me? Retrieved from https://www.thebalance.com/what-will-a-good-retirement-planner-do-for-me-2388434