Early Retirement: 4 Things to Prepare before Taking the Plunge

As most of us have come to accept over the years, the retirement age that we are used to today is probably going to be a lot, lot different later down the line. It’s something that is constantly increasing – and this means that many of us have a big decision to make if we are looking to take it early.

Well, as the title may have given away, this is what today’s article is going to focus on primarily. Let’s now look at some of the main things you need to take into account if you are contemplating early retirement.

Is retiring the only option?

It’s perfectly understandable that you don’t want to be working until you are “too old”, but there are other options when it comes to retirement. In other words, it’s not black and white. You can, for example, consider a phased retirement. As the name suggests, this involves cutting down your hours and days. In some workplaces, this might still allow you to draw some of your pension, while still earning a smaller salary.

Have you truly considered all of the expenses?

One of the biggest misconceptions doing the rounds about retirement is that all of the expenses are set in stone. You’ve paid the mortgage off – and this means that your expenses are cut to a minimum.

Unfortunately, it’s not quite as easy as this. Firstly, some expenses are fixed, such as the cost of food. Then, there are new expenses, like paying for a funeral and even making sure that your children are catered for financially as they flee the nest. Make sure all of these are considered when you do start to put your retirement plans together.

How much income will you have?

Following on from the last point, we will deliver similar guidance when it comes to your income. Fortunately, this is something that a lot of you will already be well aware of. For years you will have been used to a regular salary hitting your bank account, and this is, of course, ending.

Instead, it is replaced with a pension. You need to understand just how much this pension is worth, and if you have any other investments tucked away, which will help with your living expenses.

What will you do with your time?

While the thought of an easier and more relaxed life naturally sounds appealing, sometimes it’s about digging deeper into your long-term retirement goals. When some people retire, they can feel somewhat lost. They have found themselves in a working routine for decades, and when that goes out of the window, there can be a feeling of “what’s next”.

This is the point when you need to assess just what you want to gain from your early retirement. It’s also the time where you can start to assess the financial impact of any new hobbies that will now take up your time.