If you’re already tired of having to work long hours day after day and feel that you’ve lost motivation to get up in the morning and go to work, the idea of retiring early must have crossed your mind at least once. It’s perfectly normal to feel fed up with all those obligations and look for a solution, but you can’t make such a decision on a whim.
Like every major change in life, this one should be carefully planned and prepared if you want the transition to be as smooth as possible. The preparation doesn’t only include the financial aspect, but many other equally important decisions that you need to make. So, let’s take a look at six absolutely necessary considerations and one that many people often neglect
1. Setting up a separate account
Whether you are an entrepreneur wishing to retire early or an employee on the verge of burn-out, you should definitely open a separate account, where you’ll transfer a fixed amount of money each month, plus any bonuses you get. Depending on your income, you’ll be able to save enough money for early retirement more or less quickly, but some form of saving is necessary.
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2. Careful budgeting is a must
In a way, if you’re a successful entrepreneur, it might be easier for you to afford to retire early, since you might be making more money or have someone who is ready to take over the company, while you reap the benefits of your investment at an earlier stage of your career. On the other hand, with such volatile markets, it would be unwise to believe that you’ll never hit a bump on the road. That’s why you have to budget your expenses and income wisely and realistically, with some amount being allocated to your retirement fund.
3. Plan for the rainy days
Just like every successful company has a budget for emergencies, you need to have one for your retirement. It’s very similar to insurance, where you pay a fixed sum each month, hoping you’ll never need to claim any expenses from your insurance company. This emergency budget will be your safety net, which should act as a cushion during your retirement.
4. Consider changing the place of residence
Your interests, abilities and capacity change over the years. The fact that you still may feel capable of climbing any mountain doesn’t mean that will be the case in a few years’ time. Be realistic and prudent when deciding where you’d feel most comfortable living. Take into account attractive retirement house plans, offering all the facilities and amenities a retiree needs.
5. Find out about post-retirement benefits
Check with your employer if you’re eligible for a pension or healthcare benefits and ask for clarification if you’re not absolutely sure about the provisions. You might be offered an option to receive your pension as an annuity or in a lump sum. The former refers to a stream of payments over your lifetime, which provides more security, but less flexibility than a lump-sum payout.
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6. Choose a health plan
Older age usually brings more health problems and you need to be covered in that respect. That’s why you need to choose your health plan wisely and try to have as comprehensive medical insurance and care plan as possible. With so many options out there, it’s easy to be perplexed and make a wrong choice. So, take your time and ask for help if necessary before making this choice.
Bonus tip: Is it a phase?
While it’s always advisable to plan well ahead, you might want to reconsider making such an important decision before you draw the line once and for all. Namely, if you are still young and feel that you can give a lot, you might want to take some time off work, just to reconsider your decision. Consider it a trial period and make the final decision after experiencing life without work. Basically, prepare for every option, but postpone the final say until you’re sure about it.
There are many reasons you should be looking forward to retiring early, if possible, but you won’t be able to enjoy all the benefits unless you are prepared and certain about your decision.