You’ve always had an idea of what age you plan to retire. And you’ve probably made certain plans based on that timeline. As your anticipated retirement dates gets closer, you may even start to consider an early retirement.
Comprehensive financial planning that addresses vast “what if” scenarios, such as “what if” you had to or want to retire early, can help you make the best use of all your resources to come to a confident decision. Here are six things to consider if you’re considering early retirement.
Think about pension and Social Security benefits
For many retirees, Pensions & Social Security are the main sources of regular income in retirement. Work with an advisor to project what your benefits would be if you were pushed to claim them several years early.
Stress-test your 401(k)
In addition to weighing different strategies to maximize your pension & social security, evaluate how much income you could potentially derive from your personal retirement savings.
Remember to evaluate health insurance
If you are no longer covered under employer-sponsored health insurance, you’ll want to find some coverage until you can apply for Medicare. Work with an advisor to talk through private insurance carriers & Medicare supplement plans.
Create a post-retirement budget
To make sure your retirement savings will cover your expenses, add up the monthly income you could use from all income streams. Then, compare the total to your anticipated monthly expenses (including income taxes) if you were to retire five years early and are eligible, and choose to file, for Social Security and pension benefits earlier.
There are various life events and expenditures to consider, so make sure you’re working with an advisor to accurately forecast the “what ifs.”
Protect your portfolio
When you retire early, you have to walk a fine line with your portfolio’s asset allocation—investing aggressively enough that your money has the potential to grow over a long retirement, but also conservatively enough to minimize the chance of big losses, particularly during distribution phase.
Evaluate your spending
Many people don’t think about their expenses because they simply spend what they make when working, but one of the most valuable decisions you can make about your retirement life is to reevaluate where your money is going now.
If you’re considering early retirement, contact an ARGI advisor to discuss all your options.
Respective services provided by ARGI Investment Services, LLC, a Registered Investment Adviser, ARGI CPAs and Advisors, PLLC, ARGI Business Services, LLC, and Advisor Insurance Solutions, LLC. All are affiliates of ARGI Financial Group LLC. Trust services provided by ARGI Trust, a division of Advocacy Trust LLC.