On The Agenda:

Sometimes we have clients who want to retire early. But how much earlier do they mean, and is this a realistic goal? We’ll share some challenges they face and how to know if early retirement is for you.

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Episode Show Notes:

On this episode of How Money Works, we’re talking about early retirement and if it might be right for you.

Age 62 to 65 is the average range for retirement but remember – retirement isn’t an age. It’s a dollar figure. You could retire now if you had enough money. You hear this all the time, but it’s really what you should do – define your goals and then craft a plan.

You need to make sure there’s not a gap in your finances. Let’s say you need $100,000 a year after taxes have been paid. So, that’s $8,333 a month.

Let’s pretend you also have Social Security of $35,000 a year, so that means that you need from your retirement nest egg $65,000.

So, how long will your retirement nest egg last if you’re hacking away at it at $65,000 a year? You also need to know the tax scenarios of the different retirement money you have.

Another thing to consider is if inflation continues to go up, should you adjust your income goal to compensate for higher costs in the future?

If you are taking money out of your investments, you need to figure out a way to protect your principal. It’s great to be aggressive while you’re investing, but if we get in a bear market and you’re retired, that could mean trouble.

Our recommendation is to plan extensively and run your numbers. Leave a margin for error.

Listen to the full episode or use the timestamps below to jump to a certain section. Thanks for listening.

Important Points:

0:34 – How early?

2:24 – The gap

3:54 – Inflation

5:46 – Investing while saving

7:36 – Challenges of retiring early

10:44 – Insurance

 

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