Most of us really hate to do office work for 9 hours. We live a monotonous routine-bound life and crave for a permanent break from it. But easier said than done! Regular retirement requires wise planning but early retirement needs more attention and acumen. You must have solid accumulation of wealth to support yourself throughout the remaining days of your life. When you retire earlier, you also save for your regular retirement.
Here is a list of some crucial points that you should ask yourself before hanging your boots up.
Why are you retiring?
It is the first and most important question and none other than you have the accurate answer. Is it your health problem that is prompting you to call it a day? Or you don’t like the ambience at the workplace? Do you have any intention to commit yourself to another career that you are passionate about? Or you simply want to enjoy time with your family? Be clear about the actual reason as to why you want to retire so early and think if it is a good reason to give up your job that earns you income following a regular interval.
Will it be possible for you to manage your family expenses without a regular job?
Once you retire, you become jobless. And if you are not alone, you have to think twice before taking such a crucial decision because the entire family is dependent on your income. Now there are other sources of income for people, including dividends from stock, earning from share, rent, part-time job etc. Your dependence on side income may change over time. However, the question remains same – if you would be able to manage without your 9-hour job?
Divide the questions into some parts and ask yourself the followings:
- Do you have fund to manage all expenses and maintain the same living index after retirement?
- You should not expect the market to be consistently smooth. Depending on the economic situation, you may get very poor return on income at times. Are you saving enough to make up for the loss and manage in the same way you have always did?
- If you are a parent, have you considered rising educational expenses?
What is your plan for after-retirement healthcare?
Healthcare expenses can leave you bankrupt if you are not prepared for it in advance. Have you calculated how much will be needed to pay for health insurance policies you already have? You also need to set aside a tidy sum for unforeseen health hazards that may happen to you or anybody from your family. If you or anyone in your family is prone to frequent illness, you may have to save more for precautions as well as treatment.
Do you have any backup plan for rainy days?
You cannot always expect sunny days in your life. What will you do in times of financial emergency? Without a solid plan in place, you will never be able to overcome the disaster and your entire planning will sink on the midway. I hope you already have life insurance. Do you have other contingency funds? Have you any plan to downsize your current expenses by shifting to a smaller home? The last-time economic recession eclipsed over the global scenario for a couple of years. If that happens again and stays for a longer time, how do you cope up with the situation? The nutshell of my point is you should build a solid cash cushion to support you throughout the troubled phase.
How will you stay healthy and cheerful?
It is your responsibility to keep yourself healthy both physically and mentally as well as ensure the same for other members of your family. Are you going to make some drastic changes in your plan to eat healthy and stay happy or it will be same as it is today? Making abrupt but unrealistic changes won’t make you feel comfortable and that could gnaw at you both physically and psychologically. Also get prepared to face volley of questions regarding ‘why so early’. At first, it is fine but after that, you will get irritated. How to handle such situation? Just think about that.
What is about your future living index?
I hope you have no plan to live like a hermit or nomadic. Those are extreme cases and I want to focus on common people showing rational behaviour. Do you want to maintain the same standard of living after retirement and most importantly, have you enough to ensure that? If you have a low budget for pro-retirement phase, you have to cut down expenses in many fields. And if you want to maintain the same level, you need to have an adequate amount of saving. At this point, it is important to allocate a monthly fund for miscellaneous expenses as those eat into a larger part our income.
Do you have other points to add to the list? It would be nice to hear from you. Your opinions are always appreciated and highly valued.