When we say early retirement, we’re saying retirement before the statutory age, a person is said to retire early if he or she retires before the age of 65. Often early retirement occurs to most people unexpectedly, and they don’t plan for it, probably they are services longer needed in the company or the company is having issues and have to reduce their staff.
However some individuals plan for early retirement, they intentionally become an investor, invest their money in the different Investment plans, and therefore decide to retire early and be their boss.
The category of people are so crazy about financial freedom and stability and also their freedom of time, they want to be under anyone, at the same wants to make cool and crazy money and live the life they desire.
There is an investment strategy employed by those set of people who intentionally wants to retire early called FIRE. “FIRE means financial independence retire early”…So they moved from the quadrant of self-employed to the quadrant of investors and business owners because most investors also have businesses they run after retiring early.
Early retirement has also benefits and also some disadvantages, of course, you can’t eat your cake and have it. However when planning for early retirement, the plan is divided into two stages, Plan before retirement and plan after retirement, that is they are some things you need to do or consider before making early retirement an option, and Similarly, the somethings you need to do and have in place after retiring early.
In this guide, we will reveal to you everything you need to know and do before and after early retirement.
Now, let’s look at the things to consider before early retirement.
Early Retirement How To? Have a clear vision and a clearly defined goal
According to recent research and statistics, it was discovered that most people who want to go for early retirement do not have a vision goal after early retirement.
You need to have a vision of yourself after retiring early, what picture are you painting, and what kind of lifestyle will you be living after early retirement? What type of activities will you be engaging in after early retirement ?. What side job or activities will you be doing that will still be generating income for you?
What are your goals and plan ?, Do you have a plan to go on a tour, travel, and other a lot of others things.
Having a clear vision and clearly defined goal will help you in planning how much to save before retirement.
retiring early? Don’t forget Health Insurance Plan
Yes, no doubt health is an important asset, but it’s quite unfortunate health insurance is mostly neglected and no provisions are being made for it by individuals who wish to retire early.
Before retirement, you have health insurance with your organization but saying early retirement also means you wouldn’t have access to the health insurance plan of the organization anymore.
Wouldn’t you be receiving medical care before 65, definitely No, therefore you need to plan for your health insurance if you are working early retirement?.
There are many insurance companies you register as individuals to secure your health.
Remember, if you are healthy, you are not ready !!!
Plan to keep earning income
Yes, plan to keep earning income, saying early retirement doesn’t mean you have stopped working completely. You can be retired early and still have a business that brings in income for you. The goal of early retirement is you have full control of your time.
You are dedicating your time to yourself, not any boss or organization.
Having a job or business that generates income while retired helps to reduce the stress of having to save enormously for early retirement.
However, while planning for early retirement, endeavor to browse through various business or side jobs that fit your lifestyle and be doing them after retirement to make the journey more pleasurable.
Make provision for your Housing
Most investors who are pursuing early retirement are concerned about having the investment ready before retirement, they forget to put their housing into consideration.
You should make provision for your new house if you plan to relocate to another location.
And if you are not relocating, then ensure to do necessary repairs and renovation to your house and pay off all dues while still working and making income.
Plan on social security strategy
Not only should you plan for health insurance, but you should also plan on getting social security benefits, social security provides income for retired people and the disabled who can’t work.
You will be entitled to some retirement benefits if you have registered on social security, however, kindly include it in your plan or talk to your financial advisor about it while planning for early retirement.
Create Financial buffer
Lastly one of the things you must do before pursuing early retirement is to create a financial buffer. Buffer is like a kind of money reserved or set aside for unexpected events. Aside from your main retirement saving, it is advised for you to create a Financial buffer, you can create a 5year or10-years financial buffer. Having a buffer help investor protect their wealth.
Now, let’s dive into what to do after early retirement.
Yes, early retirement is not the last bus stop. Cooler, you are now retired, but there are a few things you still need to do to make the journey easy and pleasurable.
Mind your spending
After early retirement, you might be issued with what to spend on and whatnot. You must set guidelines for your spending, have a priority when it comes to spending, and spend on things that will add value. You need to learn how to control your spending so that you wouldn’t have to spend your whole retirement saving on things that are not relevant.
Bucketing your saving
Bucketing helps you to split your saving into different segments for different purposes, each saving segment will have its specific purpose. A segment can be for fun and holiday, while sigma int can split into investment portfolios so you invest them aggressively.
Enjoy your early retirement
Last, you need to enjoy your early retriever, yes I mean enjoy your early retirement, some individuals deny themselves certain things before they don’t want to experience any downfall in their finances.
People who have been saving constantly for a long time, usually have issues when it comes to spending. However, you need to enjoy your wealth too. Therefore create a retirement income plan and retirement spending plan, this allows you to strike balance in your finances and enjoy your retirement