Here is what you need to know before planning early retirement!
Even though retiring early might seem like a good idea, you should keep in mind several factors before making the decision. Keep reading to find out what you should do.
Several reasons may lead young earners to consider retiring early. Some are looking forward to spending more time with their families; others want to start their own business or just want to lead a simpler life.
While it is not adverse to do so, funds and sustainability are key factors to consider. Financial independence and early retirement (FIRE) calculators should not be viewed as a panacea, and ignore the key aspects.
In this article, you will learn how to prepare for such a change.
For retirement to be comfortable, you need an adequate corpus set up. If you're renting out or own property, paying bills, paying education fees, etc, you'll need enough money on hand. Additionally, inflation should be taken into consideration when calculating the corpus amount. Planning accordingly will make the process more efficient.
- Determining the standard of living
A corpus based solely on your current costs, savings, and investments would be absurd. You should base your corpus on your lifestyle after retirement. It is wise therefore to plan for the one-time as well as recurring expenses you might incur after retirement.
- Planning for the new phase
Retirement is an altogether new phase of life and to make it more happening, you should consider planning for the same. By planning, we mean that you should decide how you would be spending the post-retirement phase. This will help you to be more accurate in calculating the corpus required for your goals. It will also give you peace of mind that your goals are being taken care of.
- Do you expect it to be temporary?
You need to ask yourself if you will be going on a temporary hiatus or will you be making it mainstream. Also, even if you decide to make this a permanent thing, and for any reason it doesn’t work out, are you prepared mentally to go back to the job or line of work that you were doing previously?