It is a position that most of us would love to get into. Unfortunately, for purely practical reasons, early retirement isn’t for everyone. You have to have your house in order – which is something that few of us do.
As such, if you are considering planning for early retirement, today is for you. Here are five questions you should pose to help get you to this elusive life stage.
What is your new-look income?
As you probably know by now, your income isn’t going to look the same. Gone are the days of receiving a salary on a set day each month; you now probably have to rely on a pension. Or, if you have planned well, you might also be able to tap into savings or investment plans.
Regardless, do the math. It is unlikely that you’ll have the same income as when you were working, but you need to understand this figure so you can progress to the next question.
What is your new cost of living?
Put simply, your new cost of living is going to look drastically different from your previous one. For example, have you considered the following costs:
- Paying for a funeral: The costs involved in paying for a funeral are high (although lower if you do it in advance).
- Paying for any care: Hopefully, you don’t need it, but it can happen. Elderly care is expensive and while the authorities might help, to get the very best care you sometimes need to take matters into your own hands.
- Hobbies: On a lighter note, how much are your hobbies going to cost? For example, golf is a popular retirement hobby, but the costs in playing it are high. Remember, you now have to fill up the time that was once spent earning.
Is your home still suitable for you?
One way in which you can unlock capital is through your home. Downsizing is surprisingly popular and involves selling your larger family home and buying one that is smaller and more suited to your present-day needs. If you have this option at your disposal, it can make the world of difference to your early retirement potential.
What is your free time going to look like?
You have been at the mercy of a company for decades and suddenly, you are gifted forty hours of free time every week.
The question is, what do you do with this time? Do you have hobbies? Do you have friends to see? While part of the lure of retirement might be eradicating total structure from your life, a lot of people find that having some form of routine is crucial to their post-retirement happiness.
Why are you retiring?
This might seem like a strange final question to ask but give us time.
Some people have their hearts set on early retirement but don’t quite understand why. It means that once they retire early, they don’t know what to do with themselves and are struggling to find meaning.
If you are well and truly sick and tired of work, this question is not for you. However, if you quite enjoy your work, you might want to question whether or not retirement (at least full-time retirement) is the right thing for you now.