The implications of early retirement
It takes massive amounts of long-term discipline, planning and sacrifice throughout your working career to make early retirement possible. Very few of us can make it possible – especially if we want our retirement lifestyle to at least match our current lifestyle.
Here are a few things you need to consider very carefully before you make any firm decisions. The questions are tough ones, but they are crucial. As always, it is strongly recommended that you discuss your plans with your financial planner before you take the next step towards planning your dream retirement.
Fewer years to save: If you retire at 55, how much less will you have saved than if you continued to work into your 60s? Are you maximizing your retirement fund contributions in anticipation of this? Are you making the most of tax deductions by making additional voluntary contributions whenever you can? Have you created a realistic plan to pay off all your debt by the time you stop working?
More years to finance: Will you have enough money to see you through three or four or even five more decades of life – and potentially rising medical expenses, should your health deteriorate? Similarly, if you need to move into a retirement home or an assisted living facility, will you be able to afford this?
Mental health: Are you sure you will enjoy retirement? Will you have enough money to indulge your hobbies and travel dreams? If you grow bored or listless, do you have a plan to counteract this? Will you be able to take on a part-time job or ‘side hustle’ to keep your mind alert – and possibly supplement your retirement income as well?
Your loved ones: Will there be others who depend on you financially after you retire? If so, have you discussed your plans with them, and have you factored in the possibility that some of your family members may experience unexpected hardship, even if they are coping now? And even if none of this is the case, will you be able to leave a legacy for your dependents, or will your savings be depleted?