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Once your kids are out of the house and beginning to live independently, you start thinking about early retirement. If you’ve been planning for this, congratulations on your hard work and financial know how. Before you give your employer notice, here are a few things to consider at your life stage about early retirement.
What about insurance?
If you are retiring early, you may lose your employer sponsored coverage and you won’t be eligible for Medicare until you are 65 years old. Unfortunately, as we age, we generally encounter more medical and dental problems and need more prescriptions to keep our bodies in good working order. This makes it extremely risky to go without some kind of health insurance coverage. It is a good idea to shop around for medical and dental insurance so that you can find a plan that fits within your early retirement budget. That way, you can afford to stay healthy without dipping too far into your retirement savings.
Also keep in mind that health insurance isn’t the only kind of insurance you may need when you retire early. Also be sure to think about your life insurance needs. Make sure you have enough coverage to protect your spouse and any dependents. Also, keep in mind that the proceeds of life insurance policies are payable immediately and generally income tax free. Also consider long-term care insurance. Though the money you have saved and invested for your early retirement may last you while you are in good health, if you were unable to live independently, the money might not go as far. Sit down with a financial planner and discuss your needs for insurance as you approach your early retirement.
How can I continue to make money?
When your kids move out of the house and you are thinking of taking an early retirement, you probably have the perfect opportunity to set up a home office for freelance work or a consulting business. You may have caught the early retirement bug, but aren’t quite there financially, in which case you need to have some supplemental income. Consider a working early retirement so that you can enjoy your time as an empty nester, but still have some income to bolster what you have saved and invested thus far.
Can someone tell me if I have enough to retire early?
Before you hand in your resignation, it is good idea to have a financial planner assess your retirement savings and investments so that you know whether you are prepared to take an early retirement. A financial planner will be able to tell you whether you have enough money to have a comfortable retirement with what you have. If now is not the right time, he or she can advise on how to get on track to retire soon, as well as analyze your cost of living and other parts of your financial profile so that you can set a reasonable timeline.
Published on January 08, 2007