Life doesn't always go as planned, and if you're currently navigating a new set of circumstances that has led you to consider early retirement, it's important to proceed carefully and thoughtfully. Early retirement planning is crucial to ensure you're financially secure.
Is it possible for you to retire early? If so, what's the best way to go about it? Here's a retirement planning guide to help you decide.
Strategize Your Social Security for Early Retirement
You may be able to start collecting Social Security at age 62, but many people choose to hold off if they can. Waiting until your full retirement age (which depends on your birth year) or up until age 70 will lead to an increase in benefits. This is a key aspect of early retirement planning.
Rebalance Your Portfolio for Retirement Planning
Whether it's by re-examining your portfolio or shifting more assets to cash (or both), try to make sure you're finding the right balance and reducing risk as needed. This is especially crucial if you're considering early retirement, as you'll have fewer years to recover from market downturns.
Create a Withdrawal Approach for Early Retirement
While many retirees aim to withdraw around 4% of their investments in the first year of retirement and adjust the amount for inflation going forward, there are no set rules for success. Depending on your budgeting habits and age, you may decide to withdraw more or less. Early retirement planning often involves a more conservative withdrawal strategy to make the funds last longer.
Calculate Monthly Expenses for Retirement Planning
Don't forget about additional considerations like health care and taxes. Overall, it's important to sit down and calculate your anticipated monthly expenses (including a cushion for anything unexpected). This is an essential step in both early retirement and general retirement planning.
Need Help with Your Early Retirement Planning?
Do you need assistance mapping out your short-term, mid-term, and long-term goals? Reach out anytime to discuss your questions related to early retirement or retirement planning.
Check out our Cash Flow Hacks podcast to learn more about Tax-Free Retirement for Entrepreneurs.
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