Know these things before you plan for early retirement!

Although early retirement might be a good idea, there are several things you need to consider before you do it. Read on to learn more.

Young earners might consider retirement early for several reasons. Some feel the need to spend quality time with their families, while others may wish to pursue their dream of becoming an entrepreneur, or they may just wish to live a simple life. There are many reasons why one may wish to retire early.

Although it is not harmful to do so, one must consider the funding and sustaining aspects. People should not underestimate these aspects and rely on financial independence and early retirement (FIRE) calculators to make their decisions. This article will explain what you can do to prepare yourself for such a transition.

• Having a corpus in place

Having an adequate corpus in place is important to take care of your basic expense during retirement. There should enough money available to pay rent or property expenses, pay your bills, pay education fees, etc. Moreover, the corpus should be inflation-adjusted. This will help you save for the corpus accordingly.

• Decide standard of living

Arriving at corpus solely based on your current expenses, savings and investments would make no sense. It is your post-retirement lifestyle that should decide your corpus. Hence, do understand and list down the one-time as well as recurring spending that you might do post-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 ensure that you assume the expenses more precisely to calculate the corpus. Moreover, it would give you a feeling of peace that your goals are being taken care of.

• Is it going to be temporary?

The most important question that you need to ask will be, is it going to be just like a sabbatical or would it be mainstream. Moreover, even if you decide to make it mainstream and for any unfortunate reason it didn’t work out, then are you prepared on the psychological level to return to the job or work that you were doing previously?