How to Retire Early

Retiring early. Maybe a dream for some but not so much for other. You know, retiring early may mean different things to different people. Some conceptual stuff I want to talk about it today, and that and kind of maybe the ideas behind that. And think of this, you know, for some folks in their mind, they’re never going to retire. You know, whether that’s financially, whether that’s they just love their jobs so much or they just can’t imagine their life without having that time or that fulfillment of having not working. You know, over your lifetime, usually your career, your employment, kind of becomes part of you. Right? I mean you spend, in many cases you spend a lot of time at the office or at your job or whatever it is that you’re doing, if you’re entrepreneur, you’re probably spending most of your life building this business. So having that, stepping away from that can be a big thing. So from a retiring early standpoint, you know, this general full retirement age for a lot of folks with, you know, Social Security is somewhere between 65 and 67 right now for most folks. So retiring early would be retiring prior to that time line. I think anymore, at least when I hear people talk, when they come in the office, to them retiring early is even pre 62. You know, for most folks, you know, drawing early Social Security benefits, you can start at 62. So retiring early would even be before that. Maybe it’s some time in your 50s, or even heck, even sooner. Right? So I’ve talked to some young people recently and they’re like, you know, I hope to retire at 50, or I can’t imagine working past 55. So for you out there, if you’re in this boat and you haven’t retired yet and you’re thinking of this, what does that look like? What would that look like? And would that be attractive to you to retire early? So then, we say, if the answer is yes, I’d like to, then let’s forth a plan to do that. There’s many things that have to come into place when you’re thinking of retiring early. So, A, where’s income going to come from, right? There’s expenses that happen out there in the world. You’ve got to eat, you’ve probably have some electricity in the house, you’ve got to have a place to live, you know, all these sort of things. So what is that household budget and where is the income going to come from to do that? You probably want to factor in some fun money, some extras, because now that you’re hopefully retiring young and healthy, you’re going to want to do things and travel and you know whatever is meaningful to you to do that. So factor that in as well. How are you going to create that income? Is it through retirement savings? Is it through access to maybe a pension? Is there other investments that you have, like rental properties or something like that that is going to spit off some form of income for you. So looking to see, making sure that income is greater than the expenses coming in. Right? Health care is another thing out there. What does that look like early? You know, once we get to 65 and older, most of us have qualified for Medicare and can get on that and get those benefits. But pre 65, what does that look like? Are you going on the marketplace to get insurance? Are you able to get it through maybe retirement benefits from your current employer, something along those lines? So making sure you have strong plan from a health care perspective as well because that’s a big expense or can be a big expense and can be something maybe you’re not used to paying if you’ve had the benefit of having it through your employer before, not all of a sudden you’re tasked of having it yourself. Taxes. You know, what form of income is coming in and do I have accessibility to that money? Am I going to get a tax penalty? As an example, if I’m retiring before 59 and 1/2 and I have money in IRAs, I am going to pay a 10% early withdrawal penalty likely on that money, if I start taking it out prior to 59 and 1/2. So there’s some different rules of 401(k)s, 403(b)s, depending upon how you leave and all that sort of stuff, that may give you access a little bit sooner. But again, looking at it from a tax, a tax penalty, and accessibility to that money is going to play a role in maybe that plan and all of that. Right? So, in a nut shell here, retiring early may be a dream for some and not be for others. But if it is a dream for you, the most important thing you can do is set up a plan of how to accomplish that and what are these check marks that you have to do to get to that point, to achieving that reality of retiring early. Oftentimes when we sit down with folks that have done a nice job saving and they have this dream, it’s not as far off as some think. So, having that, you know, sitting down and walking through that and maybe there’s a few adjustments you can make early one to better that situation. And that way you can get there and realize those aspirations that you have. If this is something you’d like to walk through with our team of advisors here in Traverse City, Gaylord, Petoskey or Cadillac offices, we’d love to sit down with you for a no-cost, no-obligation visit to map out this plan so you can plan to retire well and plan to retire early.