4 Gaps You Need To Fill If You Want To Retire Early
Posted on: 11 November 2019
Do you want to retire early? More and more Americans are actively choosing to work toward the goal of retiring 10, 15, or even 20 years early. For some, this seems like a pipe dream. However, you can do it successfully by filling these key financial gaps:
1. Wants and Needs
Americans have a hard time defining what is a 'want' and a 'need.' There is a fundamental gap between what people often know is a 'want' and what their emotions tell them about that expense. While you are drawing a normal salary, this might not be a big problem. However, to retire early may involve much tighter control over spending habits. Make it your goal to constantly evaluate the actual distance between what you think is a 'need' and what really is.
2. Health Care
If you plan to retire before the age when you can apply for Medicare, you will need to arrange for health care costs to be covered some other way. Some industries and careers generally include retiree health coverage you could access. You may be able to use Affordable Care Act tax credits to pay part of your private insurance premiums as well. Talk with your investment advisor about ways to pre-fund healthcare coverage in your portfolio.
3. Monthly Income
To make your nest egg last as long as possible, you may need to supplement it with some small monthly income. Such income could be passive — such as rental homes or a dividend-based investment portfolio — or it could be active, like woodworking and selling the items at local fairs. Look at a variety of options to create a small but reliable side income stream that will prevent you from draining your savings too early.
4. Filling Time
One gap that many of those planning to retire early fail to fully understand is the gap between the extra time on their hands and their ability to fill it comfortably. If you've spent a lifetime working at a career, you may not actually enjoy sitting around fishing all day. This gap sometimes causes people to go back to the workforce or suffer from emotional challenges. Before retiring, set up your new lifestyle through things like volunteering, consulting, or caring for grandkids.
As you work to fill these financial and emotional gaps, you can put yourself on a solid path toward early retirement. Get started today by meeting with a registered investment advisor in your area. Companies like Tannin Capital, LLC can offer more information.
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