It is never too early to start planning for retirement. However, retirement may not happen exactly when you expect it to. If you’re not prepared for it, early retirement can have a negative impact on your financial health and can become more of a curse than a blessing. That is why our financial advisors at Compass Financial Services are sharing their tips to help you prepare for early retirement.
How to Prepare For Early Retirement
Whether you’re someone being forced into early retirement or you’re making the choice on your own, there are many things to consider. But first, we want to talk about why so many Americans are being forced to retire early and what kind of impact it can have on an individual.
About 50% of retirees end up having to retire before they plan on retiring leading to financial obstacles and other challenges. There are two major reasons this happens. The first being health and disability reasons. In many cases, workers develop health complications, experience an injury or something else that might affect their ability to perform their job, often leaving them unable to complete their job’s duties.
The second reason many are retiring early is because many are being laid off before they’re ready to stop working. In 2020 when the global pandemic first began, this was unfortunately a common occurrence that many individuals and families had to navigate. For this reason, it’s important to plan ahead for retirement as it will prepare you for any potential outcome.
Top Things to Consider for Early Retirement
As we briefly mentioned above, there are many variables to consider before retiring:
- Health Insurance - You likely have health insurance through your employer, so if you are forced to retire early, it is a big expense you need to take into account when your employer will no longer cover it.
- When to Claim Social Security - If you work until you are 65, then you can delay claiming your social security, but if you want to retire early you’ll need to start thinking about when you want to claim it.
- The Longevity of Your Financial Plan - When you retire early and stop earning an income, are there other ways you can make contributions to your retirement plan? Try to think in advance about how an early retirement would affect your long-term savings. Our advisors plan for many different scenarios when working with Iowans who are planning for retirement.
How much do I need to save for retirement?
When it comes to saving for retirement, there is no one-size-fits-all answer. Luckily, there are several online calculators that can produce a good estimate for your particular circumstance. All you have to do is enter your age, salary, current savings and how much money you are saving per month and it will tell you how much money you can expect to have at retirement age, and how much you will actually need. It’s important however, to keep in mind that these online calculators do not take into account things like health care, leaving a legacy or lifestyle goals like travel. That’s where our team of experienced financial advisors can help!
Compass Financial Services Can Help You Plan For Early Retirement
Early retirement doesn’t have to be a surprise. At Compass Financial Services in Des Moines, we offer retirement planning services for this very purpose – to help Iowans prepare for and work towards an early retirement. Contact our financial advisors today and get a complimentary initial consultation with one of our experienced advisors. We will work with you to create a customized plan that helps you pursue your financial goals. Get started!
*The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.