By Brenda Weathers Hargroves
A recent Employee Benefits Research Institute survey revealed the top three reasons people retire early are 1) they can afford to, 2) workplace changes, and 3) health reasons, with 2 and 3 not related to COVID-19. The sweet spot is when you face workplace changes, you’re in good health and can afford early retirement. What’s even better is when the workplace change comes with a financial incentive. Oh, the possibilities!
Looking back on how retirement began for me, I realize I was one of the fortunate ones. I was laid off from my last full-time job at age 59. With no thought of retirement in mind, a full-time job search initially occupied my time and energy. While securing interviews was not a problem, I faced ‘overqualified’ as the reason I received no job offers.
While overqualified was the nice way of putting it, I suspect my age also came into play. After going down this road for a short time, I started to rethink my next move. What about retirement? Playing devil’s advocate, I looked at reasons why people can’t afford to retire and compared my situation.
You Haven’t Saved Enough I’ve been a saver since childhood. In fact, saving has become a lifelong game. I needed to assess my assets but was pretty sure I had enough to jump off the diving board and swim (figuratively, that is. I don’t know how to swim, but you get the idea).
You Have A Lot Of Debt
I learned early on the more you owe, the heavier the load. I’ve worked hard to remain debt-free, and it has served me well. You are in a better position to take advantage of opportunities that come along if debt is not a consideration.
Don’t get me wrong. There is a sound argument for good debt, but it should be thoughtfully managed. I only consider debt good if it serves a useful purpose. Check out millionaires’ attitude concerning ‘good debt.’
Your Expenses Exceed Your Income
I’d reached the point where I earned more than I spent several years prior to coming to the retirement crossroad. The secret to successfully accomplishing this goal is learning how to manage your finances by budgeting, acknowledging the difference between wants and needs, and then acting accordingly.
You Don’t Have An Emergency Fund
The money in my emergency fund was enough to cover my expenses for one year. Surely, twelve months was enough time to determine whether retirement was a workable solution.
You Haven’t Calculated Your Net Worth
I knew when I stood financially and was grateful my assets exceeded my liabilities. (In case you didn’t know, net worth is NOT the value of your assets. It’s the value of your assets MINUS your liabilities.)
You Need To Evaluate Your Health/Life Insurance Situation
This one can be tricky depending on your individual or family situation. Health insurance, in particular, can be prohibitive, especially when you don’t have the safety net of an employee healthcare program.
In my case, I was healthy and felt I could cover any related expenses because of the Affordable Care Act (Obamacare). The cost of life insurance was not an issue for me because I am a widow and have no children. So, I didn’t bother to purchase any. I had, however, included burial expenses in my budget.
You Don’t Know What You Are Going To Do After Retiring
Again, fortune smiled on me. I knew I wasn’t ready for 100% retirement and would likely seek part-time employment. I wanted to travel more and possibly pursue a writing or coaching career. Having the knowledge and security that comes with knowing you can manage your finances while pursuing hobbies and interests is truly a blessing. And the ability to make it all happen in your own timeframe is an added benefit.
After considering the above scenarios, I chose to take the leap and I’ve been happy with my decision ever since. I hope you will be in a similar situation if or when your time comes to make an early retirement decision. With careful financial planning, nothing can stop you from reaching this goal!
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