Dreaming of an Early Retirement? Consider These Five Actions First? - 1
By Saghir A. Aslam
Rawalpindi, Pakistan
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities)
Your ability to enjoy an early retirement could depend on how soon you identify and address any gaps you may have in your plan. Here’s what to consider next. Retiring early might be something you’ve daydreamed about - or something you’re planning. Even if it’s your goal, it can be smart to prepare for it so you can feel empowered to make the best decision for you in case of an unexpected event such as a late-career layoff or even a health crisis.
How do you define early retirement? Is it prior to age 62 when Social Security benefits can begin?
Maybe early means before age 65 when Medicare coverage begins. Based on your birth date, your full retirement age as defined by Social Security may not be until age 66 or later. In order to develop a plan, it is helpful to define a retirement age that makes sense for you. Being able to retire at your desired retirement age could depend on identifying and addressing any gaps in your retirement plan sooner versus later. Effective planning is the key to helping ensure that someone’s resources will fund a happy, secure retirement.
- Know your goals and where you can be flexible
Well-rounded retirement planning is about more than managing money. “I always talk about managing a portfolio of a goals,” Knowles says. That means outlining what you hope to accomplish with early retirement, understanding what you’ll do with your time, and making sure that you, and if you have one, your partner is on the same page. For example, do you hope to travel extensively? Or spend more time cooking, creating art, or volunteering? Before retirement, many people simply focus on accumulating lots of assets and assume that those assets, will pay for whatever they decide to do, Knowles sys.
Don’t assume, Knowles counsels. Targeting a certain amount of assets isn’t enough, as health care costs or other needed expenses may take priority over recreation. They key is to create a retirement plan with built-in flexibility. In other words, what goal are you willing to change? And how will you change them? “It’s having options for the tradeoffs that could arise.”
Many financial advisors now recognize that spending in retirement can be the same as or even higher than what individuals spent before retirement. This is due to more active lifestyles in retirement and to the increasing costs associated with health care and other necessities.
To prepare, Knowles suggests establishing a baseline budget before retirement that you keep updated over time. This will help you understand and plan for the amount of income you need to live, pay for health care, and meet other obligations. Doing this can also help you see places where you can cut expenses to help you save more for retirement. We can’t control market. We can’t completely control our health, we control inflation. But we can control what I spend on things other than necessities.”
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)
