Planning Early Retirement?
Here Are A Few Things You Must Know!
The wise person planning early retirement will assume that financial conditions will be much different than they were for our parents. You cannot plan on Social Security paying you any amount whatsoever. If it does, take it, you have earned it.
Nor can you plan with a hundred percent confidence that your pension plan, if you have one, will be able to pay you what you are owed. Many pension plans are under funded. A recipe for disaster.
When planning early retirement, be conservative. Expect the unexpected. Plan for the worst case scenario. If you think you have enough money to live on and pay for your current and future medical needs, then by all means take early retirement.
The Biggest Mistake Retired People Make
Mark Ford, a multi-millionaire and editor of The Palm Beach Letter, wrote an article for Steve Sjuggerud's Daily Wealth Premium newsletter on October 8, 2011, stating that “the biggest mistake retired people make is giving up all their active income.”
By active income he meant money that is earned through labor or a business you own. When you give up your job or business income, it will get more difficult to get it back.
Mark said, “First, your connection to your active income is cut off. With every month that passes, it becomes more difficult to get it back.
Second, your ability to make smart investment decisions drops because of your dependence on passive income.”
Mark ought to know. He retired three times. The first time at the age of 39. When he didn't have active income, he began to worry. After returning to work, he began to feel better.
Employers are biased against hiring people who have been unemployed for more than 6 months according to an article I read in my local newspaper.
I know that is true from my personal experience. So, if you are dependent upon others hiring you in a typical job, think twice before quitting.
There are many ways a retired person can earn active income. You can start your own business. I like writing articles for my websites about things I enjoy and am knowledgable about.
I earn income from ads placed on my website, monthly. It is a great way to earn extra money, working when you want. You can read more about this online income opportunity here.
I recommend that you use the same web tools that I use, SBI.
You don't need to have any technical experience to create a website with SBI. They provide you with all the information you need to know to succeed online. You just provide the willingness to learn, and follow their advice. It works!
You could also offer your consulting services to employers. Take the knowledge you learned in life and apply it in your own business.
Or, check out my website for some home business ideas.
Planning early retirement is possible if you have active income to sustain you and supplement your savings in your IRA, pension plan, or 401(k).
How Much Do You Need To Take Early Retirement?
Planning early retirement means you must determine if you have enough savings to cover your living expenses and medical needs.
If you want to travel and enjoy the "good life" in your retirement years, you will need an income of at least $75,000. More is better.
To earn $75,000 from a typical savings of $250,000, you will need to earn at least 29.99% R.O.I. That is highly unlikely, especially in the stock market.
You need to save at least $707,018.59, and earn a minimum of 10% annually for 30 years, to have a passive income of $75,000 annually. Do you have that much in your IRA or 401(K)? If you don't, then think twice before giving your boss notice that you are taking early retirement.
You will need to plan for your old age. That means buying long term care insurance and supplemental medical insurance. You need to do some estate planning, setting up trusts, and creating the legal documents, such as power of attorney, necessary for your child or the person who will help you in your latter days, to care for you and your estate.
Planning early retirement means start early and plan for the unexpected. The more years that you can earn active and passive income will affect your enjoyment in your last years of life.
Planning early retirement will allow you to enjoy your golden years without any financial worry.
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