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A Step-by-Step Guide to Reaching Early Retirement

Eyeing early retirement, but have no clue where to even begin? We’ve got you covered.

Many in today’s workforce look forward to the day when they’ll finally be able to punch the clock one last time. No more scheduled meetings or deadlines, just ample time to live out our wildest dreams. The question now stands: How do I make sure I’m financially secure in retirement?

Current studies show that the average age Americans hope to retire is 62, but the actual median retirement age has increased significantly over the years.

This both impacts how much time we get to enjoy the fruits of our labor and how long you’ll have to plan accordingly. 41% of Americans believe financial security in retirement is merely just a dream—with Gen Y at 46%, Gen X at 45%, and baby boomers at 30%, according to a survey conducted by Natixis Global Retirement Index. While these statistics may be alarming, having a financial strategy in place can make all the difference. Planning your financial goals with early retirement in mind means you’ll have more time to enjoy your golden years free of worry.

Here’s a step-by-step guide to reaching early retirement like a pro.

1. Visualize life after retirement

The best way to get started is to have an idea of what you’d like life after retirement to look like. Are you traveling overseas to sight-see? Is your free time spent relaxing or exploring? Will you set aside more time to volunteer at your favorite nonprofit?

Paint a picture of what life could be.

Once you have a good idea of your early retirement goals, you’ll be able to plan and save according to your preferred lifestyle. Your vision becomes the foundation of your retirement plan, the key to your worry-free golden years. Visualizing will also help to mentally prepare you for the psychological and social changes that come along with leaving the workforce.

2. Plan out your healthcare and wellbeing

Medicare and retirement usually go hand-in-hand, but here’s the catch. It’s only available for individuals over the age of 65 which automatically cancels out Medicare as an option when it comes to retiring early. Fortunately, there is an alternative that won’t break the bank.

The Patient Protection and Affordable Care Act, also referred to as Obamacare or the Affordable Care Act (ACA), was implemented in early 2010. The introduction of ACA expanded healthcare accessibility to a larger demographic, providing affordable healthcare options to all Americans. Shopping your state’s insurance marketplace allows you to predetermine the annual cost of your healthcare plan so you can retire early without the financial stress of high premiums.

3. Establish your living arrangements

Now that you’ve visualized life after retirement and sorted out your healthcare plan, preparing your home will help you to maintain your current or chosen lifestyle. This is entirely dependent on the individual and may mean something different to you than it does to your peers.

Preparing your home for early retirement can mean:

  • Paying off your mortgage and enjoying your golden years in your current home.

  • Downsizing to save on monthly and annual living expenses.

  • Renovating your home for a complete refresh to mirror your life changes.

  • Relocating to your dream neighborhood.

Try knocking out any major purchases or repairs early to avoid dipping into your retirement savings.

4. Aim to continue earning an income

Leaving the workforce doesn’t mean you have to stop earning an income. Think about what kind of work you might find rewarding or monetize and chase a forgotten dream. The sky is not the limit, go big. When you incorporate a continuous income, you set yourself up for a more comfortable retirement, one where money is not a deterrent to your lifestyle.

Not excited about the prospect of continued work? Consider a Roth IRA savings plan or look into alternative investments to help fund your early retirement goals.

5. Set spending guidelines

One of the key factors in leading a comfortable life is our spending habits. This is especially important when planning for early retirement as you’ll most likely be leaving behind your main source of income to chase a care-free life. Start by setting a budget and practicing responsible spending habits to help reduce the anxiety around finances and create a healthy safety net.

At Downey Financial Group, our team of financial advisors is here to assist you throughout your life’s journey. We’ll create a plausible early retirement roadmap and financial strategy based on your individual goals so you can enter your golden years with peace of mind.

Contact us today to learn more about how we can help you retire early.

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