Wednesday, June 23, 2010

What about Early Retirement

Many people fantasize about retiring early, but the reality may not be as pleasant as the fantasy. Early retirement may not be strictly voluntary, but may occur under pressure. Because business are constantly cutting costs, restructuring, and downsizing to increase profits, employers offer “early retirement” packages as incentives to encourage older, highly paid employees to retire sooner than planned.

Factors to consider when contemplating a voluntary early retirement, or evaluating an early retirement package, include the following:
  • Fewer working years in which to save
  • More years over which to stretch retirement savings
  • The psychological impact of not working
  • Need to reduce living expenses
  • Retraining for a job that could provide part-time income
How Much Do You Need?

The sooner you begin planning your retirement, the better off you will be.

Whether or not to take early retirement is not an easy decision. You must analyse your financial resources and estimate what your expenses might be after you retire. Consulting with a financial planner to guide you through the decision-making process is a wise choice. Calculate the amount you can expect to receive after you retire and the difference between that amount and early retirement amount – how will that difference decide your future lifestyle?

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