Following the Road to Early Retirement - McKee Builders
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Following the Road to Early Retirement

October 29, 2016

If you are on the road to early retirement, or want to be on that road, there are lots of important steps to take in the near and long-term to ensure that you realize that goal sooner rather than later.

Save and Plan Aggressively

It seems too obvious to say, but early retirement requires a healthy resource base of savings. Today, with interest rates so low (and likely to remain so for the foreseeable future), there is no easy way to invest for retirement.

The best option is to save aggressively, as well as continuing to invest in your retirement account(s). Saving aggressively will likely require tradeoffs today and over the long-term. According to some retirement research, you need to start saving at least 15% of your income for at least a decade. You may be able to reduce this timeline if you power save, with at least 25% of your income.

Reducing Living Expenses After Retirement

Committing to a lifestyle which requires lower expenditures is a complementary strategy to aggressive savings. Keep in mind that once you retire, you will no longer be saving for retirement, which will reduce one significant expenditure. Depending on the level of income that you need to replace, you may need to save between 15-20 times your pre-retirement income, though it is also possible to replace less of that income if you are able to live on less.

The Importance of Moving

With the current housing boom, it may be a good time to sell and move into a smaller residence. You may also want to look at different counties and even states where real estate costs and cost of living are lower, and tax rates are more favorable. Also, a smaller and newer residence may also mean fewer house-related repair expenses.

If you can identify a retirement community that you might want to move into sooner, even before you retire, that may help you manage both your near and long-term housing costs. You might consider looking at 55 plus communities in Delaware, which offer numerous advantages, including proximity to some of our country’s most exciting cities and resources, wonderful recreational activities, low cost of living, and a favorable tax environment for retirees.

Health Insurance is Available

While health insurance used to pose a big issue for early retirement, health reform has helped mitigate this challenge. Today, it is possible to purchase comprehensive insurance policies through state exchanges. Moreover, even though your age will push up your premium, there are limits on what health insurance companies are permitted to charge, and as well as subsidies that are available. While you may still wish to go with private market insurance, at least you have more options, and you should price them all out.The long and short of it is, be thorough in your planning, and be prudent in planning your retirement. Retirement, whether early or later, is within your grasp.



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