Early retirement: The tug of war between aspiration and practicability
When asked about what is the best time to retire, many would say the earlier the better. However, retirement cannot be done impulsively – you need to be fully prepared financially and mentally. If you think about it carefully, the idea of early retirement usually works itself out.
If you retire early, you shorten your time to earn and lengthen your time to spend. Simple math shows that you will need to save up much more for early retirement.
Income during retirement
Do you have other forms of income from investments such as rental income, annuity, bond interests or stock dividends that offers you financial comfort and security for your retirement life? Alternatively, you can consider part-time work to be "semi-retired" to support your everyday expenses.
Before deciding on early retirement, check that you have adequate medical insurance coverage, or if you are entitled to post-retirement medical benefits from your employer. Without adequate medical coverage, one major sickness could deplete all your reserves.
Some people work in order to service their debts. For example with housing loans, payments will stretch into many years. If you still have debts to clear, it may be too soon to consider early retirement.
Changes in lifestyle
You will have more time for yourself when you leave your nine-to-six life behind. Conversely, you may also have less to do to keep yourself busy. Consider the objectives of your life after retirement. You could end up spending more because you have more free time for dining, holidays and other activities. Budgeting and managing your spending properly will be key to ensuring that you have sufficient funds to support yourself and still be able to enjoy life after retirement.
Support from your partner and family
You are more likely to retire happily if you have the support of your partner and your family.