4 Roads to Early Retirement

The happiest workday is Friday, according to a recent study by the fitness tracker company Jawbone. And people are happier on weekends than they are during the week. In other words, people are happier when they’re not working. Many of us have, for one reason or another, dreamed of early retirement. A TIAA-CREF survey from 2014 suggests that the biggest regret of retirees is that they didn’t retire sooner. Maybe our career has plateaued, the workplace has developed a poisonous atmosphere or we are just sick and tired of the job. Some of us have early retirement thrust upon us when we are downsized out of a job for the benefit of someone else’s bottom line. Whether by choice or chance, retiring early is easier said than done. But don’t be scared. It may be the key to a happier life. If you hate your job, or if your company is in trouble, the smart move might be to take matters into your own hands, decide whether you can retire early and then map out a way to do it. Here are four clear routes to early retirement, and one road hazard to avoid.

1. You have enough money. 

© Corbis

This is the most obvious path to early retirement, but for many of us also the most unrealistic. Nevertheless, there are still a few people who enjoy a generous defined-benefit pension that kicks in after 20 or 25 years of service. This might be enough by itself to enable you to retire. Or maybe you had a good career, lived frugally and built up a substantial retirement nest egg. I know one accountant who retired at age 49. She made a good salary and saved a lot of money. And since she was a financial professional, she was confident she could manage her money. Due to her hard work and diligent saving, she is enjoying life these days.

2. You have another career in you. 

Technically, this is not retirement. But it solves the problem of hating your job and wondering how to extricate yourself from a bad work environment. One friend of mine who was a production manager at a struggling printing company held a secret desire to become a teacher. He saved up some money, did his research and at age 54 jumped ship to enter a fast-track program designed to train mid-career individuals to become math and science teachers. He left work in November, started the program in January and was teaching middle school science by August.

3. Your spouse has a good job.

You can retire early if your spouse is earning well.

© Steve Prezant/Blend Images/Corbis You can retire early if your spouse is earning well.

My brother-in-law took a retirement package from his computer company when he was in his mid-50s. He had a daughter in college and a son still in high school, and I asked him how he could afford to retire with those responsibilities. He smiled and replied, “The secret? A working wife.” His wife had worked when she was younger, took off a dozen years to raise their two children and was more than ready to go back to work – at what turned out to be a very convenient time. But he is not the only guy who’s enjoying early retirement while watching his wife go off to work every morning.

4. You’re prepared to seriously downsize your lifestyle. 

© Tim Hale Photography/Corbis

Some people scoff at professionals who advise us not to retire until we have $1 million in our retirement accounts, or until we can replace 80 percent of our pre-retirement income. If you’re prepared to sell your home, move to an area (even overseas) with a low cost of living and just enjoy life rather than try to keep up a middle class lifestyle, you can retire with much less money. It’s a serious adjustment, but for some people it’s the right thing to do.

Road hazard. If you retire before 65, the age you become eligible for Medicare, make sure you don’t go without medical insurance. My friend the teacher stayed on COBRA for the nine months he was out of work, then signed up with his school’s medical plan. My brother-in-law had his own retirement medical insurance, and his wife’s new job covered the kids. And now, of course, you have the option of buying insurance through your state’s health insurance exchange due to the Affordable Care Act. Finally, don’t retire just to get out of a job. Have a vision of what you’ll be doing once you leave the workplace – whether it’s launching a new business, starting a new hobby or embarking on a road trip. You will probably have to watch your expenses and live a more modest lifestyle. You might be poorer, but you’ll probably be happier.

Written by Tom Sightings of U.S. News & World Report

(Source: U.S. News & World Report)

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