| Early retirement (ceasing full-time employment before | | | | When you retire, you ought to have a sizeable |
| the full or normal retirement age) is a mixed blessing. | | | | retirement fund that is impervious to poor spending, |
| On one hand, you have more time and freedom to | | | | medical bills or increased living expenses. You cannot |
| enjoy the rest of your life. On the other hand, you | | | | accumulate wealth merely by saving. You must |
| have a higher risk of outliving your savings because | | | | invest- and invest wisely at that! Although you have |
| you may live for a longer period without full-time | | | | a shorter investment horizon when you retire early, |
| employment. | | | | you need to allocate a greater percentage of your |
| Unless you are independently wealthy, you have to | | | | portfolio to capital growth options. |
| plan carefully to retire early without jeopardizing your | | | | 5) Allow pension plans/ annuities to mature beyond |
| financial future. To mitigate the attendant risks of | | | | your retirement age |
| living longer in retirement, you must accelerate the | | | | Having your annuities and individual pension plans |
| speed at which you obtain financial independence. | | | | mature at the time of early retirement is not a good |
| The following tips can help you to achieve this. | | | | idea. You give them a shorter accumulation/ benefit |
| 1) Eliminate or reduce debt quickly | | | | period and annuities have lower payout rates at |
| You should not bear the same debt-servicing ratio | | | | earlier ages as well. It is better to stagger the |
| during your retirement period. If you are planning to | | | | maturity of these plans and find other means of |
| retire earlier, you must try to eliminate or significantly | | | | income until you really need them. When planning to |
| reduce your debt even faster. You may be forced to | | | | retire early, you should use those plans to |
| bear some level of debt when you retire early. | | | | compensate for post-retirement inflation. |
| However, having too much can handicap your dreams | | | | Early retirement planning magnifies the importance of |
| of early retirement or create discomfort when you | | | | proper financial planning. Some other tips for retiring |
| retire early. | | | | early include:a) Maximising your employer's pension/ |
| 2) Perform a robust retirement needs analysis | | | | savings plan- this would give you greater returns on |
| Regardless of when you plan to retire, you need to | | | | your contributions if they were matched.b) |
| do a proper retirement needs-assessment. However, | | | | Diversifying your income- when you retire early, you |
| when you plan to retire early, it is more critical to do | | | | should plan for multiple sources of income through a |
| a financially prudent needs-assessment. You should | | | | combination of having money work for you and |
| assess the impact of inflation before and during | | | | earning money by doing things you love.c) |
| retirement, retain a higher percentage of your | | | | Incorporating all the methods of financial planning to |
| pre-retirement income and plan to leave more money | | | | assist you- budgeting, financial goals and proper |
| for contingent expenses. A post-retirement analysis- | | | | portfolio diversification are some of the basics that |
| based on the figures derived from your | | | | you will need. |
| pre-retirement analysis- will be very handy as well. | | | | Planning for an early retirement requires attention to |
| 3) Get lifetime medical coverage if possible | | | | financial planning and retirement planning- particularly |
| It is important to financially protect your health and | | | | evaluating and monitoring retirement needs. An early |
| well-being. You must ask yourself,' How will my health | | | | retiree must be more meticulous, attentive and |
| and well-being be protected when I no longer work?' | | | | disciplined. By following the basics of retirement |
| Self-insuring is always a risk- particularly when you are | | | | planning, you should be able to enjoy more of your |
| dependent on money working for you. | | | | life without worrying about outliving your savings. |
| 4) Place emphasis on capital growth | | | | |