Information Regarding Early Retirement Questions And Its Potential Issues

Posted by on April 12, 2012 | No Comments

Early retirement is a sticky business for some. Their reasons for wanting early retirement stem from a variety of different sources; some do so because of medical issues, others are raking in so much money, it’s an obvious choice. Whatever your reasons for wanting to take an early retirement, you may be wanting to know some important details about the true disadvantages of doing so and perhaps even some unforeseen advantages. Here are some answers to your early retirement questions.

What Can Be The Aftereffects Of Early Retirement?

One of the psychological implications with early retirement is that you’ve spent so much time preparing for retirement and arranging it that you’ve not given yourself purpose for the actual retirement. Some people find that a job gives them a focus in their life, while those without have to fill their time up with things to do. This lack of focus can lead to some feeling they have no purpose any longer. Due to this, it’s important to consider what you will do with your time before you rush ahead with your plans.

The main issue with early retirement is that while normally you’d have longer to save money and less time to spend it in, the reverse is true for early retirement. You’ll have less time to save and more time to spend it, meaning you’d have to have an exceptionally increased income over the average person. Hoping that your money will last you until Social Security happens might not work for some, as it comes at a reduced rate and might not be able to sustain your lifestyle. This is excluding any emergencies that might arise and require you to dip into your savings to fix.

How Much Money Will You Need For An Early Retirement?

First, we’ll assume that you’re retiring at forty. With an average lifespan of around eighty in some first-world countries such as the US and UK, that extends your retirement period to around forty years, instead of twenty. If you work from between 16-18, this leaves you with just over twenty years to gather enough to cover your lifestyle for that retirement period. If your living costs are around $40,000, then this could be, including inflation, up to $1,000,000 required for maintaining your lifestyle for the next forty years.

To do so, we can follow a simple rule of thumb, which is multiplying it by 25. The result is $1,000,000 for forty years of retirement. Assuming you’ve worked since you were 16-18, this leaves you around twenty years to make a living to last you double that. For many, this is simply unfeasible and unattainable in such a short time.

Learn all you need to know about long term care insurance by searching online. There you will find many answers to your early retirement questions. Go online today and discover more.

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