Mistakes Made in Early Retirement
Retirement is a funny thing. Given COVID, general working conditions, and trends, more and more people are wishing that retirement was today rather than tomorrow. This makes it tempting to take advantage of an offer to retire early from your company.
Imagine this scenario:
Here you are at age 62, and your company is giving you an option to retire early. If this were just four years later, the decision would be easy to make. Today, however, it is a tough decision to make. If you make a mistake with this decision, it could be costly. The following are mistakes that I see people make:
Assuming and rationalizing everything will work itself out
It is easy to take a general glimpse at your investments and potential retirement income and assume that everything will work out. After all, retirement is very appealing at this stage of your life. So it is easy to rationalize whether or not it makes sense. Rationalization is the enemy of common sense. Be very realistic and get into the details to get a clearer picture of whether it makes sense.
Having just enough to get by
If you find yourself needing $4000 a month and you have $4100 coming in for retirement, you might want to consider how close you are to what is coming in and what is going out. It doesn't give you much room for financial change or the effects of inflation. A good retirement plan provides plenty of cushion for the unexpected, and unexpected expenses always come up.
Not creating an investment plan that coincides with your risk level
It would be best if you had the appropriate risk level in retirement. First, it is essential to take inventory of your investment accounts and consolidate them into one place. Second, it is crucial to assess your risk level and adjust accordingly. A financial advisor can help you with this process.
Be careful selecting the right financial advisor
A financial advisor can play a vital role in this process. It is important to get the right one with the right motives. A financial advisor who primarily acts as a salesperson will rationalize along with you in your decision to retire. A prudent financial advisor will be honest with you and bring you back to reality to make a wise decision.
Retire in God's Peace
Jeremiah 29:11 - For I know the plans I have for you," declares the LORD, "plans to prosper you and not to harm you, plans to give you hope and a future.
God already knows His plans for you. Based on that, it is important to pray for direction and peace. Most importantly, don't ever decide without God's peace. When you have God's peace, you know it is the right decision. Even though you may be dealing with the disappointment of not having peace about going forward with early retirement, have faith that God has a better path for you.
Bob Brooks is a Financial Advisor and host of the Prudent Money radio show. For questions and or comments, feel free to contact Bob at email@example.com.