Mistakes Made in Early Retirement

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 and you were 66, 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 with early retirement.   

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 just work out. After all, retirement is very appealing at this stage of your life. It is easy to rationalize whether or not it makes sense. Rationalization is the enemy to common sense. Be very realistic and get into the details to get a clearer picture of whether retirement today 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 think twice about retirement. With the surplus only being $100.00, there is not much room for error. It doesn't give you much room for financial changes or the effects of inflation.  A good retirement plan provides plenty of cushion for the unexpected and there is always unexpected expenses of some kind that comes up.  

Not creating an investment plan that coincides with your risk level 

Of course, this applies to any time you retire whether early or on-time. It is very important that you have the appropriate risk level in retirement. First you want to take an inventory of your investment accounts and consolidate them into one place. Second, it is important 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 very important role in this process. It is important to get the right one with the right motives. A financial advisor who is primarily 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 so that you can make a prudent 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 make a decision without God's peace. When you have God's peace, you know it is the right decision. Even though you may not have a peace about going forward with early retirement and it is disappointing, 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 info@prudentmoney.com. 

Bob Brooks

Bob Brooks is a Financial Advisor and host of the Prudent Money Radio Show, heard every weekday from 4:30 PM - 5:00 PM on FM Radio 91.3 KDKR.

For questions and or comments, feel free to contact Bob at info@prudentmoney.com