WHEN THE RUSH TO RETIRE EARLY GET YOU IN TROUBLE
“Achieving financial independence, retire early” gives you new freedoms and opportunities, but this phase requires a lot of financial goals and retirement planning. Here are the signs that the rush to retire early will get you in trouble.
WHEN THE RUSH TO RETIRE EARLY GET YOU IN TROUBLE
If you're thinking about achieving financial independence, chances are you've had a retirement planning carefully in advance. That's a good thing, no matter how much you save. To achieve this goal, you need to do some tasks to make sure your money is spent in the right places which will enough to help you live comfortably and maintain this living way for many years to come. Therefore, the "FIRE" plan – financial independence, retire early, is not something everyone can do.
Reaching the "FIRE" goal is not always a necessary and sufficient condition for early retirement. In addition to this factor, you need to consider other issues for your retirement planning. If you have these below signs, it's possible that the rush to retire early will get you in trouble.
1. The rush to retire early will get you in trouble if you have misplaced savings
Even if you hit your savings goal in your retirement account, you may not be able to retire as soon as your retirement planning. Especially for those who want to retire in their 30s or 40s, there is a significant gap between early retirement and age, making it difficult to use a retirement savings account for free.
Retirement accounts like 401(k) and IRAs both require a minimum age for withdrawals and may incur a 10% penalty fee if you withdraw early. For 401(k) and IRAs, the minimum age is 59.5. While there are some exceptions - for example, the 55 rule for those who retire between the ages of 55 and 59.2, not all of them could apply.
When the rush to retire early get you in trouble / ph: pexels
As a result, you will need another savings in addition to retirement fund such as a personal taxable investment account. While there are no tax incentives like 401(k) or IRAs, these accounts do not require a minimum age for withdrawals.
2. The rush to retire early will get you in trouble if you don't have a backup plan
During your early retirement time, you suddenly realize that this time is not as fun as you thought. An unexpected expense, an unexpected family problem that your retirement fund can't afford, stock market volatility, ..are all factors that can have a big impact on the money amount you have saved for your early retirement.
Chances are, you'll end up in a situation like this and find you need to get back to work. And that's what you should think beforehand for retirement planning.
Having a plan to cut costs and increase income during early retirement is crucial to making sure things go as smoothly as possible. Furthermore, having an “out of control” fund in your retirement planning also gives you peace of mind.
3. The rush to retire early will get you in trouble if you don’t think of cutting costs to make your living less expensive
Each person has their own choice about early retirement. But most follow FIRE – spend less and save more.
You maybe think about moving to an area with lower house prices or consider monthly services to cut living costs.
Even for those in retirement age, cutting costs and simple living are good solutions in this phase. Cutting costs is a good way to reduce the need for a backup plan and help maintain your savings.
WHEN THE RUSH TO RETIRE EARLY GET YOU IN TROUBLE
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[RETIREMENT PLANNING] 5 KEY PRINCIPLES OF FINANCIAL MANAGEMENT FOR EARLY RETIREMENT
Early retirement at the age of 35 with a huge money amount in the bank account? Here are 5 key principles of financial management for early retirement but many people do not take it into account.
Early retirement at the age of 35 with a huge money amount in the bank account? Here are 5 key principles of financial management for early retirement but many people do not take it into account.
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