Client login

The Early Retiree's Financial Planning Guide

Early retirement. Those two simple words may conjure up any number of feelings ranging from excitement to envy to complete bewilderment. Just how do they do it? Early retirement is a dream for many Americans, and it is totally possible – in order to make it happen, though, you need to have a financial plan in place.

Defining Early Retirement

Dream or no dream - what exactly is early retirement? While there is no official definition, early retirement typically refers to leaving the workforce before age 65. That could mean retiring at 62, 55, or simply earlier than you thought you would. A 2018 poll showed that approximately 50% of Americans hope to retire by age 60.

It’s not just basketball players and business heirs who retire early. Sometimes your company is acquired, a smart investment pays off, or your part in the tech wave of the 90s leaves you cushioned for life.

Early retirement is also common for those with significant military, state, or civil service (such as firemen and policemen) under their belts. These professions are some of the few that still offer a full pension and health benefits before the age of 65.

This Business Insider article shares inspiring stories of people who retired in their 30s and even in their 20s.

What’s Different about Early Retirement?

If you dream of leaving the workplace behind or traveling the world sooner rather than later, early retirement could be for you.

When considering your financial retirement planning, consider these unique pluses and minuses to retiring early. A realistic picture of early retirement is key to getting the most out of your years of freedom.

Here are some important differences to keep in mind when looking ahead to early retirement:

Retirement Planning for the Longer-Term

Whether you retire at 55 or 45, everything from housing costs to healthcare will be stretched over a longer time period than normal retirement. Combine that with our rising life expectancy, and it becomes crystal clear that you’re in this for the longer-term.

  • Use an online retirement income calculator to estimate your retirement needs, taking into account:
    • Your current monthly income
    • Age at which you want to retire
    • How much you’ve already saved
    • Projected monthly expenses
    • Any potential pension or social security income
  • To help you create a long-term investment strategy, consider partnering with a fiduciary financial advisor such as a CERTIFIED FINANCIAL PLANNER™️ (CFP®️) who specializes in retirement planning

Shifting Priorities

Throughout your longer retirement, your priorities are likely to change – so don’t neglect planning ahead for those phases of life that are yet to come.

  • As you go from raising teens to an empty nest, costs, emotions, and priorities are likely to shift.
  • At some point, caring for aging parents may give way to caring for your aging partner, or both.
  • At a certain age, the travel and adventure you once valued may be replaced by the desire to settle into a community. For Denver retirees, this guide will help you make the most of your community and your retirement plan.

A CERTIFIED FINANCIAL PLANNER™️ (CFP®️) can help you make strategic decisions to prepare for those life changes which will affect your overall retirement investment plan.

It's Lonely at the Top

Early retirement can be a lonely journey at times. Many early retirees miss the social and teamwork aspects of work life. Also, friends and colleagues are still working, which may leave you longing for companionship.

Here’s what you can do:

  • If your partner is also retired, travel together. Another option is joining a group trip with others in the same situation.
  • Get involved in local activities and develop new hobbies in your own city. Fortunately, Denver has lots to offer retirees, like national parks, craft beer and fly fishing.

Three Steps to a Strong Early Retirement Plan

1) Examine Your Investment Options

If you know you want to retire early, don’t miss your chance to maximize savings and investments while you’re still in the workforce.

  • If you have an employer-sponsored 401(k), make the maximum contributions and take advantage of any employer funds matching program.
  • Know the difference between a Roth and Traditional IRA and make the maximum annual contributions to either (or both) retirement accounts.

2) Prepare for the Unexpected

Even when you’re living the good life, stuff happens. Planning for a rainy day is an essential part of any retirement plan, and that goes for early retirees as well.

  • Have a life insurance plan in place to ensure financial protection for your loved ones in case anything were to happen to you.
  • Invest in long-term care insurance to protect you in the event of a chronic medical condition, disability, or disorder. Long-term care will pay for many things not covered by normal health insurance.

3) Get Specific

A CERTIFIED FINANCIAL PLANNER™️ does more than just crunch numbers. Clearly defining your top priorities for retirement, all the way down to the daily details, will help you and your CFP®️ come up with the best financial plan for the retirement you want.

Think about your post-work life goals:

  • Is your lifestyle more nights out and elegant clothing, or more dinners at home and yoga pants/sweats?
  • If you want to travel, where do you want to go? Are you leaning toward long-term travel or shorter vacations? Luxurious destinations or a quiet cabin by the river?

If you’re determined to make early retirement a reality, we want to help you succeed. At Wealth Legacy Institute, our goal is to help you plan for the retirement you really want, not the one you think you should have, or what you think you can afford.

For more tips on making your retirement plan work for you, get The 2019 Guide to Retiring in Denver.

2019 Denver Retirement Guide

Ready to take the next step?

Let’s talk!

Explore what’s possible for you during your retirement

Trade Tariffs Can't Spoil a Good Retirement Plan

The world watches intently as the U.S. and China go head to head over exports and manufacturing. Since the start of 2018, the two powers have imposed ...

September 30, 2019

Learning the Hard Way: Not All Advisors Are Created Equally

George and Rachel thought they were doing everything right when it came to formulating their personal retirement plan.

September 23, 2019

Avoid These 5 Bad Travel Habits to Save Thousands

Many of us have dreams of traveling more – hitting the open road to explore cuisine, culture, and city life. If that’s you – congratulations! You’ve e...

August 22, 2019