Retiring early is the dream of many people. They can travel, develop hobbies and get rid of the nine-to-five life while they are healthy. However, when the salary stops, financial pressure and life vacancies may follow. "Kiplinger" compiled financial experts to remind you that just because your savings appear to be sufficient, it does not mean you are ready for retirement. If the following 8 warning signs appear, it is best to slow down first.
1. I have never tried to live on retirement income. Don’t just estimate expenses on paper. Experts recommend starting by spending only the amount you expect to have available after retirement for six consecutive months and saving the difference in salary. If you feel tight now, it may be even more difficult to adapt after retirement.
2. Failure to prepare for the worst-case scenario. In the early stages of retirement, if the stock market falls, inflation remains high, or you suddenly need to repair a house or take care of your family, will your funds be able to sustain it? There are still gaps in a plan that only works when everything goes well.
3. Failure to calculate taxes after retirement. In the United States, there may be tax-saving opportunities between stopping receiving a salary and starting to receive social security benefits and withdrawing from retirement accounts; however, large conversions or withdrawals may also increase federal health insurance premiums two years later.
4. Lack of social circle outside of work. Not only will you lose your salary when you leave your job, you may also lose the people you interact with every day. Clubs, volunteers or regular gatherings can be arranged in advance to keep people connected during retirement.
5. No long-term care plan. The cost of care in later life can disrupt your retirement budget. You don’t have to buy insurance, but think about how much money to set aside and whether you’re willing to sell the property to pay for it if the need arises.
6. Just want to escape a bad job. If your thoughts about retirement are mainly due to workplace stress or burnout, you can first consider taking a vacation or changing careers. If you continue to have income, you can also have more time to determine what kind of life you want to live.
7. Underestimate how long you are likely to live. Calculating only on average life span, you may run out of savings in your later years. You might as well try to calculate whether your pension will still be enough when you live to be 90, 95, and 100 years old.
8. No consensus with your partner. One party wants to travel, and the other party wants to spend time with their children and grandchildren. There may be conflicts in terms of money and time arrangements. Before retiring, you should discuss your life goals and leave space for your own activities.
