Planning for Early Retirement

'Retirement' conjures up images of lazy mornings, fishing trips and unlimited golfing hours. Retirement is considered as a 'golden period' of one's life. It is the time when life offers you the pleasures, which you missed out while working hard for your family. If you plan an early retirement, the golden period will come even nearer. However, life may not be as hunky-dory as imagined if you fail to plan it properly. Depending upon how you wish to spend your post-retirement life, several aspects have to be considered while planning. Financial aspect is the most important one, so start organizing your finances, the moment the thought of retirement strikes you.

The decision of retirement should not be taken overnight and single-handedly. Your retirement is likely to affect the life of your family members, particularly your spouse. Hence, involve your family in decision making as well. Give yourself some time to assess the pros and cons of your decision. Once you have made up your mind, start planning meticulously.

Following early retirement planning tips may help you to plan your life.

The agenda of early retirement plan should focus on financial planning. Work wisely on your financial situation. You can seek an expert, who can give you some retirement planning advice. Be realistic and practical in your approach. If you are planning a complete retirement and intend to spend the rest of your life in plain leisure, think again! It's not at all a good idea in this troubled time of economic slowdown. If your retirement decision is not influenced by a terminal illness or other genuine problem, always keep your options open for a part-time job. It might take some burden off your spouse's shoulder.

Assess your current lifestyle, and the one you wish to lead post-retirement. Curtail unnecessary expenditures because every dollar that you save now will make your retirement life easier. To cover your expenses, you will need about 70 percent of your pre-retirement income if you are an average earner and 90 percent or more if you are a low earner. Saving as much as possible while you are still working is the only way out. Hence, give the top-most priority to saving.

Do not pile up debts. It's very unfortunate if you cannot clear your debts before retirement. Consider the inevitable health expenses that are likely to occur in later life. Keep aside a major chunk of your pre-retirement income to cover your and your spouse's medical expenses. If you plan to make contributions to charity or other causes, make provisions for it as well.

If your organization offers retirement schemes or any tax deduction scheme, always opt for it. Contribute as much as you can for plan 401(k), which allows you to save for post-retirement period, by deferring income taxes on the current income. Open a savings account which you are least likely to touch and deposit a substantial amount of your income in it.

A well-planned early retirement can open a plethora of avenues for you. Most people don't find time to pursue their interests or hobbies while they are working. You can use your post-retirement time to accomplish those things that you were yearning to do all your life.