Are You Ready to Retire?

If you’re considering retiring early, you’ll forego not only the headaches of working but also the additional earnings that could have made your 澳洲幸运5官方开奖结果体彩网:retirement even more comfortable. Make sure you’re truly ready before you leave.

Here are s♚ix sign💧s you may be able to retire early instead of continuing to work.

1. Your Debts Are Paid Off

If your mortgage is paid off and you don’t have any loans, credit lines, large credit card balances, or other debt, you won’t have to worry about making large payments during retirement. This leaves your savings and retirement income available to enjoy life and free to use in the event of an emerg🥂ency.

2. You Have Ample Savings

🌺You planned and set a goal for retirement savings. Now your investments meet or exceed the amount you were hoping to save. This is another good sign you could take early retireಞment.

If you didn’t plan for early retirement, you will need to recalculate how long your savings will last. Also, depending on your age, you may not yet be eligible for 澳洲幸运5官方开奖结果体彩网:Social Security or Medicare. Your savings will need to🐻 cover your expenses until you reach tꦉhe eligible age.

“Think ‘Rule 25🌃.’ Prepare to have 25 times the value of your annual expenses,” says Max Osbon, partner at  in Boston, Massachusetts.

The Rule of 25 is used by many participants in the Financial Independence, 𝓰Retire Early (FIRE) movement, and it depends on a 4% maximum portfolio withdrawal rate (adjusted for inflation). Many experts, though, question the validity of the 4% guideline, especially for 澳洲幸运5官方开奖结果体彩网:folks who plan to retire early. Since the 澳洲幸运5官方开奖结果体彩网:4% rule for retirement budgeting only allow🌠s for safe withdrawals for about 30 years, this means it may not provide sustainable income for individuals who retire early.

3. You Can Get at Your Savings

No one likes to pay unnecessary penalties.

If your 59th birthday was at least six months ago, you’re eligible to take penalty-free withdrawals from any of your 澳洲幸运5官方开奖结果体彩网:401(k) plans. These policies generally apply to other 澳洲幸运5官方开奖结果体彩网:qualified retirement plans, but there are exceptions.

For instance, the 457 plan doesn’t have an early withdrawal penalty. But remember that you’ll still pay income tax on your withdrawals.

There’s also good news for wannabe early retirees with 401(k)s. If you continue working for your employer until the year that you turn 55 (or after), the Internal Revenue Service (IRS) allows you to withdraw from only that employer’s 401(k) without penalty when you retire or leave, as long as you leave it at that company and don’t roll it into an individual retirement account (IRA).

“There is a caution, however: If an employee retires before age 55 [except as noted above], the early retirement provision is lost and the 10% penalty will be incurred for withdrawals before age 59½,” says James B. Twining, CFP, founder and CEO of in Bellingham, Washington.

The third option for penalty-free retirement plan withdrawals is to set up a series of 澳洲幸运5官方开奖结果体彩网:substantially equal withdrawals over at least five years, or until you turn 59½, whichever is longer. Like withdrawals from a 457 plan, you’ll still have to pay income taxes on your withdrawals.

If your retirement plans include any of the above penalty-free withdrawal options, it’s another point i🎃n favor of leaving work early.

4. Your Healthcare Is Covered

Healthcare can be incredibly costly, and early retirees should have a plan in place to cover the costs before becoming eligible for Medicare at age 65. If you💫 have coverage through your spouse’s plan or if you can continue to✨ get coverage through your former employer, this is another sign that early retirement could be a possibility for you.

Keep in mind that COBRA may extend your healthcare coverage for a period of time after leaving your job, although your 澳洲幸运5官方开奖结果体彩网:costs with COBRA may be higher than other options.

Another option for early retirees is to purchase private health insurance. If you have a 澳洲幸运5官方开奖结果体彩网:Health Savings Account (HSA), you can use tax-free distributions to pay for your out-of-pocket qualified medical expenses no matter what age you are.

5. You Can Live on Your Budget

Retirees living on fixed incomes, including pensions or retirement plan withdrawals, usually have lower monthly incom🐎es than they did when they were working.

Try practicing sticking to your reduced retirement budget for at least a few months before you actually retire. You’ll get a sense o👍f just how easy or difficult it would 🍷be to make that lower budget permanent.

“Humans do not like change, and it is hard to break old habits once we have become accustomed to them. By ‘road-testing’ your retirement budget, you are essentially teaching yourself to develop daily habits around what you can afford in retirement,” says Mark Hebner, founder and CEO of in Irvine, California, and author of “Index Funds: The 12-Step Recovery Program for Active Investors.”

6. You Have a New Plan

Leaving work early to spend long days with nothing to do𝐆 will lead to an unhappy early retirement. Having a defined plan—or even the outline of a daily routine—can help you prepare.

Perhaps y🐭ou’ll replace sales meetings with a weekly golf outing or a volunteer gig, in addition to adding daily walks or trips to the gym. Plan a long-overdue trip or take classes to learn sℱomething new.

If you can easily think of realistic, non-work-related ways to enjoyably pass your days, early retirement could be for you. In the same⛎ way you test-drive your retirement budget, try taking a week or more off work to spend your days as you would in retirement. If you become bored with long walks,ꦬ daytime TV, and hobbies within a week, you’ll certainly get antsy in retirement.

The Bottom Line

These are questions nearly all young and middle-aged workers have asked themselves: Should I leave my job and retire 💎early? What would I need? How do I know I’m ready?

When it comes to decid🧔ing if you should retire early, there are several signs to watch for. The signposts als𝓀o point to a number of plans you can make now to increase the chances that you could fulfill this dream if you end up wanting (or needing) to do so.