Retiring ahead of schedule may seem like a dream, but it is doable with the proper planning. Depending on when you were born, the normal retirement age is currently 66 or 67. If you’re planning to retire five, 10, or even 15 years earlier than that, one of the most important things to consider is how to make your savings last for the really long haul.

It will take some strategic planning to get out of the full-time workforce ahead of schꦆeduleဣ.

Create a Realistic Budget

The first step in managing your savings in early retirement is being 澳洲幸运5官方开奖结果体彩网:realistic about your budget. The money you’ve stashed away has to lastꦯ well beyond the 20 to 30 years t🉐hat conventional retirement planning is based on.

Figuring out how much you can reasonably afford to spend each year depends on what you’ve saved, your 澳洲幸运5官方开奖结果体彩网:life expectancy, and your anticipated expenses.

Scott A. Bishop, executive director of wealth solutions at Avidian in Ho🌟uston, pꦡuts it this way:

How much annual income will you need in retirement? If you aren’t able to answer this question, you’re not ready to make a decision about retiring. And, if it’s been more than a year since you’ve thought about it, it’s time to revisit your calculations. Your whole retirement income plan starts with your target annual income, and there are a significant number of factors to consider, so it is important to actually take the time to create a good retirement budget.

How Early Retirement Alters the 4% Rule

The 4% rule has long been the baseline for determining your withdrawal rate from retirement savings. This rule dictates that you withdraw 4% the first year in retirement, then withdraw the same dollar amount, adjusted for 澳洲幸运5官方开奖结果体彩网:inflation, every year going forward. Drawing down your nest egg at that rate should make 🐟it last for 30 years.

If you need your savings to last an extra decade or longer, the 澳洲幸运5官方开奖结果体彩网:4% rule may not be realistic.✅ You may need to consider dropping your♏ withdrawal rate to 3.5% or 3%.

For example, let’s say you retire at age 50 with $1.5 million saved, and you choose a moderate 澳洲幸运5官方开奖结果体彩网:asset allocation. If you expect to live another 40 years, your initial withdrawal rate would be 3.2%, a😼llowing for an initial monthly distribution of $4,000. If you waited until 55 to retire, those numbers would adjust to 3.4% and $4,250, respectively.

Knowing how much you have to work with on a monthly and y🐭early basis can help you twea🎀k your budget.

Plan Ahead for Medical Costs

People are eligible to sign up for Medicare coverage anytime during the three months before they reach age 65. If y🌌ou retire before that, you’re responsible for maintaining your health insurance until Medicare kicks in.

The monthly premiums may be manageable while you’re relatively healthy, but out-of-pocket costs can skyrocket if you d🍃evelop a serious health problem.

A 65-year-old couple retiring in 2021 will need to save $300,000 to cover healthcare costs over their remaining lifetime, according to Fidelity Investments. Costs continue to rise, which means a 55-year-old couple retiring in 2021 can expect to spend more.

Putting money in a 澳洲幸运5官方开奖结果体彩网:health savings account (HSA) while you’re still working is one way to prepare for future medical expenses if you plan to retire early. “Working people should, if possi♏ble, make tax-deductible contributions to their HSAs and let the money grow tax-free. Invest the money in the stock market,” says Louis Kokernꦆak, of Haven Financial Advisors in Austin, Texas.

Withdrawals are tax-free if they’re used for healthcare expenses, and once you turn 65, you can 澳洲幸运5官方开奖结果体彩网:pull money out of an HSA f𓆉or any reason without a penalty. You will owe income taxes on the distribution.

You may also want to think about investing in 澳洲幸运5官方开奖结果体彩网:long-term care insurance​, which would keep you from having to spend down your assets to qualify for Medicaid if you need nursing home care later on.

Delay Collecting Social Security Payments

Full retirement age is 66 or 67 if you were born in 1943 or later, but you can begin taking 澳洲幸运5官方开奖结果体彩网:Social Security benefits as early as age 62.

That may be tempting if you’re worried that yo🥂ur savings may run thin in early retirement, but there’s a catch. Taking Social Security early lowers the amount of your benefit permanently. Waiting longer to apply increases your be💖nefit amount. Waiting until age 70 gets you the absolute maximum you can get.

If your full retirement age is 67, for example, but you start taking Social Security at 62, you would receive a permanently reduced benefit. If you wait until age 70, however, your benefit will increase 8% for every year you wait.

If you’re retiring early, taking benefits at 62 might help your savings go further, but you will get more money if you can afford to put it off. Doing the math on applying earlier or later makes it easier to decide when 澳洲幸运5官方开奖结果体彩网:the best time to take benefits would be.

​The Bottom Line

The longer your retirement outlook is, the more important it is to 澳洲幸运5官方开奖结果体彩网:prep🐲are a roadmap for how you’ll spend what you have saved. 

“A pre-retirement checklist requires a detailed spending plan or you will most likely outlive your savings,” says Eric Flaten, founder and senior advisor at ePersonal Financial in⛄ Bellevue, Wash. “Track your expenses online using an expense tracking tool. This places your daily spending literally at your fingertips with any smartphone or tablet.”

Paring down your budget, factoring in medical care costs, and delaying Soci⛦al Security benefits can all help keep you from going broke.