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How to Tell If You’re Ready for Early Retirement

by AOG Wealth Management

Unfortunately you can’t just wake up one day and decide you are going to retire. Retiring early has many challenges and you need to fully understand what it means to retire early before you make the leap.

The first step is to ask yourself if you’re really prepared to say goodbye to a steady paycheck. Contact a Northern Virginia and Potomac area wealth advisor to help you evaluate your retirement prospects. This includes details like your current income, expenses, nest egg value, and investments.

Assessing your retirement prospects isn’t as simple as gathering your savings and hoping they’ll add up to the amount you need. Many people seem to think that as long as the amount you spend annually is less than 3% of your investable assets, you can afford to retire anytime you want.

It’s not that simple. Retirement expenses can be much higher than you project. Without a good retirement plan, you could run through your savings early and outlive your money.

Consider health care, for example. Even with the Affordable Care Act in place, medical expenses can still take up a major portion of your savings. Unforeseen emergencies are especially costly and may drain your retirement funds quickly.

There’s also the challenge of creating the most efficient retirement cash flow as possible. Ideally, retirees can turn to distribution plans like 401(k)s or an Individual Retirement Account (IRA) for day-to-day expenses. Keep in mind that there are rules for how money is to be distributed from retirement plans. Break one of the many rules and you might find yourself being penalized for an early withdrawal. The rules are very complicated, so it’s important to understand the distribution rules before leaving the workforce.

It’s also important to consider other factors, such as where you’ll live and how to spend your retirement hours without a job to occupy yourself with. Many early retirees find it helpful to have friends close by to provide support and hobbies or even part time jobs to keep them active and occupied.

AOG Wealth Management has had a long history of helping clients plan their retirements. If you want to find out if you’re ready to retire, we’re the Northern Virginia and Reston wealth management experts who can help you find the answer. We can help you manage your assets and create a retirement plan that fits your needs and financial situation. To get started, give us a call at (866) 993-0203 today.

Category: Blog, Info Articles