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Do you have a goal of retiring early? If so, then planning is key. Consider your options carefully as you calculate not only how an early retirement will affect you financially, but also your goals for where you want to live and what you wish to do during your golden years. While meeting with a financial professional to map out your plans is certainly important, the following points could help you further examine early retirement from all sides of the token before taking the plunge.

  1. Consider selling your home

Will you keep your same home after you retire? Weigh the financial implications to see if downsizing could be a good option for you to conserve funds in retirement. Make sure you give yourself plenty of time to think about this option a few years before you retire, however. It could take your home a period of time and renovations before it’s ready to be put up for sale, and depending on the state of the real estate market, it could also take a chunk of time for it actually sell.

  1. Think about your retirement goals

The possibilities are endless…have you always thought about volunteering for a non-profit organization? Traveling abroad? Working a part-time job? Considering all your options a few years before entering retirement can help lessen the confusion. For instance, if you want to volunteer, start researching organizations you’re interested in; narrow down the locations where you might want to travel; or look into training programs that would steer you toward a second career.

  1. Ponder the 3 stages of retirement

Retirement can be divided into three stages.

Go-go stage: This is typically when people spend the most money as they engage such activities as travel, home renovations, starting a business or engaging in other post-retirement expenditures. This stage, dubbed the “honeymoon” phase can last from a few months to two years as retirees get all their hobbies and goals squared away.

Slow-go stage: During this stage, retirees’ energy levels may have changed, which in turn can change their goals and priorities. Less money may be spent as traveling lessens and not as many expensive hobbies (such as golf) are being pursued. Retirees may have more of a desire to stay home during this stage as they are now more settled and connected to their community and local interest groups.

No-go stage: This is the last stage of a retiree’s life, when his or her health makes it difficult to travel at all. While activity costs may be way down during this time, healthcare costs will likely go up. Add in the cost of assisted living, and that could have an even bigger impact on one’s bankroll.

The bottom line: If your goals for the future include an early retirement, then give yourself a good five years before that time comes to map out what you want your golden years to look like. Everyone’s goals have different price tags, so being aware of those costs before you retire is certainly beneficial.

Finally, consider the thoughts of Donna McCaw, author of It’s Your Time: Information and Exercises to Get You Ready for a Great Retirement. She says there are three things people need to determine in retirement: a sense of purpose, or the reason they get up in the morning; who are the people in their community; and how they want to structure their time. Being aware of these three components will only help your golden years become all the more sweet.

Author Ron L. Brown, CFP®

Ron is a CERTIFIED FINANCIAL PLANNER™ and President of R.L. Brown Wealth Management. He specializes in retirement, estate, and business planning for professionals and entrepreneurs. Ron assists his clients with creating a financial plan to ensure they are able to live their ideal lifestyle during retirement and leave a strong legacy for their family. Ron has been featured in The Wall Street Journal, US News, Yahoo Finance, Investopedia, and numerous other high profile financial publications.

More posts by Ron L. Brown, CFP®
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