5 Signs You’re Ready to Retire Early
Retirement is something we all work toward. We save, we plan, and we dream knowing that one day we’ll reach a place in our lives where we can retire. But when exactly is the right time? Simply put, it can be whenever you’re ready for it. And, if you have a solid pension or hefty 401(k) and a plan, your time may come a lot sooner than you think. Here are five ways to tell if you’re ready for early retirement.
1. You’ve crafted and followed a retirement budget
Yes, you can expect your expenses to drop a little bit when you retire, but they won’t drop as much as you might think. This is why it’s extremely important for you to create a post-retirement budget and then live off that budget for six months before you retire, writes Bankrate. Following a post-retirement budget will let you know whether it’s realistic and if you’ll be able to stick to it. If you’re unable to stick with it for six months, it’s time for you to take a step back and reassess your situation.
Before putting your budget together, get an understanding of what your cash flow will be like after retirement. Determine how much you’ll need every month, including quarterly and annual expenses, per Bankrate. And, while you’re budgeting, make sure you factor inflation in as well. After fifteen years, inflation can really start to impact your budget.