An Overview of Crucial Role Retirement Advisors Play in Decisions Related to Early Retirement
You need to talk with retirement advisor if you are planning to take early retirement. Few of the details advisor will generally look into would include:
• Your retirement budget
• Health insurance
• Financially dependent kids
• Early retirement and debts
• Type of Portfolio
You may assume that your expenditures will reduce after retirement but in reality they may not drop at the same rate as you anticipate. So, how to check whether budget you create will meet your requirements? As a solution, retirement advisors generally advice that people interested in taking early retirement should try to live off it for at least 6 months before they actually retire.
In case, you are not able to survive on this budget without touching your savings or swiping your credit card then it will be a clear indication that budget you have created in not right and needs to be re-evaluated or it is still not the right time to take retirement.
As such, while planning your retirement budget, retirement advisors will try to examine cash flows you will have as well as factor in inflation to take the right decision.
Early retirement will also become a feasible option when you have right health insurance coverage. This will be an important consideration since expenditure on health insurance usually increases at a faster rate in comparison to inflation.
Ideally, you should have health insurance that has low deductibles as well as is sufficient for covering expenditure on doctor visits, prescriptions and hospitalization so that you will have minimum out of pocket expenditures.
Financially Dependent Kids
If you are planning to retire early but still have kids studying in college then retirement advisors will have to closely monitor your financial position since college expenses can consume a significant portion to money you have in hand to spend on other things.
In such case, you will have to develop alternative sources of income or delay your retirement till the time kids finish their college education.
Early Retirement and Debts
Taking early retirement while still in debt can be wrong decision, as for instance if the home is not paid off then you will have significantly less money in hand to meet other expenditures.
Retirement advisors often suggest that taking early retirement is not the right decision if you still have major debts to pay off.
Type of Portfolio
According to retirement advisors, retiring early will be a feasible option when you have an investment portfolio that consists of diversified asset classes. Such portfolio will be able to protect you during bad market situations.
As for example, retirement advisors will give consent to early retiremetn when your portfolio comprises of tax free as well as tax deferred assets. Having such portfolio you will have required income for sustaining a retired life that may well extend for 20 or more years.
A Final Note
Finally, we can say that retiring early is a critical decision and you should consult retirement advisor to know whether it will be right to retire early or wait for some more time.