Early Retirement Planning: Do Dreams come True?
Virtually every employee dream about early retirement some time during his or her career. Early retirement planning can make that dream come true. There are many motivations for early retirement. You might hate your job. Or you might love your job, but want to live your passion, your dream. Dream on, and it will remain a dream. Sit down and do some serious planning, stick to your plan, and your dream will come true!
Hurdles
Do realize that the odds are stacked against you. Virtually any tax advantaged deferred-compensation retirement accounts that you have, will have some direct and indirect penalties for early retirement. This is the first hurdle in your early retirement planning. You retirement provision will have to come largely from fully taxed savings and investments. There are strategies for avoiding taxes, but it is not available to all people and outside the scope of this discussion. It depends on your home country, the country where you normally live, the country where you earn the bulk of your income, and the country where you hold and invest your funds. The next hurdle is to turn your savings into a reliable and sustainable income that would support you and your spouse 30 or 40 years or even more. No regular paycheck. No annual salary raise.
Case Study
I observed one of my friends making a very smart move. His early retirement planning was impeccable. He first made it known to his colleagues, fellow board members, and fellow shareholders that he wants out on his executive and administrative duties. He went back to do the work that he enjoyed and did well when he was younger, before he moved into management. He then resigned from the company and sold his shares, but indicated that he would be available as a subcontractor. He actually took early retirement and work only on projects that interest him. He and his wife travel whenever they feel like it – even for extended periods. Communications today makes it possible to do some one or two hours of work on a project daily from anywhere in the world. Some ten years later and he is still doing it. He's got the experience to know which projects would be challenging, but fun, without uncontrollable risks. And the best part is that they can live well on his sub-contractor's income without drawing against his retirement provision.
Consider a Part-time Job
For many, early retirement planning start to make sense when you are prepared to save more, spend less, and consider a part-time job. A part-time job remains very attractive throughout your retirement simply because too much leisure time on your hands can get pretty boring! We dedicate an entire section to
Retirement Jobs
on this Web site. Here are some more discussions around early retirement:
Early Retirement Incentive
An early retirement incentive program (ERIP) is used from time to time by employers to reduce their workforce.
Taking Early Retirement
Taking early retirement is at the same time exhilarating and scary! Fortunately the scary part can be managed. Eliminate uncertainty and take control of your retirement planning.
Retirement Ages
Retirement ages differ from person to person and from country to country. You may retire whenever you want – as long as you have made adequate financial provision for your retirement.
401k Early Retirement? Any Penalties?
The 401k early retirement rules are no different from any other retirement provision plan's early retirement rules.
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