To decide if you should accept an early retirement offer, you can’t just look at the offer itself. You have to consider your total financial picture. Can you afford to retire early? Even if you can, will you still be able to reach all of your retirement goals? These are complicated questions that a financial professional should help you sort out, but you can take some basic steps yourself.
Identify your sources of retirement income and the yearly amount you can expect from each source. Then, estimate your annual retirement expenses (don’t forget taxes and inflation) and make sure your income will be more than enough to meet them. You may find that you can accept your employer’s offer and still have the retirement lifestyle you want. Remember, these are only estimates. It is important to build a comfortable cushion in case your expenses increase, your income drops, or you live longer than expected.
|"If you don’t think you can afford early retirement, it may be better not to accept your employer’s offer.."|
If you don’t think you can afford early retirement, it may be better not to accept your employer’s offer. The longer you stay in the workforce, the shorter your retirement will be and the less money you’ll need to fund it. Working longer may also allow you to build larger savings in your IRAs, retirement plans, and investments. However, if you really want to retire early, making some smart choices as early as possible will help you overcome the obstacles. Try to lower or eliminate some of your retirement expenses. Consider a more aggressive approach to investing. Take a part-time job for extra income. Lastly, think about selecting early Social Security benefits at age 62, but remember that your monthly benefit will be smaller if you do this.
For more information about this topic, view our e-book here: https://retirekit.theretirementgroup.com/what-to-do-with-an-early-retirement-offer-e-brochure
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