Have you ever stayed awake at night thinking about early retirement?
Ask any early retiree and they will tell you how amazing their decision has turned out to be. Low-income tax, no more need to spend your money on transportation/wardrobe, and spending your entire time building a business of your own are some the benefits of retiring early.
Here are the 6 signs that you are ready to retire early.
1. You have excellent healthcare
Having a solid healthcare plan ensures you to have an early retirement without any risk to your health. Medicare will only kick in after you are 65. Do you have any other healthcare plans like Obamacare or general health insurance? If yes, then it is a great sign and it checks off an important box.
2. Your savings account is loaded
It is great to invest in assets that yield income without having to do much work. But it is equally important to go to the old school way and have your savings account loaded. Most banks will provide an interest of 1.8-2.10 percent annually, on the savings account.
According to a report by Investopedia, CIBC Bank USA offers an interest rate if 2.10 percent annually. So, if you already have a savings account(with sufficient funds) in one of the banks providing high-interest rates, you are in a prime position to retire early.
3. Your mortgage is paid-off
This point is an obvious one. It is considered criminal to retire without paying off your mortgage. Most people spend 30-40 percent of their paycheck paying off their monthly mortgage installment. If you have somehow paid off your mortgage and have a hoise of your own at an early age, nothing is stopping you from retiring early.
4. You are confident of taking care of yourself
“I’d rather welcome change than cling to the past.” Robert T. Kiyosaki, Rich Dad, Poor Dad
There can be many reasons to quit your stable day job and retire early. Early retirement does not mean you will not work. It is an official resignation from working for someone else and investing your time in creating something of your own. Most millennials retire early so that they focus fully on their business or investment career. Early retirement could work wonders if you are confident in your abilities to produce something spectacular that also has a monetary value.
5. You don’t believe in the concept of retirement
The concept of retirement was much celebrated in the ’80s and ’90s when the industrial revolution was at its peak. People were programmed to believe that they had to work hard during all their formidable years and they will get compensation in their twilight years. This system worked well until the millennials grew up.
An early retirement is a great option if you are a millennial and believe there is no such thing as retirement. The above statement might seem contradictory. But by early retirement, I mean quitting the rat race and doing something you love.
Although, there are some pitfalls of an early retirement that you should be aware of. You will have to pay a 10% penalty to withdraw money from your 401k plan(you are not allowed to withdraw until you are 59 years and six months old). Secondly, only retire early if you have planned something amazing. It could be anything like building a business, traveling the world(to vlog), or become a full-time philanthropist.