Click here to learn more about our financial professionals by visiting FINRA's BrokerCheck.

Make Early Retirement a Possibility

| December 28, 2021

Put you and your family in a better position by utilizing retirement planning advice from a fiduciary.

Are You Thinking About Retiring Early?

Whether it was the pandemic that caused you to consider retiring early, or if this is something that has been one of your goals for some time now, retirement planning can help you make decisions that put you in a better position to hit your retirement goals.

While some people thrive in their careers, and have no intention of retiring prior to age 65, there has been a movement gaining speed and it involves early retirement. Those in the FIRE (Financial Independence, Retire Early) movement have their sights set on leaving their conventional jobs before hitting the traditional retirement age of 65.

The FIRE movement, which is defined by frugality and strong saving and investing plans, doesn’t fit everyone’s model. But if you are considering retiring early, here are some things you need to consider.

The Importance of Saving

A popular strategy in the FIRE movement is the 4% rule. This strategy utilizes a diversified portfolio to produce an income stream for savers. The strategy assumes that the investor can produce an average annualized return greater than 4% which would allow the investor to take this amount in income and continue to allow the portfolio to grow with the potential of keeping up with inflation.

The caveat with the 4% rule is that in order to reach the withdrawal goals, you must save 25 times your annual expenses before retirement. Retirement planning involves a certain amount of frugality, to be sure, but that term is relative to an individual’s lifestyle. To get a ballpark figure of what the 4% rule would require, let’s look at an individual who leads a lifestyle with a $50,000 per year income. To retire early, the goal for this person’s nest egg would be at least $1.25 million.

Retirement Spending

A study that looked into spending pre-and post-retirement found that almost half of the retirees spent more in retirement than they did while they were working. You might be able to avoid such expenditures by looking into retirement planning strategies that include creating a detailed retirement budget.

Check out free online interactive tools to help you, including worksheets that assist you in tracking the various expenses, from healthcare to food, housing to clothing, travel to hobbies, and entertainment to transportation. The more detailed you get, the better estimate you’ll have.

Work With a Fiduciary

The most valuable resource you will have in your retirement planning is a professional that has your best interests at heart. At Heritage Investments, we work with investors to help them work toward their financial goals. If you’re interested in early retirement or just want to get some advice on how to boost your nest egg, contact us and let’s discuss your options.