Every year, hundreds of thousands of working adults take early retirement. They do so under all sorts of circumstances and for dozens of different reasons. Some are just tired of the rat race and are lucky enough to have the financial stability to exit the working world a few years ahead of schedule. Others spend years making detailed plans to leave the workforce in their 50s. Many head for the open road, living in motor homes while they explore the world. Some stay put and turn favorite hobbies into part-time side jobs to enhance the quality of their remaining years.
For those who retire before reaching their sixties, it’s best to have a good plan in place so the transition, and new lifestyle, goes smoothly. The last thing you want to encounter during an early exit from the working world is financial problems. Here are several ways that people make sure their lives are free of money troubles when they say goodbye to the 40-hour week while still in their fifties.
Plan to Work Part-Time
Even if you have enough funds to live comfortably, working part-time can be an ideal way to scale back from an intense, high-pressure, full-time career. Plenty of early retirees get jobs in fields they always wanted to explore but never had the time, like teaching, consulting sports training, and tax preparation.
Sell Your Life Insurance Policy
Many people who have life insurance policies don’t realize that they can sell their policy for a lump sum payment that is greater than the cash surrender value. You can look into selling a policy anytime, and find out the going market rate, namely the amount of cash you could get today if you decided to sell.
For all sorts of reasons, many decide they no longer need or want a policy, which is why they sell them for an instant cash payout. The more coverage you have, and the longer you’ve been paying, the greater the payment you could receive. For many working adults, this strategy is one of the fastest and most effective ways of raising money to cover expenses that go with early retirement.
Fund an IRA to the Max
If you plan correctly, you can start taking money out of a Roth IRA as early as age 59.5. Make sure you set up the account at least five years in advance of removing any funds. The benefit is that you don’t have to pay any tax on Roth withdrawals. For people who plan to leave their careers before the age of 60, a well-funded Roth can be a problem-solver.
Move to a Low-Cost Location
A recent trend among younger retirees is relocating to a low-cost geographic location, either within their home country or somewhere else. For example, many thousands of Americans bid their careers farewell and move to places like Costa Rica, Panama, and Chile. All those nations, and many more, have large English-speaking populations and welcome senior citizens from all over the world.