Most people have a set plan for when they will retire. However, as we age, there’s also a chance we’ll want to accelerate that timeline at the last minute. While retiring immediately can be difficult if that wasn’t your initial plan, it may also be doable depending on your age, retirement savings, and more. If you want to retire now, here are five tips to help make that possible.
1. Review Your Income Potential
If you want to pull the trigger on retirement earlier than you originally planned, you need to take a close look at all of your potential income sources. That way, you can make sure that you could financially support yourself before you leave the workforce or, at least, your current career.
In most cases, you want to explore traditional and unconventional options. For example, if you’re at least 62, you could see if starting your Social Security benefits early makes sense. If you’re 59 ½ or older, you can also tap into your other retirement savings accounts without a penalty.
Do the math to see if fully retiring now is an option. If it isn’t, then you can expand your analysis. For instance, you could see if a part-time or freelance job could give you enough to make ends meet.
Another unconventional choice for homeowners could be renting out their house. If you could bring in more than your monthly mortgage payment (including insurance and property taxes) and could move into a rental in your area that costs less than your current mortgage, it’s worth considering. You could come out financially ahead, potentially making retirement more viable.
Alternatively, you could get a roommate, giving you an extra person to help cover household expenses. If you’re in a tourist area, you could also explore turning a room in your home into a short-term rental. Often, the latter option works best if there is a bedroom with its own bathroom near a semi-private entrance into your home.
However, you could turn your entire house into a short-term rental if that has more earning potential than a long-term arrangement. While you’d still end up moving out, it could mean generating more cash and avoiding the constraints of a traditional landlord-tenant agreement.
2. Cut Expenses Ruthlessly
If retiring now is genuinely a priority, you may need to be ruthless about cutting expenses. While small changes like ditching cable and limiting dining out can help, you may have to think bigger if your available retirement income wouldn’t make your current lifestyle possible.
Look at every possible opportunity to cut back. For instance, you may want to consider downsizing your home. Along with reducing your monthly mortgage or rental payment, you may be able to bring down the cost of some utilities that way. Additionally, if you’re a homeowner, you may be able to sell, giving yourself a small nest egg to support your semi-spontaneous retirement.
When it comes to food spending, consider how you could use your time during retirement to limit that cost. For instance, you could commit to cooking fully from scratch, such as making your own bread and pasta. You could also start a vegetable and herb garden and learn to preserve or can.
3. Adjust Your Portfolio
Traditional advice is to reduce the risk in your portfolio as you age, ensuring you don’t run the risk of losing value during retirement. However, if you want to retire faster than you originally planned, being a bit more aggressive could be a necessity.
With a more aggressive approach, you boost your earnings potential in exchange for more risk. It’s important to note that losses may be more likely, but like earnings, they aren’t guaranteed either. Exactly how this unfolds depends on where you position those investments. As a result, you may want to speak with a financial advisor about your goals and get insights about potential changes to your current allocations, ensuring you can balance risk with reward potential.
4. Consider Moving to a New City or State
While moving can cost a bit, heading to a new city or state may make an immediate retirement more viable. The cost of living varies by location. If you’re in a high-cost area, going to one that’s more affordable can make retiring sooner rather than later a genuine option.
Similarly, not all states tax retirement income the same way. If you choose a state without an income tax or one that doesn’t tax Social Security or other kinds of retirement income (or has a generous exemption that covers most or all of your income), you might find that retiring now doesn’t mean you can’t be comfortable.
5. Become an Expat
Not wholly unlike the option above, becoming an expatriate (expat) and moving to a different country could allow you to retire now without any financial issues. There are plenty of countries with significantly lower costs of living. While a dramatic lifestyle change may also come with the territory, it’s worth considering if retiring immediately is legitimately a priority.
Before you go this route, you’ll need to do a significant amount of research. Along with focusing on budget-friendly countries, taking safety into consideration is also essential.
You’ll have to review laws and rules regarding moving to the country as a non-immigrant, too, as they can vary. See what kind of visa may be required, whether there are limits on property ownership, if you’ll need to take steps to access healthcare locally, and more. That way, you can get a comprehensive picture of what you’ll need to do to transition successfully while remaining on the right side of the law.
Did you spontaneously retire ahead of your original schedule? If so, do you want to let others know how you got financially prepared for retirement? Do you have any other tips that can help someone retire as soon as possible? Share your thoughts in the comments below.
Read More:
- Retirement Costs to Consider
- Managing High Inflation in Retirement
- 5 Solutions for Managing Money After Retirement
Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.