For many people, early retirement is the ultimate financial goal. Early retirement gives you the opportunity to enjoy your free time while you’re still young and healthy. You may be able to do things in life that wouldn’t have been possible if you’d waited to retire at an older age.
However, there’s nothing exciting about early retirement if you’re forced into it before you’re ready. An unplanned or unwanted early retirement can lead to serious financial challenges, and it may hurt your ability to support yourself and your desired lifestyle through the remainder of your retirement.
Unfortunately, many workers face the threat of forced early retirement every year. For some, it could be due to layoffs or termination and difficulty finding a new job. Other workers may suffer an injury or illness that leaves them disabled and unable to continue working.
Either instance is a very real possibility as you approach retirement. If you should be forced into retirement without a plan in place, you could face serious financial difficulties. Below are a few steps you can take to prepare and protect yourself:
Continue to develop your skills and education.
With retirement in sight, it may seem like there’s no point in continuing to learn new skills or to develop as a leader. After all, you’ll be out of the working world in a few short years. What’s the point of learning new technology or methodologies?
That continued learning could be the difference that keeps you out of the next round of layoffs. Look for ways to develop and make yourself as valuable as possible to your employer. Keep coming up with innovative ideas and improvements. Volunteer to take on those difficult assignments. You need to finish your career with an uninterrupted stretch of earning and saving. Take steps to ensure your employer views you as a valuable part of the team.
Use disability insurance and other tools to minimize financial risk.
Think disability won’t happen to you? Think again. According to the Council for Disability Awareness, more than 60 percent of workers believe they have a 2 percent or less chance of suffering a long-term disability. The actual likelihood is closer to 25 percent.1
Disability can happen, and it can have severe financial consequences. You can minimize the risk by protecting yourself with disability insurance. Your employer may offer coverage. However, you also may want to talk to your financial professional about a more robust individual policy to use until you retire.
Maintain a disciplined budget.
Budgeting is always a good idea, but it’s even more important as you approach retirement. Now is the time to cut expenses, save more money and practice living on your projected retirement income. A lean budget will also be helpful if you’re forced into early retirement.
Look for ways to cut costs. Paying down high-interest debt is one way. Scaling back on discretionary expenses is another. You can even downsize to a smaller home to free up cash flow. Now is the time to cut costs and practice living frugally. That way you’re prepared should you be forced into early retirement.
Ready to plan your retirement strategy? Let’s talk about it. Contact us today at Grand Canyon Planning Associates. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.