For many people, early retirement sounds like an excellent idea. However, before jumping headfirst into the prospect of having plenty of free time to do this and that, it’s important that both spouses be in complete agreement as to the plan that may be ahead of them. With rising prices for groceries and other essentials, volatility in the stock market, and limited retirement benefits from Social Security, retirement in any form sometimes seems like a dream. However, with careful planning and thought as to how life will be once the 9 to 5 routine becomes a thing of the past, early retirement can be a great option for the second half of life.
A Greater Return on Investment
While retiring early often means a reduction in income, it can actually turn into a moneymaker where pensions are concerned. When money from a pension or Social Security is invested in a Roth IRA, thousands of dollars in tax-free savings can be accumulated. For example, a 55 year-old investing $100 per month for 10 years at a rate of five percent per year could earn %15,500 by age 65.
Starting a Second Career
While retiring early usually means a person is done with working, others decide they may want to use the second half of life to start a second career. This is an especially attractive option for retired military personnel, who often decide to use their experience to work with law enforcement in their community. In addition to this, many seniors use this time in life to start a business, often based on a hobby they have enjoyed for many years.
For those who have had jobs which resulted in sleep deprivation, poor eating habits, and constant stress, early retirement can result in much-improved health that actually saves money over time. With more time to exercise and relax, both spouses can find themselves living longer and feeling better. When this occurs, medical expenses often go down significantly, freeing up more money that can be put into savings or invested in other ways.
By presenting your spouse with these and other reasons, it should be a very easy sell to convince them that early retirement is a great option that’s well within reach. Whether the time is used for new kinds of work or play, it’s clear early retirement offers numerous options to help people enjoy their later years.
David Milberg is an investment banker from NYC.