How to retire early on your terms

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Early retirement is of great concern to many small business owners and executives in their fifties and early sixties. These are generally people who have worked very hard and sacrificed many hours of personal time to achieve their goals. They want to retire while they are still healthy enough to enjoy.

If you are looking to retire early, it is important to prepare for success by planning ahead. The first step is to define your vision for this next phase of your life. Are you looking for complete freedom to walk on the beach and play golf every day? Or do you envision starting a small business or becoming a consultant in your field?

Successful retirement means you have the financial freedom to choose whether or not to stay busy. But now you need to put in place a financial plan to fund these decisions.

Here is an example of an out-of-retirement thinking: A couple of mine dreamed of going to all 50 states. They had designed a product that they wanted to sell after retirement and began shipping the product to customers as part of their trip to save shipping costs and meet customers in person.

Here are a few more steps to help you prepare for early retirement:

Adjust your finances to match your vision. Once you’ve thought about the life you want as a retiree, think about the financial implications. Are you planning a move? Compare property taxes, heating bills, and other expenses to see how much you will save or spend by moving. Look at your credit card statements and checking account for the past year, and write down any expenses you can expect to continue into your retirement. Then think about hobbies: How much are you going to spend on things you plan to do? Don’t buy a boat without knowing the maintenance costs!

Maximize ongoing income and investments. Live below your means so that you can save more and invest more today. Increase your income with a side appearance or other means. Maximize your retirement accounts. Let a financial planner help you create a bespoke investment portfolio.

Consider health insurance costs. You can’t enroll in Medicare until you are 65. Hence, you need a plan to pay your health insurance costs by then. You can sign up for your spouse’s employer-sponsored plan, purchase coverage through the Affordable Care Act marketplace, join a cost-sharing plan, or get a part-time job that brings health benefits.

Avoid “rules of thumb”. Take, for example, the idea that you need to replace 80 percent of your annual income in retirement. Many high earners will never spend that amount, and those with fewer resources may need more. You can face rising healthcare costs, rising taxes and inflation, and life changes like adult children in need of financial assistance.

Early retirement is possible, but you need to keep track of things early on. Hire a financial planner to work with business owners and business leaders. You usually only retire once so you want to get it right.

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Eric Tashlein is a certified financial planner and founding director of Connecticut Capital Management Group, LLC, 2 Schooner Lane, Suite 1-12, Milford. He can be reached at 203-877-1520 or via www.connecticutcapital.com. This is for informational purposes only and should not be construed as personalized investment advice or legal / tax advice. Please contact your advisor / lawyer / tax advisor. Investment Advisor Representative, Connecticut Capital Management Group, LLC, a registered investment advisor. Connecticut Capital Management Group, LLC and Connecticut Benefits Group, LLC are not affiliated.

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