Asset Allocation is One the The Four Considerations to Help Prepare for an Indenpendence Retirement

4 Considerations to Help You Prepare for an Early Retirement

How long do you want to work for???

Some people, whether for financial reasons or out of the sheer love of work, want to work for as long as possible. Others instead strive to reach retirement as quickly as possible.

If you’re dreaming of an early retirement, make sure you’ve reviewed these four things to help ensure you’ve covered all of your bases.

• How much you’ve saved: The earlier you retire, the more years you may have to finance with your savings. This means that, compared to someone who retires later in life, you’ll either need to have a larger nest egg that’s capable of funding a longer retirement or have a comparatively smaller withdrawal rate.

• Asset allocation: In a similar vein, in order to successfully fund your potentially longer retirement, you’ll likely need to stay invested and generate returns to help you keep up with inflation and maintain your standard of living. Some people reach retirement and immediately pull all of their money out of the stock market in order to avoid any risk of market volatility or losing principal on their investments. While this may insulate you from the ups and downs of the market, the steady impact of inflation could erode your savings and jeopardize the longevity of your money. A good financial advisor can work with you to make sure your asset allocation is aligned with your risk tolerance while still providing the potential for long-term growth. 

In today's globalization and broader less trade, a multi-mixed of asset classes that invest into various countries and currencies is extremely important to preserve wealth. 

Read more about about Asset Allocation and Currency Diversification.

• Health coverage: It’s important to have a plan for acquiring health coverage prior to becoming eligible for Medicare at age 65. Based on how quickly premiums have been rising in recent years, you could be paying significantly more on your health insurance by the time you reach Medicare eligibility than when you initially retire, and the premiums you’ll be paying will likely be a lot higher than what you paid while you were still working.

• Emotional costs: It’s easy to overlook the emotional costs of retiring early, but they should be taken into account before you receive your final paycheck. Will you miss your coworkers? Will you be bored? Make sure you find activities that you are passionate about that will help give your retirement a sense of purpose.

Source - desmoinesregister.com