Truth About Retiring Early

Few of us can retire at 35 and live for the next 45 years just playing golf and traveling the world, or even living on an island with our feet in the sand enjoying the sun. However, many of us do dream of retiring early in our 50s. What holds us back from realizing that dream? Maybe, the truth about retiring early is fogged by bad information and faulty thinking.

Steve Adcock at MarketWatch wrote recently, “You don’t need to win the lottery to retire early. When you live at or below your means and actually care about where your money is going, people can live quite well on far less than a million. Live like kings, in fact.”

“A million bucks is a wonderful milestone, but we don’t need to reach it before retiring early. There is nothing inherently magical about the million-dollar figure, aside from all those zeros. It’s a completely arbitrary number. In fact, we may never need to reach it to keep our jobless dreams alive.”

The ability to retire early is complicated by debt. If you have bought into the consumer culture of debt is the American Way, it will be very difficult to retire early. You need savings if you retire. You can’t afford to carry large debt payments, a car, mortgage, college for your children, health care, etc., into retirement. Your actual living expenses will drop precipitously when you retire. No more buying clothes for work, for example.

You Will Face Criticism When Retiring Early

Mr. Tako, who retired at 38 and writes the blog Mr. Tako Escapes wrote, “The amount of mental fortitude required isn’t something I think gets talked about enough,” he said. “The ability to withstand significant criticism of your life should not be understated when a person retires early. Expect your friends, family, and online peeps to criticize this choice, especially if you’re younger. It really brings the ‘haters’ out of the woodwork.”

Here’s the Big Truth About Retiring Early

Retiring early could reduce your Social Security benefits, which means you have to save even more on your own. Early retirement impacts your Social Security payments, even if you delay receiving benefits until the full retirement age of 67.

Joe Udo explains how benefits are calculated by the Social Security Administration. You need 40 credits of work in order to receive Social Security benefits. You can earn one credit for every $1,130 you earn, up to a maximum of four credits each year. If you worked for at least 10 years and paid Social Security taxes, then you probably will be eligible for Social Security.

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