Early retirement is a dream for many people but only if it was done on your terms.
Sadly, the health crisis could have been to blame for some people choosing to retire early from work. The pandemic caught a lot of people off-guard and drastically changed the way people view their finances. In an instant, emergency funds were depleted and the need to dip into long-term savings seems to be the only option.
The pandemic took out businesses left and right and closed down several brick and mortar shops. Americans were struggling to hold on to their jobs fearful that the company they work for might simply fold up from losses. However, some companies are starting to get back up as they pivot to the new normal.
The pandemic did force some people into retirement where they had to choose it rather than continue exposing themselves out in the open. CNBC shares that over 28 million boomers retired during the 3rd quarter of 2020.If you are one of those that chose this route, you might start to think that you have a tough time ahead. Early retirement is nice if you planned for it but if you were forced into the situation, then that is another story.
You could be asking yourself how you can make retirement work if you did not really plan for it to happen this early. Do you need to make some big money decisions just to make sure you are able to retire comfortably? Before doing anything drastic, there are a few things you might want to look into to help you process your journey better.
Check your retirement savings
If you were forced into early retirement, you need to first account how much you have in your retirement savings. This is the first order of business when you choose to leave your corporate job ahead of schedule. For one thing, a lot of people rarely check on their retirement accounts on a regular basis. This is actually one of the reasons why some retirement accounts are targeted by thieves and hackers.
You need to look at what you have saved up to determine what your finances are going to look like in retirement. Do you have the minimum amount you need to cover all your basic expenses in retirement? How far along are you in getting the retirement lifestyle you need? These are just some of the questions you need to answer to help you move forward.
Adjust your retirement lifestyle
If you are going on an early retirement unplanned, there is a good chance that your finances are not enough. There are a lot of reasons why you might be forced into retiring earlier than planned. A lot of it now could be the result of the health crisis. The pandemic displaced a lot of workers from several industries across the country.
Some who were nearing retirement could have chosen to simply retire ahead of time to stop worrying about whether they will be returning to work or not. There are those who were called back to work but are afraid of possibly contracting the virus. There are a number of reasons you might want to retire early. You just need to adjust your lifestyle as well.
If you wanted to spend most of your retirement travelling the world, you might have to adjust and find something else to do. For one, your finances might not be able to support that lifestyle you want. The pandemic might make it a little more challenging to travel as well. Make sure you look at your plans, check your finances and see how you can make the necessary adjustments.
Find alternative sources of income
When you are forced into early retirement, your nest egg could take quite a hit. One way to help you bridge the gap between what you have and what you need is a side hustle. A lot of Americans have been taking on a side gig even before the health crisis started. It was a way for most to make ends meet and for some, to accelerate their financial targets.
Now that you are retired, a side hustle can help you bring in some much needed income to cover your needs. One idea to consider are your income-positive hobbies. As the name suggests, this is where you tap into your hobbies to bring in extra cash. The good thing about this is that you get to do the things you already like doing.
You can also choose to go into consultancy and bank on years of experience in your corporate job. If you have the capital, explore setting up a business of your own. Technology has made it quite easy to set up a business at a lower cost. You can even set up an online shop and begin selling without having actual product inventory with you.
You can always go back to work
One of the options people start to think about when they are forced into early retirement is to simply go back and find another job. It seems to be a very simple solution to help you save more for your retirement needs. But this is easier said than done, especially if you already started claiming benefits. There are some instances where a suspension of your pension can happen.
On top of these, you also have to go back to the original reason why you had to retire early. If retirement was your way of minimizing your possible infection from the virus, then getting a job could bring you back to your original dilemma. If you do choose to get a new job, make sure you understand the repercussions on your pension and your health safety as well.
Factors to consider before retirement
If you have time to prepare for early retirement, here are a couple of things to work on to help you tackle it better.
What is your plan
Your plans might change because of the sudden need to retire but nevertheless, you still need a plan. What are you going to do in retirement? How are you going to spend your days? You might have an idea what you wanted in your original timeline. Move to another place, get a smaller house, or even spend time volunteering in your community.
But if you were forced to retire earlier, this could all change which is all the more reason you need to come up with a plan. After considering your finances, you need to make the appropriate adjustments on your plan. This will guide your everyday activities and help you enjoy your retirement.
Your household budget will change in retirement. There will be a lot of expenses that will change and probably be replaced by a few new ones. This is the reason why you need to revise your budget when you are already in retirement. This will be one of the most useful tools in making sure you stay on top of your finances. US News shares that this budget will allow you to outline your funds to cover regular bills as well as unexpected expenses.
It would help if you can get a general check-up prior to retirement to know which areas you need to work on. Of course, if you already know of any pre-existing conditions, then a visit to your doctor will help. Retirement will give you a lot of changes especially with your lifestyle. This could affect your health in so many different ways. Remember that the healthier you are, the more you can enjoy life.
Being forced into early retirement is tough but there are things you can do to help you enjoy your golden years.