If you've flirted with the idea of early retirement -- and who hasn't? -- chances are your fantasy looked something like a highlight reel from Martha Stewart Meets Lifestyles of the Rich and Famous. There you are, strolling up to the 18th green -- for the third time today. And there you are on the boat. In France. Gardening. Gardening in France.
You get the picture: ample financial resources, good health and an abundance of time to do whatever your heart desires. Who wouldn't trade in the hour-long commute and the tyrannical boss for 35 years in pursuit of the perfect state of relaxation?
But, for many who have achieved the dream, there is another side to early retirement, one plagued by boredom, loss of self-esteem and self-image, and the steady ratcheting down of lifestyle.
Before you decide to leave the office for the last time, consider whether or not you are truly prepared. Ask yourself the following questions:
Are you prepared to replace, or do without, the social connections and sense of purpose that most people derive from their jobs?
Do you have the financial resources to support yourself for 30 or more years? Can your investments provide you with sufficient income to maintain your lifestyle regardless of whether the economy is booming -- as it did throughout the '90s -- or not?
Can you sacrifice the loss of as much as 20 percent from your Social Security or pension?
Can you afford the cost of healthcare until Medicare kicks in at age 65?
Have you taken inflation into account?
Are you willing to downscale your lifestyle, or relocate to another, less expensive area?
Would you be willing and able to work part-time if money got tight?
Is your company offering an advantageous early retirement plan?
Financial advisor and ThirdAge money expert Jeff Fleming says, "If you are planning to retire prior to age 59 1/2, carefully examine your retirement plan withdrawal options to be sure that the limited withdrawal methods available to avoid IRS penalties will actually provide sufficient income. If not, then you will have to derive the income shortage from other sources."
As baby boomers edge closer to retirement, it is anticipated that we will redefine that stage of life. However, no one has come up with a solution for too much time on your hands.
