5 ways to retire early

How to Retire Early

Early retirement is a dream for some people, and a nightmare for others. Many baby boomers have been booted out of the workplace in their 50s, unexpectedly and unceremoniously, while they still have a mortgage, a car loan and college tuition bills. Suddenly there's no more paycheck, no more benefits and no more contributions to the 401(k) plan. People who are thrown into early retirement are typically left to their own devices.

Yet, for some, this mid-life kick in the pants can be a good thing. For example, one colleague, age 53, used his layoff as an opportunity to change careers. He found a fast-track program to train as a science teacher and now happily teaches high school chemistry.

But far too many 50-somethings leave their familiar place of work only to find that they are unemployable at any comparable position. I have one friend working for minimum wage at the checkout counter at the supermarket. Another friend thought he could afford to retire, but now, short of money, is trying to sell real estate, which is no easy job in this economy.

Nevertheless, part of the American dream is taking early retirement and moving to the beach or the mountains, or buying a boat and drifting off to someplace warm and wonderful. Here are five ways you can take early retirement and make it work for you.

1. You have a pension. The defined-benefit pension is fading out of the private workplace. But a lot of older workers are grandfathered into an old pension system that will offer them a regular monthly income. In addition, many teachers, police officers and other public employees still have the option to take retirement after a certain number of years of service, often when they're still in their 50s. Typically, retirees need about 70 percent of their pre-retirement salary to keep up their standard of living. So, if you can leave work with that kind of benefit, you will probably do OK.

2. You have saved up the money. If you've earned good money, lived a frugal lifestyle and have $1 million or more stashed away in your retirement accounts, then you may not need a job anymore. You're financially independent. But do the math. If you still have college tuition bills staring you in the face, or if you've already bought a boat and a second home and you're up to your eyeballs in debt, even $1 million may not be enough to carry you through retirement. Also, remember, you can start Social Security at age 62, but you're not eligible for Medicare until age 65, so it helps if you also have access to medical insurance and other benefits.

3. Your spouse still works. It was my brother-in-law who first told me about this retirement strategy. He was laid off in his mid-50s, with a modest package from the corporation where he'd worked for 25 years. I was puzzled, because he seemed so happy about it. So I asked how he could afford to retire so young. His response: A working wife. He had lost his benefits, but he qualified for his wife's medical plan. And their two kids were out of college, so they could afford to live on one paycheck.

4. You hate what you do. A lot of people like their jobs. They're proud to be a lawyer, accountant, carpenter or chef, and they relish the feeling of accomplishment of a job well done. Plus, they are comfortable with their daily routine: the morning coffee on the way to work, the lunches they enjoy with colleagues and the after-work softball league. But if you dread going to work, hate your co-workers and resent your boss, is it all worth it? Even if you can't afford to retire completely, maybe it's time to rethink your career. It might be worth taking a lower paying job in a less stressful environment or moving to part-time employment. No job is worth the money if it's killing you.

5. You have other interests. If you have long held a dream for a second career, or passionately want to pursue some long-held interest, then maybe early retirement is a good move, regardless of the financial cost. My brother-in-law jumped at early retirement from his stressful corporate job. He sold his house and moved to a smaller place in town. He got rid of his car. Now he spends his days in his basement workshop building furniture which he sells at craft fairs and flea markets. He is a true example of someone who is poorer, but much happier in his new life.

Tom Sightings blogs at Sightings at 60.

Copyright 2015 U.S. News & World Report

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