Early Retirement is not Impossible
I am a Money Magnet! We are Money Magnets!
Sharing this article from BDO Private Bank Wealth Management Magazine called "So you Want to Retire Today?" It highlights some important factors to consider when we eventually decide to retire. It starts off with the line "Early retirement is not impossible. All you need is serious planning." True enough, everyone can retire early and be free from the corporate world as long as we are determined to plan for it. Read on to know more about things we need to consider for retirement.
by: Judith Juntilla
During the high-flying times of the financial markets in the Philippines in the early 90's, many newly minted Masters of the Universe were raking in six-digit salaries and swimming in bonuses and commissions. It was a good time to be a professional in the finance industry; the world was for the taking and nothing was impossible.
Even retiring before the age of 40.
Not surprisingly, many did entertain this notion and took their bulging bank accounts to sail off to the land of Happily-Ever-After. A few short years after, some of these people were back at work.
What happened?
No, they did not get bored at the B&B they built, nor did they wake up and find they missed the fulfillment of a day's work; they didn't even feel a burning desire to contribute to an industry that needed their years of experience. The sad fact is, they retired too early.
Unfortunately for some of these successful individuals, they failed to recognize a little concept called the Lifestyle Index. "Basically, the Lifestyle Index refers to the sum total of a person's state of being and status, where he enjoys all the comforts and amenities of his current state in life," said BDO Private Bank. The index includes, but is not limited to, housing, food, clothing and fashion, recreation, spending and savings habits, travel and leisure.
To simplify, if you used to buy a latte from a trendy coffeehouse every morning when you were still employed, you cannot expect to do the same once you quit working and not deplete your resources over time.
"Many retirees fail to anticipate that their lifestyle index will increase because, after retirement, they will have more time for family and friends, pursue hobbies, interests and sports activities that were previously set aside due to demands of work," explained the bank.
Simply put, more time means more activities, more activities mean more expenses. "Consumption levels will increase after retirement. This is the main reason people should put more serious time in making their retirement plan." BDO Private Bank explained.
The bank believes the ideal time for retirement is at the age of 50. Nevertheless, potential early-retirees must also look at other factors before counting down to 50. "He must have sufficient means to sustain his lifestyle, support him in old age or in sickness," it said.
More importantly, he emphasizes the need to create a financial plan specifically tailored to the person's needs and objectives. "He must have proper financial planning to grow and consolidate whatever he has accumulated to sustain his retirement needs, and later distribute, when necessary," said the bank.
Retiring early is not impossible, as long you seek the help of someone who knows exactly where you stand, and can understand where you want to be.
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