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August 17, 2021

Thinking of retiring early? First ask these three questions

Financial Planning Committee

For many individuals, the idea of retiring early and having more time to do the things you love like travel, golf, volunteer, etc., can be exciting. But there are many things to consider beyond “do you have enough money to retire?” such as the cost of health insurance, considering how you will spend your time, where you will live, and many more.

In this short video, JNBA Advisor & Advisory Services Manager Elise Huston and Client Services Manager Stacy Friedges discuss several things to think about if you’re considering early retirement, including how you’ll pay for health care.

Can you afford to retire early?  

This can often be a hard question to answer, especially if there are still questions around how you want to spend your time or where you will live in retirement. As a starting point, you at least want to ensure you are able to replace your current income or maintain your current standard of living. However, you may have other goals you want to plan for in retirement that would change your current spending. This may include purchasing a cabin and having increased costs associated with a second home, relocating to a different city or state that could have a higher or lower cost of living, or additional time to travel both domestically and internationally.

At JNBA we believe it is important to plan for all of these “what if” scenarios. That way, as you consider an early retirement you have the information you need to better understand how a few additional years of working and saving could impact your long-term spending goals.

What will be the cost of health insurance?  

You may not think this would be a deciding factor, but the cost of individual health insurance can come as a surprise to many people. We recommend consulting with a health insurance agent prior to retirement to better understand what your potential health insurance costs would be if you were to retire prior to Medicare age. We have worked with clients over the years who decided to work another two or three years to ensure they had employer-sponsored coverage until they reached age 65 or Medicare age based on the cost of their individual health insurance plan. It is also important to understand if your current employer offers Retiree Medical Benefits. This is something that should be explored and included in your retirement plans.

How will you spend your time in retirement?  

Having a plan for how you intend to spend your time is greatly important as you transition into retirement. We often hear clients dream about having more time to golf, spend time with family and friends, or tackle a personal passion project, but that will only fill so many of your days. A lot of a person’s identity and social network can get wrapped up in the job or work they do. We recommend having conversations with your spouse or family around your goals for retirement, hobbies you want to explore, or organizations with which you want to volunteer to have a sense of purpose and identity in retirement.

While retiring early can be exciting, it may not be for everyone. And after evaluating all of these factors, you may decide to continue working or phase into retirement on a part-time basis. Having clarity around how much you want to spend and how you want to allocate your time will help ensure you are on the right path to an early retirement.

If you are considering an early retirement or if you know retiring early is something for which you want to work and plan, please consult your JNBA Advisory Team to ensure we have a plan in place that not only supports those goals but helps you achieve them.

Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from JNBA Financial Advisors, LLC.

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