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6 Secrets to Retiring That No One Is Talking About

Not only are Americans less worried about retirement savings than they were 10 years ago, they’re generally better informed about how to save, too.

What’s more, more than half of Americans are planning to retire before the age of 65 — some even earlier.

On average, early retirees leave their jobs about 5 to 6 years before their Social Security or other government benefits kick in, according to data from LIMRA Secure Retirement Institute.

This poses plenty of planning challenges for ambitious retirees who want to quit in order to enjoy the good life.

If you want to leave the workforce early, here are 6 secrets you need to know as you plan your retirement.

1. There’s No “Perfect Number” — Only Your Number

Your financial advisor probably has a tried-and-true formula for calculating how much money you’ll need to last your retirement. General wisdom holds that this amount is roughly 10 times your annual income, reports Carolyn O’Hara at AARP Magazine.

But Dan Yu, a managing principal at EisnerAmper Wealth Advisors, tells his clients to save more — a lot more. “Spending really doesn't slow down in early retirement,” Yu explained to AARP, “as many new retirees ramp up travel.”

Still, there’s no “perfect number” out there. A stress-free retirement — especially an early one — depends on how well you’ve budgeted your projected costs and minimized your expenses.

In addition to consulting a financial advisor, try using a retirement calculator like this one at CNN Money to help you begin your retirement planning. What’s your number?

2. Plan for a Long Life

Whether or not you plan to retire early, you should plan for living a long, healthy retirement — like, thirty to forty years long.

How will longevity impact Baby Boomers, and the generations behind them? Inflation, says financial advisor Kate Stalter.

“For the boomers, it is quite, quite different than it was for their parents," Stalter told U.S. News & World Report. "I think people underestimate the effects of longevity.”

Retirees from the Silent Generation, for example, didn’t have to worry about living as long after retirement, which meant budgeting for health care costs was simpler.

For Boomers, the story’s a little more complicated. Take long-term care, for example. “A 4.5 percent increase means the semi-private nursing home room that cost $6,844 per month in 2016 was approximately $7,148 per month in 2017,” reports Maryalene LaPonsie at U.S. News & World Report.

And those numbers will only continue to go up. Speak with a financial advisor to ensure you’ve adequately budgeted for a lengthy retirement, including all the expenses that come along with aging. Taxes, rising health care costs, long-term care expenses, and final preparations should all factor into your retirement budget.

3. Most of Your Money Won’t Go Toward Travel

Most retirees are excited to finally travel, vacation, and spend more leisure time with friends and family. And no wonder — they finally have the free time to get out and about.

But the biggest expense you can expect during retirement may come as a surprise. According to a Fidelity Investments study, health care expenses for an average couple retiring in 2017 are up 6% from last year — coming in at a whopping $275,000.

“This $275,000 is a brutal number," Fidelity’s senior vice president Adam Stavisky told CNBC.

“In many ways, it's annually a clarion call both for people to start understanding the obligations they will face in the future and how they will best prepare for them,” he added.

This is especially important information for retirees who may want to leave their jobs early — or expect to have high travel and leisure expenses in their early retirement. Make sure to balance expenses with rising costs — and longer lifespans.

4. You Still Have to Stick to a Budget

If you thought finally being free from your office job means you no longer have to worry about budgeting, think again.

Since retirement budgets are a moving target, it’s common for retirees to misjudge how much money they actually need. This can lead to over- or underdrawing retirement savings — and neither is a great position to be in, says financial advisor Walter Updegrave.

Still, there’s no crystal ball for predicting how your retirement will go — it’s all about finding a happy medium as you track your expenses.

“[The] key to balancing the risk of spending too much against the risk of spending too little is to start with a reasonable withdrawal rate that has a decent chance of making your money last — and then make adjustments, or resets, along the way,” writes Updegrave at CNN Money.

If you find that a 4% draw is too high, make some changes. Just don’t forget to consult — and revise — your budget!

5. There’s a Knack to Drawing on Your Investments

Mastering your retirement budget also requires knowing how to spend down your investments. According to financial reporter Leslie Haggin Geary, your best bet is to play it safe.

“If you need retirement savings to get by, and you’re wondering whether to take them from an IRA, 401(k) or a Roth, don’t be tempted by instant gratification,” Geary writes at Bankrate.com, noting how many retirees want to spring for tax-free withdrawals first.

“Instead, withdraw from taxable retirement accounts first, and leave Roth IRAs alone for as long as possible,” she adds.

In general, your biggest asset is flexibility over time, especially if the markets go through major up- or downswings. Checking in with your savings once a year can help you make the right call, suggests Updegrave.

“[By] making small adjustments every year or so, you’ll be less likely to end up with too little (or too much) money late in retirement when your options are more limited,” writes Updegrave at TIME.

Work with your financial advisor to keep an eye on your accounts — and your budget — throughout retirement.

6. You Might Not Really Retire

Since retirees are living longer, healthier, more active lives, they may not be ready to fully exit the workforce when age 65 comes along.

Sure, work can also provide a little bit of extra income for retirees who don’t want to depend entirely on Social Security income or a pension.

But part-time jobs, consulting gigs, and volunteer work are all ways for retirees to stay involved in their communities and to do work they love, too, says Sally Balch Hurme, author of Get the Most Out of Retirement.

"Try to think of the things that you feel good about or passionate about or have an interest in," Hurme, told U.S News & World Report. "Leaving your regular job allows you to explore something new."

Whether you have extra income that allows you to retire early, or simply want to learn more about retirement planning, financial literacy and a knowledgeable financial advisor can take you where you want to go. The only real secret to a stress-free retirement is smart planning — and plenty of good advice along the way.



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