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Life may be short but early retirement might be, too, if you don’t have a solid financial plan for life after work.
Whether it’s due to pandemic burnout, a new attitude on life or an optimism fueled by surging stock and real estate markets, more Americans appear to be retiring early, based on U.S. Bureau of Labor Statistics data.
The labor participation rate for Americans over age 55 ticked up 0.7% in January to 39.1% but remains well below the 40.3% recorded in February 2020 and has recovered more slowly than the rate for the general population.
“I think Covid has increased the interest in retirement generally and accelerated the number of people retiring early,” said certified financial planner Lazetta Rainey Braxton, co-CEO and senior financial planner at 2050 Wealth Partners in Brooklyn, New York. “People are rethinking everything and often more emotionally than practically.”
For those who have the resources, retiring from the daily grind opens a new world of opportunities. However, it comes with risks and for all but the wealthiest Americans — and the earlier you retire, the greater the risk.
“If you don’t have debt, have a track record of living within your means and have enough resources to cover emergencies, knock yourself out,” said Danny Artache, a financial advisor based in Jupiter, Florida. “But if you run out of money, you could end up being a greeter at Walmart.”
Are you ready to retire both emotionally and financially?
“Don’t be afraid of your numbers,” Braxton said. “You need to know what they are.
“The more comfortable you are with those numbers, the more easily you can pivot when things change.”