Following on from the previous blog on considering early retirement, the focus of this conversation sparker is to look at five key things that should be on our to-do list before we make any decisions about our retirement (or any big life decision!).

In his article for Glacier, Dinash Pillay, National Business Development Manager at Glacier, said that there is much for you to consider before you hand in your early retirement notice.

We know that people live longer now than in previous generations, so there is the likelihood that you will live beyond 80. Dinash says that the most important question for people facing retirement, arguably, is: will my retirement savings last as long as me? Before you make any life- or finance-changing decisions, the answers to these questions will inform your decision-making.

When life is overwhelming and we have too many balls in the air – which is common for those in their 40s and 50s – writing down lists helps us to declutter our thoughts and process the emotions before they process us.

Here’s Pillay’s 5-Check offering to help us make better choices around our retirement planning.

Your to-do list before deciding to retire early

1. Consult a personal financial adviser. If you don’t already have one, appoint a qualified, appropriately authorised financial adviser to help you make some of these decisions. If you do decide to opt for early retirement, there is little room for mistakes or bad decisions regarding investing your money. An adviser’s expertise will go a long way in enabling you to invest and retire with confidence. Also, they are not emotionally attached to your money, so will help you make decisions based on the facts, objectively taking your unique needs, investment risk appetite and lifestyle into account. 
2. Scrutinise your household budget. This means evaluating every expense incurred in your home – the essential costs of living such as groceries as well as the luxury items such as entertainment. In every budget, there are fixed costs that are unlikely to change, whether you are working or not. An example of this is that you may be paying school or university fees for your children or you might still be servicing debt. Those costs may exist for many more years. So, regular review of your budget is essential. Consider that the monthly income from your retirement fund is likely to be less than your current monthly income. As a retiree, you might be able to save on costs like fuel, but also consider new costs that could be incurred e.g. your private medical aid that previously may have been included as an employee benefit at work. 
3. Think about who depends on you financially and how long you will have to support them into the future. Your spouse may not be employed; you may still have children at school or university; you may have a disabled child; or you may have unemployed or retrenched adult children whom you support. These dependents have to be taken into account in your planning.     
4. Know how much retirement savings you’re losing by retiring early. You’d be surprised how much you could lose in savings, even by retiring just two or three years earlier than you originally planned to. 
5. Decide on how you will spend your time. Taking a dream holiday is one option, but it can only last so long. Many retirees complain about boredom within the first six months into their retirement. They have so much time with few activities to fill it. Perhaps consider creating a new source of income using your skills, or find a hobby, or think about the possibility of volunteering in your community. There are many organisations that serve the needy who could use your skills and expertise. The point is to find a new purpose and to live it with confidence.

The way that we define and refine what retirement looks like will continue to evolve as we move forward, so remember that there is no ‘right time to retire’; it all depends on your personal situation. 

Going back to point one on the checklist is always a great idea!

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