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Four Considerations for an Early Retirement in 2021

Posted on: January 13, 2021

Four Considerations for an Early Retirement in 2021
 
Retirement is a professional and personal milestone that involves considerable planning and preparation. The decision to retire is not one to be taken lightly and depends not only on your personal preference to stop working, but also relies heavily on your financial ability to do so. Due to increased costs of living and longer life expectancies, the ‘Freedom 55’ is much less common than it used to be for Canadians. In fact, a 2017 Labour Force Survey reported that labour force participation from people in their 60s has nearly doubled in the last 20 years.
 
With the Covid-19 Pandemic taking hold of the world this past year, it has been a life-altering experience for the global workforce. For many people, a temporary job loss has turned into a more permanent period of unemployment. For seniors who were only a few years away, some are reconsidering if they should enter an early retirement.
 
If you’re thinking of an early retirement, you may want to consider these four factors:
 
  1. Do you have a good financial advisor?
For most people, the main deciding factor in whether or not they can retire early depends on if they’ve saved enough money. Having a good financial advisor is one of the best investments you can make to get your finances in check. Good financial management is especially helpful if the unexpected happens and you need professional advice. Your advisor has a duty of care to help you make smart financial decisions and is one of the first people you should consult when considering an early retirement.
 
  1. Have you considered of the cost of elderly health care?
A somewhat sobering consideration is the reality of elderly healthcare. Canadian Census data shows that today, the average Canadian life expectancy is almost 83 years old, however functional health starts to decline after 65. When assessing your financial ability to retire early, you cannot ignore the potential costs of elderly care. Although you may not have health complications now, your retirement plan needs to factor in all potential financial risks in the future.
 
  1. What does a post-pandemic retirement look like?
For most people, plans for retirement include tropical trips and extended periods of travel; however, that’s all changed due to the pandemic. Globally, governments are advising against travel, deeming it unsafe during this public health crisis and in some countries it’s even impossible. With no knowledge of when the pandemic will end, it’s worth reconsidering what your retirement plans are, how you would actually spend your time and if now is the right time for you to retire early.
 
  1. Do you want to leave a legacy behind?
Another consideration for early retirement is what kind of legacy you want to leave behind. For some, the choice to leave behind a financial inheritance is extremely important. This could go to your family, your business, an academic scholarship fund or to charity; whatever it may, it’s an amazing opportunity to transfer your wealth and leave a lasting impact on someone or something you care about deeply. Leaving a legacy takes financial preparation and often professional counsel. We recommend meeting with your financial advisor and assessing how your plans to leave a legacy will fit within your early retirement plan.
 
Retirement is an incredibly joyous milestone and a proud achievement that you want to be able to enjoy to the fullest. Taking into consideration these four factors can help you decide whether or not you’re ready to make that transition early. For more advice, read our article on how to make your transition into retirement a happy one.
 

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