Early retirement appeals to many

With rising life expectancies and inflation, some people retire later to boost savings. But those with solid nest eggs may be tempted to leave work early to travel, pursue hobbies, and enjoy life while healthy.

Test your retirement paycheck first

Don't just plug numbers into a financial plan. Live on your projected retirement income for six months while still working and save the difference to see if the lifestyle matches your budget.

“One thing I like people to do before retiring is actually practice living on what they expect to have available in retirement.”

Plan for worst-case scenarios

Your retirement plan must survive market downturns, higher inflation, home repairs, and health emergencies. If it only works when everything goes right, it's incomplete.

“What happens if the market has a bad couple of years early in retirement? What if inflation stays higher than expected?”

Consider your retirement tax calendar

The years between your last paycheck and when Social Security and required minimum distributions begin offer tax-planning opportunities like Roth conversions that could save you thousands.

Watch out for Medicare premium increases

A Roth conversion, large IRA distribution, or taxable capital gain can increase your Medicare Part B and Part D premiums two years later through something called IRMAA, catching many retirees off guard.

Build a social network outside work

Leaving your job means losing workplace connections. Before retiring, plan to stay connected through a house of worship, clubs, volunteering, or other activities to replace those social bonds.

“Keeping up social connections is very important as someone ages.”

Plan for long-term care costs

Long-term care can derail retirement if not planned for. Set aside a portion of your nest egg upfront, consider long-term care insurance, or plan to use your home as a safety net if needed.

“If it's not planned for, it can derail retirement plans.”

Don't retire to escape burnout

If you're retiring mainly to escape a toxic job, consider a sabbatical or career change instead. These options give you mental rest while keeping money flowing in and allowing you to build a better financial plan.

“Maybe a sabbatical or a career change may be the right solution versus retirement.”

Plan for a longer lifespan

Test your retirement income plan against living to 90, 95, 100, and beyond. Don't assume you won't live into your 90s just because your parents passed away earlier.

“Today's actuarial tables used by life insurance companies go out to age 120.”

Align with your spouse on retirement

Discuss early retirement at length with your spouse before retiring. Make sure you share the same vision for spending priorities, time priorities, and how you'll handle seeing each other all day every day.

“The spending priorities and time priorities need to be discussed to avoid relational strains and potentially financial strains while in retirement.”