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3 Ways to Retire Early

Tom Sightings

By the time I was in my early 50s, the company where I'd spent most of my career was faltering on several fronts. The situation created a poisonous work atmosphere. The company was simply not a pleasant place to spend the day, and hadn't been for several years.

I was sick and tired of my job, and all I could think about was how great it would be if I could afford to take early retirement. But I couldn't see how I could pull it off. Then I got fired, and was forced to figure out how to pull it off.

If you hate your job, your company is in trouble, or there's any other reason you're not focusing on the job, it's time to start dreaming about what else you could be doing. It might be smarter to take matters into your own hands, decide whether you can afford to retire early, and then map out how you can do it. Here are three times it makes sense to retire early:

1. You have enough money. This is the most obvious way to retire, but it's also the least realistic. There are still a few people who enjoy a generous, fully guaranteed defined-benefit pension that kicks in after 20 or 25 years of service. This might be enough by itself to enable you to retire. And some highly paid professionals in the private sector might have built up a substantial retirement nest egg that will be enough to last for the rest of their lives. I know an accountant who retired at age 49. She made a good salary, lived a frugal lifestyle, and saved a lot of money. And since she was a financial professional, she felt she could adequately manage her money to support herself for as long as she lived. She's an unusual woman who is enjoying life these days. But it will take diligent saving and proficient money-management skills to accumulate enough to retire early.

2. You have another career in you. Technically, this is not retirement. But a second career solves the problem of hating your job and wondering how to extricate yourself from a bad work environment. One friend from my former company who was a couple of years younger than me held a secret desire to become a teacher. He saved up some money, did his research, and then jumped ship to enter a fast-track program designed to train mid-career individuals to become math or science teachers. He left work in November, started the program in January, and was teaching middle-school science by August.

3. Your spouse has a good job. My brother-in-law took an early retirement offer from his computer company when he was in his mid-50s. He received a decent package, but he had a daughter in college and a son in high school. I asked him how he could possibly afford to retire with those responsibilities. He smiled and replied, "Let me tell you the secret to early retirement: A working wife." His wife had worked when she was younger, took off a dozen years to raise their two children, and was more than ready to go back to work--at what turned out to be a very convenient time. And he is not the only guy I know who's enjoying early retirement while watching his wife go off to work every day.

The postscript. If you plan to retire early, make sure you figure out a way to maintain your medical insurance. My friend the teacher stayed on COBRA for the nine months he was out of work, then signed up with his school's medical plan. My brother-in-law had his own retirement medical insurance, and his wife's new job covered the kids. In my own case, I was able to join an insurance plan through an industry association that I belong to. But however you do it, make sure you're covered.

Finally, don't just retire to get out of a job. Have a vision of what you'll be doing once you retire. Figure out what you are going to do after your spouse goes off to work in the morning, leaving you alone in the house. My brother-in-law took up cycling and trained for long-distance bicycle races, and he also volunteered at the zoo two days a week. In my own case, I started a consulting business, relying on contacts I knew through my old job. But I make a lot less money than I used to. My friend the teacher also took a pay cut.

If you retire early, you will probably have to watch your expenses and live a more modest lifestyle. You'll be poorer. But you might be happier.

Tom Sightings is a former publishing executive who was eased into early retirement in his mid-50s. He lives in the New York area and blogs at Sightings at 60, where he covers health, finance, retirement, and other concerns of baby boomers who realize that somehow they have grown up.

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