If you've taken steps to build a nest egg at a young age, being able to retire early can seem like a dream come true. However, retiring before age 65 often brings on issues that can potentially derail the next decades. "Some think the hardest part is saving the money to achieve your goal of retiring early, but it is post-retirement that requires the most amount of planning," says Amit Chopra, managing partner at Forefront Wealth Planning and Asset Management in New City, New York. Use these strategies to avoid dwindling funds and make the most of an extended retirement.
Plan your days. You might have a cruise marked on your calendar to kickstart retirement, but it's important to think through your daily routine. "Begin to determine what hobbies you'd like to pursue or what hobbies and skills you want to hone and work on," Chopra says. In addition to ensuring a healthy amount of activity during retirement, planning out what you'll do will help you understand what you'll spend. Hobbies such as biking, boating and fishing will have certain costs you'll want to factor into your budget.
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Set a budget. Before retiring, you likely followed a budget to make sure you saved enough each month. After you step away from work, you'll want to evaluate what you spend and establish a new budget for the next years. "A budget gives you the pathway to enjoy retirement the right way, and that's with you in control of your money," says Kalen Omo, owner of Kalen Omo Financial Coaching in Tucson, Arizona. Look at your budget once a month with your spouse or an accountability partner to make sure you're on track, and then adjust any expenses that have changed.
Don't overlook health insurance. You may have received health insurance coverage through your employer during your working years, and most Americans are eligible for Medicare when they turn 65. If you retire early, such as at age 50, you won't receive Medicare coverage for more than a decade. "Make sure you've made provisions for health insurance before you're eligible for Medicare," says Stuart Ritter, a senior financial planner at T. Rowe Price in Baltimore. If your spouse is still working and has health insurance, you may be able to receive coverage through that plan. You could also purchase your own private policy or look for part-time work that includes health insurance coverage.
Stick to a withdrawal rate. If you have funds set aside for retirement, sit down with a financial advisor to decide what percentage you plan to take out each year. Make sure the total lines up with your planned budget. Then, if possible, avoid taking out more than the set amount, even if the market performs better than expected. "One of the biggest mistakes I see people make is to begin taking a certain percentage withdrawal, but in good market years they splurge and withdraw more," Chopra says. Instead, stick to the withdrawal rate and adjust only for inflation. For example, if you have $1 million invested and you plan to withdraw 4 percent each year, you'll take out $40,000 annually. If you adjust for inflation of 2 percent the following year, you'll take out an additional 2 percent of $40,000, which would make your withdrawal $40,800.
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Look at a side venture. Even if you don't want to work full time, there may be opportunities for jobs you enjoy. "There is something very different about going into a job because you want to and not because you need the paycheck to pay your bills," Chopra says. Selling items online or picking up gigs you can do at home allows you to set your own hours and take time off when you want to travel or pursue other activities. If you worked in a specific industry for several decades, you might be able to consult for certain companies or your former workplace.
Keep an emergency fund. Unexpected events can happen at any time, and having a stash you can draw from during a crisis will bring peace of mind. "If you face an emergency without [an emergency fund], you'll need to tap into your nest egg," says Nahum Daniels, a financial planner and author of "Retire Reset!: What You Need to Know and Your Financial Advisor May Not Be Telling You." This could drain your retirement funds much faster than planned. However, if you do have to dip into your long-term savings, talk to your financial advisor to evaluate your options. "Start by withdrawing from the account that has the lowest growth and that will have the least tax impact," Daniels says.
Find fulfilling pursuits. Whether it's volunteering at a local animal shelter, library or church, helping others can boost your energy levels and state of mind. "Find an activity with a charitable cause that you want to actually do," says Thomas Humphrey, a former geologist in Blaine, Washington, who retired when he was 55. If there are organizations in your area that line up with your values and past career, consider getting involved as a board member.
[Read: 25 Things to Do When You Retire.]
Focus on relationships. While sticking to a budget will help your dollars last for decades, some of the most pleasant aspects of retirement will likely be free or low-cost. "Find couple's activities and compatible couples to socialize with," Humphrey says. If you don't plan to travel regularly, consider getting a dog or cat to keep you company each day.
Rachel Hartman has been a freelance writer for more than 10 years and frequently covers retirement topics.