You were not intending to retire, but you may not have a choice now. When your organization wishes to terminate your role, abrupt retirement can occur, or maybe you need to be home to help take care of your family. Be it downsizing, merger or accusation, laying off employees, you call it sudden because it directly affects you.
To get out of this impactful trauma, here are a few things you can do to plan it right for early retirement.
Retirement Income Plan
A retirement income plan is a roadmap that works as your savings portfolio and specifies how much income you have, the sources that it will generate from, and the amount of time that it will take to build. This income includes a portfolio of pensions, Central Provident Fund (CPF), emergency fund, annual savings, investments and projected retirement funds. When this strategy is in effect, you will determine when you are going to have to minimize costs, find extra jobs, or simply continue what you currently are doing.
Your strategy should help you to build multiple variations of achievable models to see which one offers the best long-term result for you.
Spend on a Priority Basis
When you find out that your income is unexpectedly about to get lower, immediately filter out needs against wants. This is just the first step, and you can always add them back at a later stage. Look through the bank savings and credit card statements to find opportunities to dispose-off the extras immediately. To work out a longer-term solution, this will help give you some strategic breathing space.
Never Touch Emergency Fund
As a rule of thumb, never touch the funds that you build with blood and sweat over the years. Make sure you keep pensions and retirement money intact unless it is bare necessary. The purpose of creating this wealth pool is to use it when things go wrong. However, if you feel that you have gone beyond your target pool limit, then that may be the optimal choice for you.
Downsize or Move to an Inexpensive House
Often you would need to let go of large and expensive things in your life while you learn to economize and adjust to a new standard of income. Consider selling your home and moving to a smaller house or condo, or moving to a less-expensive place. If you have a legal basement, you can put it up for rent and earn rental income on the side. All this will add up to the retirement savings portfolio that will enable you to build up wealth efficiently.
Speak to a Financial Expert
Just before you retire, it would be an all-important move to get in contact with a financial planner or advisor about your options. If you are not sure that you have sufficiently stable funds to last during your retirement — for example, from your insurance and savings accounts — a financial advisor will make you rethink what you need to do right now to retire with some wealth. For instance, what are your monthly financial responsibilities? Can you lower costs in some areas so you are only paying for what is absolutely necessary? An expert can help you figure that out.