Some local and state government employees — such as our police officers, firefighters, and public administrators — tend to retire at an earlier age than employees in the private sector. How? They usually have a defined benefit plan that promises income payments for life.
Many also have the added benefit of a supplemental retirement savings account such as a 457 deferred compensation or a 401 defined contribution plan that their employer sponsors — and they may even have an IRA, further boosting potential retirement savings. By saving diligently through these options, some can afford to retire from their public service career in their 50s. But, does it mean that they should?
If you maintain relatively good health and start saving early and consistently, then maybe you can “semi-retire” and land your dream job pursuing your passion (whatever it may be). On the flip side, retiring young could mean not having money for the comfortable lifestyle you imagined. Then what do you do? Working, perhaps on a part-time basis, is an option; but the opportunities to do so are not guaranteed and neither is good health.
One of the best starting points to determining the “right” time to retire is to figure out just how much you’ll need to save in order to retire. While you don’t have a crystal ball to see many years into the future, you can certainly develop a plan. Here are a few things to consider as you decide how much money you’ll need to retire, when you might want to retire, and which factors can impact your plan:
Finally, consider more than just your finances; think about how you’d spend your time in retirement. Will you focus on hobbies, travel, other activities? Prepare now for the retirement you envision.
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