Page 26 - BusinessWest April 15, 2024

WEALTH MANAGEMENT >>
Living the Dream
Retiring Early May Come With Challenges
DBY BARBARA TROMBLEY, CPA
o you dream of retiring early? Do you picture yourself in sunny Florida at your vacation home during the winter and heading back to temperate New England for the summer? Playing
golf, lying on the beach, enjoying grandchildren, and not adhering to a corporate work schedule — this is the dream of many, but is it a finan- cial possibility? What are the pitfalls of an early retirement, and what can you do now to achieve your dream?
At the heart of the dream is financial indepen- dence. This means not relying on employment to fund your current lifestyle. Retiring in your 50s or at age 60 means that you cannot draw Social Security, and you need to figure out a healthcare plan. Many people today do not have access to pensions like the generation before us. So that means investing early and wisely is paramount to building the wealth needed to achieve your retirement dreams. Also, if you retire before age 591⁄2, you need an investment account outside of
your retirement plan to avoid a 10% penalty on withdrawals.
The most logical place to look for invest- ments is your work retirement plan. Are you fully funding each year? At age 50, an employee can contribute $30,500 in 2024. That includes the catch-up contribution of $7,500. This may be the easiest place to invest as your funds are automatically withdrawn from your paycheck.
After your retirement plan, you can and should have a brokerage account or investment account with a financial advisor. These accounts come with many names, like individual, joint, non-qualified, etc., and send you a 1099 each year for your taxes. Many people are not aware of how easy it is to invest outside of your work plan. Investing in a well-managed portfolio, over time, will greatly increase your wealth.
Having a plan to withdraw from your portfo- lio is integral to a successful early retirement. Life expectancy is increasing, and inflation and market volatility may always impact your finan- cial life. The old myth of withdrawing 4% of your portfolio and having it last for your lifetime may
“Many people today do not have access to pensions like the generation before us. So that means investing early and wisely is paramount to building the wealth needed
to achieve your retirement dreams.”
26 APRIL 15, 2024 << WEALTH MANAGEMENT >>
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