Google
''Hard work is like a staircase and luck is like a lift. Lift may fail but staircase is sure to take you to the top'' -- unknown

To be fearful when others are greedy, and be greedy when others are fearful -- warren Buffet

I am better investor because I am businessman,better businessman because I am no investor. -- Warren Buffet

4/18/2012

Related to Retirement

boston.com posted this infomration at below link:
http://www.boston.com/business/personalfinance/livinglonger/gallery/how_to_retire_early/

Few important points for my notes:

Don’t automatically roll your 401(k) to an IRA

If you are fortunate to be retiring when you are 55 or slightly older, don’t automatically roll over your 401(k) into an IRA. A rollover is generally a good idea because you have access to a much broader range of investment options but most people overlook the fact that they can begin taking penalty free distributions from their previous employer’s 401(k) plan at age 55 but they can’t take penalty free withdrawals from their IRA until they are age 59 and a half or older.


Optimize your Social Security benefit


Your eventual Social Security benefit is calculated based on your 35 highest earning years of employment. If you retire before you have 35 years of credit, your "missing" years will be counted as zeros, which could put a dent in your benefit.

Alternatively, even if you have 35 years of credit, you might want to keep working a few years longer because the higher salary you are earning now can replace some lower year's income. Finally, if you must claim your Social Security benefit at age 62 in order to afford early retirement, the odds are good that you can’t really afford to retire early.


Keep your withdrawals to 4-5 percent of your portfolio. Most financial planners recommend withdrawing no more than 4 to 5 percent of your portfolio in the first year of retirement and then only increasing that initial amount annually to reflect the rate of inflation. If you find yourself needing to withdraw 7 to 10 percent, there is a very high probability that your assets will be depleted before you reach your life expectancy.


Figure out what to do for health insurance


If you retire early, you won’t be able to receive Medicare until you are age 65, and very few employers still offer retiree health care. So, your only options are to quit your job and continue your coverage on COBRA or get an individual policy. COBRA often appears to be a good option but it only lasts for 18 months and getting your own policy could be prohibitively expensive.

Be sure to get this aspect of early retirement settled before you officially retire, and remember that even if you have coverage until Medicare kicks in, the average couple spends over $200,000 for health care-related expenses in retirement.

No comments: