Early Retirement Guidelines

Many people can retire early with some careful planning. Tips from financial experts on reaching that goal:

* Start planning early. You can’t decide at 50 that you want to retire in five years. Most successful early retirees have long-range plans in place before they reach 40.

* Stick with a good employer. Unless you’re certain you can strike it rich on your own, work for secure companies with generous pension plans. Avoid excessive job hopping so you can accrue substantial pension benefits.

* Make use of employer-sponsored investment programs. Place a percentage of your paycheck into tax-deferred 401(k) plans. Experts urge participation to the maximum. You have to be 59 1/2 to begin withdrawing without penalty.

* Save and invest wisely. Since you can’t count on Social Security or a company pension early on, you’ll have to live off savings for a while. You’ll need between 60% and 80% of pre-retirement income. To help your nest egg grow, put a chunk of it in stocks or stock funds. The Social Security Administration can provide an estimate of retirement benefits.

* Plan for medical bills. Unless you have an early retirement package that extends your health insurance coverage, you’ll need to factor in high insurance premiums until Medicare begins at 65.

* Scale back your lifestyle. There are many ways to do this. You might buy a smaller house, forgo extravagant vacations or send your kids to public colleges instead of Ivy League schools.

* Explore career directions you can pursue later in life. You may want to work a few months a year or hours a week. Lucrative opportunities may exist in consulting. Some individuals have turned a hobby into a way to make money.

* Mentally prepare yourself. Assess your values, goals and aspirations and relate them to how you’d like to live given more time and sufficient income.