For Mark Roberts’ Use: You’ve spent years dreaming and planning for retirement, so it wouldn’t be surprising if you also wish you could retire early. Many Americans are so antsy to retire earlier than planned, that they would actually be willing to make some major changes in order to make it happen. A recent poll found that people would take the following actions in order to make their dream of an early retirement a reality:
- 38 percent would sell their homes and rent instead
- 52 percent would relocate to a less expensive part of the country
- 34 percent would move out of the country
In some cases, depending upon your retirement planning practices up to this point, these scenarios might be realistic. However, before you get too carried away with your dreams of early retirement, it would pay (literally) to consider the downside of doing so.
If you’re like the 38 percent of people would would consider selling their homes and renting instead, pay close attention to the condition of the real estate market. Ever since the housing crisis, home values have yet to fully rebound to former levels. We’re seeing some improvement in that area, but selling your home now could mean forfeiting thousands of dollars in profit. Waiting just a few more years to sell your home could translate into a much larger final price. Not to mention, renting is often not a stable long-term plan for many reasons.
If you would consider moving to a less expensive part of the country, this may be the most feasible option out of the three. Still, remember that early retirement means you need to bridge the gap between employer-sponsored health insurance and Medicare eligibility at age 65. Moving also means selling your home, which may not be a smart idea for the reasons stated above. Also, remember to factor in the expense of a long-distance move. If you currently live near family and friends, you may want to visit home several times per year – yet another expense to weigh in your decision.
Moving overseas – as 34 percent of poll respondents said they would consider – is becoming a more popular option for retirees. Aside from the obvious moving expenses, there are special tax regulations to consider. Before making such a bold move for the sake of a low cost of living, remember to consult with your tax professional or financial advisor.
Source: Marketwatch Feb 6, 2014