Retiring early is not a matter to be taken lightly. The loss of income of my day job is going to impact my lifestyle, especially with the the fact that I am not a thrifty person by nature. Hence, I definitely need to prepare for early retirement before I take any actions that I might regret.
Here is a checklist of what I have thought about. You can have a different checklist depending on your lifestyle. In fact, I am curious to see what things I might have missed since I planned to retire early.
- Support from partner: This is very important. There will be ups and downs during the early retirement process. I need my partner to be there in case anything goes wrong.
- Take stock of my monthly expenses: As mentioned in the about me page, I am an analytical person by nature. I look at all the financial numbers that my household generates at weekly intervals. This has made it a bit easier for me to know how much I spending per month. Before you can retire early, you need to get a handle on your spending figures. You cannot imagine how many people don’t know how much they spend, much less the type of spending category.
- Forecast any future increase: Plan ahead to see what kind of expenses might suddenly pop up. Major categories include having children, parents retiring, house repair, car maintenance or new car purchase. This is the part where I try to be as conservative as possible to include any expenses that I might need to recover during my retirement phase.
- Create an emergency fund: I prefer to keep a year’s expense as an emergency fund. Some might argue that 6 months is enough but I am too conservative for that. I need to make sure that in case anything happens, I have a year’s buffer to let find a new job or to create additional incomes streams.
- Take stock of my monthly income streams: I don’t intend to spend our savings during our early retirement. This can be achieved by creating multiple income streams that are independently from my day job. Some might called this passive income while others might said side income. To me, it doesn’t make any difference. All I need to know is how much I need to generate and from sources. Many Singaporeans are unaware of the fact that it is now possible to make money online if you know how.
- Check my insurance: This is to cover for any major black swan events that can potentially wipe out my emgency fund in one go. I need to prevent this from happening so this step is cruical.
What did I missed from this checklist? Do you have a early retirement checklist to share?