10 Questions to Help You Decide if You’re Really Ready to Retire Early
More and more of us are thinking about retiring early. The key is making sure we’re properly prepared. Here are 10 key questions to ask yourself.


Thinking about retiring early? We’ve put together a list of key early-retirement questions to ask yourself to find out if you’re ready.
According to a report by the Federal Reserve Bank of New York last year, nearly half of Americans expect to retire before they turn 62, a two-point rise on prepandemic levels.
And you can see why. Long walks. Even longer lunches. Time with the grandkids. Vacations. Golf. Retiring early can promise all kinds of opportunities and benefits. But it also carries some risks, as it means your nest egg will need to last longer and adjust to a wider variety of fluctuations in your own life and in the economy overall.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
It’s therefore vital to ensure you’re fully prepared, both financially and emotionally, which is exactly where the following 10-point checklist can help. But, warning! There are no C grades in early retirement. Unless you can answer “yes” to at least eight of these questions, you may want to consider holding off on writing that resignation letter just a little while longer.
1. Do You Have a Long-Term Care Plan?
Whether it’s due to illness or old age, there’s a strong chance that one day you’ll have to finance a period of medical support for you and/or a loved one. Which means you need a clear plan for how to pay for long-term care as part of your early-retirement fund.
2. Are You Debt-Free?
From credit cards and car notes to mortgages and other bank loans, having to pay off significant debts, including any interest, is a drain on your nest egg. You should clear any significant fixed outgoings from your life before saying goodbye to your salary.
3. Are Your Dependents Independent?
From kids going through college to elderly parents needing support with medical costs, you may have various people in your life who depend on you financially. It’s best to wait until the majority of them are financially independent before you retire.
4. Do You Have a Stress-Tested Financial Plan?
A written financial plan must clearly set out how your nest egg will cover your expected expenses in retirement. A qualified financial adviser can then run a Monte Carlo simulation, stress-testing that plan through different possible scenarios to reveal whether it’s up to the job.
5. Do You Have a Trusted Sounding Board?
Whether it’s a professional, a colleague or a friend, find someone you can rely on for smart, objective financial advice, ideally from outside your network of dependents. The same person can also provide invaluable decision-making support if you’re ever faced with being no longer of sound mind.
6. Are Your Legal Documents in Order?
As well as a will and health care directives, you should get a power of attorney in place. This gives someone you trust the ability to make financial decisions on your behalf if you become temporarily or permanently incapable. Name a back-up, too, in case your first choice (for most of us, our partner) passes before you.
7. Do You Have a Passion Project?
One of the biggest issues in retirement can be depression. Suddenly, you go from running 100 miles an hour to feeling like you’re twiddling your thumbs. And no amount of golf, needlework or Netflix can fill the gap! Passion projects fire our engines as human beings, so ensure you have something to engage you mentally, emotionally and physically when work’s no longer part of your life.
8. Can You Replace Your Paycheck?
Without a salary, you’ll need to use your nest egg to create a regular income stream to cover your expenses. That’s where fixed-income-oriented instruments, such as dividend-paying stocks and annuities, come in. Ideally, you should use these to reliably cover 70% to 85% of your former paycheck.
9. Have You Adjusted for Inflation?
Inflation runs at an annual average of 3%, which means your cost of living will be much higher in the future than on the day you retire. Remember to adjust for this increase when assessing the value of your retirement fund. Or put another way, as well as replacing your paycheck, ensure you’re able to give yourself a 3% raise every year, too!
10. Are You Investing for the Long Term?
Most of us become more financially conservative as we approach the end of our working life. But as an early retiree, you need to know your investments will keep delivering returns for 30 years or more.
Even when the markets are volatile and the temptation to be risk-averse is greatest, try to keep a 70/30 or even 60/40 split between safer, fixed-income investments and those with higher equity risk but higher potential long-term rewards. All being well, you’ll need them!
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Stephen Dunbar, Executive Vice President of Equitable Advisors’ Georgia, Alabama, Gulf Coast Branch, has built a thriving financial services practice where he empowers others to make informed financial decisions and take charge of their future. Dunbar oversees a territory that includes Georgia, Alabama and Florida. He is also committed to the growth and success of more than 70 financial advisers. He is passionate about helping people align their finances with their values, improve financial decision-making and decrease financial stress to build the legacy they want for future generations.
-
Stocks Swing in Volatile Session: Stock Market Today
The main indexes fell sharply in early trading on rising China tensions, but rebounded thanks to encouraging bank earnings.
-
Don't Miss Out! A Quiz on Medicare Enrollment Deadlines
Quiz Test your basic knowledge of Medicare enrollment periods in our quick quiz.
-
A 'Fast, Fair and Friendly' Fail: Farmers Irks Customers With Its Handling of a Data Breach
Farmers Insurance is facing negative attention and lawsuits because of a three-month delay in notifying 1.1 million policyholders about a data breach. Here's what you can do if you're affected.
-
Serving the HNW Market: How Financial Advisers Can Break Through and Deliver Lasting Value
Financial advisers have a significant opportunity to serve high-net-worth clients by elevating their capabilities, delivering comprehensive planning, building diverse teams and prioritizing family wealth education.
-
Don't Just Sell, Connect: How Financial Advisers Can Ignite Their Sales Growth
Avoid complacency and embrace small, consistent improvements to optimize your sales process and results.
-
Are You a Small Business Owner Buckling Under Economic Pressure? Here's How You Can Cope
Significant emotional and financial challenges, including tariff worries, are piling up on small business leaders. Here's how leaders can develop more healthy coping strategies and systems of support.
-
To Raise Prices or Not to Raise Prices: Tariff Tips for Small Businesses
Small businesses are making critical decisions. Should they pass on higher costs due to tariffs, or would that only cost them more in lost customers?
-
Five Retirement Planning Traps You Can't Afford to Fall Into, From a Wealth Adviser
To help ensure you reach your savings goals and enjoy financial security in your golden years, be aware of these common pitfalls. The key is to be proactive, informed and flexible.
-
Your 401(k) Can Now Include Alternative Assets, But Should It? A Financial Adviser Weighs In
Many employer-sponsored plans offer limited investment options, which can stunt growth. But participants considering alternatives might need some sound advice to get the most from their accounts.
-
Will Taxes Shred Your 401(k) or IRA During Your Retirement? It's Very Likely
Conventional wisdom dictates that you save in a 401(k) now and pay taxes later, but turning that rule on its head could leave you far better off. A financial planner explains why.