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.

Sign up for Kiplinger’s Free E-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!

Stephen Dunbar, Executive VP of Equitable, has built a thriving financial services practice where he empowers others to make informed decisions and take charge of their future. He and his team advise on over $3B in AUM and $1.5B in protection coverage. As a National Director of DEI for Equitable, Stephen acts as a change agent for the organization, creating a culture of diversity and inclusion. He earned a bachelor's in Finance from Rutgers and a J.D. from Stanford.
-
Six Steps to Take if You've Recently Inherited Money From a Loved One
It’s important to deal with the emotional aspect first before tackling the financial one.
By Kiplinger Advisor Collective Published
-
Alaska Airlines to Buy Hawaiian: Get Bonus Miles Now
How to use the Alaska Airlines credit card and frequent flyer program to save on trips to Hawaii, Alaska and beyond.
By Ellen Kennedy Published
-
11 Reasons to Consider a 1031 Exchange
Deferring capital gains taxes might be at the top of the list, but growing your portfolio and your wealth and helping with estate planning are also compelling reasons.
By Daniel Goodwin Published
-
Why It’s Time to Give Bonds Another Look
Yields are much more attractive now, but you should use discretion to find the bond allocation that’s best for you.
By Bill Aldrich, CLU® Published
-
Estate Planning and the Legal Quirks of Retiree Cohabitation
Creating an estate plan for an unmarried couple is already challenging, but when the cohabitating couple are in their golden years, it’s especially tricky.
By David Handler, J.D. Published
-
Seven Financial Planning Stops to Put on Your Map to Financial Security
Creating a comprehensive plan is just the start, though. Checking in regularly to make sure you’re still on track is imperative.
By Michael E. Lewis II, CFP®, CLU®, ChFC® Published
-
How to Measure the Health of Your Retirement Plan
These five key indicators can help you make decisions based on the overall performance of your retirement plan rather than individual variables.
By Brian Skrobonja, Chartered Financial Consultant (ChFC®) Published
-
Four Easy Ways to Get Yourself Fired
Being a standout on the job can sometimes be as simple as showing up to meetings on time, responding promptly to requests, doing your homework and not being a jerk.
By H. Dennis Beaver, Esq. Published
-
How Might the Great Wealth Transfer Change Society?
As $84 trillion in assets move from Baby Boomers to younger generations, we could see a greater emphasis on financial technology and investing based on values.
By Jennifer Wines, JD, CPWA® Published
-
Why More Retirees Might Come Out of Retirement
It’s often not solely because of financial reasons, but because of a lack of purpose in retirement. This financial expert can relate.
By Chris Blunt Published