Hoping to Retire Early? DONT! Even if You Can – Yahoo News Canada

Retiring early is the goal of everyone. Even when you were young, one day you knew youd be ready to retire and be able to do what you want, when you want. But can you?

As the years tick by, and that day seems closer, you begin to ask yourself whether you can retire early. Wouldnt that be great? Weve all heard the FIRE acronym: Financial Independence; Retire Early.

But there are a number of problems with early retirement, and its the reason you should ask yourself some hard questions before taking the plunge. After all, while it can be easy to jump into retirement, it can be incredibly hard to jump back out. So, before you retire, ask yourself these three questions.

Im sure you already have a goal in mind for how much you need to have before you retire. But is that number reasonable? In fact, did you decide that number when you were 30 and making $45,000 a year? Because now, youre more likely making even double that. Youve become used to a lifestyle that perhaps you simply cant keep upwhen you retire.

So, before you retire, take a hard look at what you really think youll want to spend on a regular basis. Youll need to be able to create a paycheque similar to the one you have now, combining your pension and savings all of it. And once that moneys gone, its gone. So, make sure you have a realistic goal that means you wont have to retire poor after living large.

Sure, we all plan to start up a hobby, travel the world, volunteer for charities. However, that can only take up so much time. Is it really that you just want to stop working? Digging even deeper, is it perhaps that you just dont want to work at the job you have now?

Instead of retiring all together, maybe its time for a career change. See if your savings can support the cost of perhaps starting up consulting, freelance projects, or a side gig of sewing sweaters for dogs. The world is your oyster! Once youre set up, then maybe its time to leave that old life behind and start a new one. While its far more freeing than the job you had before, youll still have money coming in.

Its nice to imagine that in the future, everything will be shiny and new. But life doesnt always work out that way. Anything can happen that suddenly affects your finances. Those numbers you worked so meticulously on suddenly make no sense at all.

Instead, all of these points mean you should be working towards the goal of financial independence, not the goal to retire. At what point do you think youll be emotionally, mentally, and even physically unable to work the way you are now? When that point comes, where will all your money be coming from? And what can you do to make sure you can continue to bring in money, even after 20 years of retirement?

To meet this goal, its important to meet with a financial advisor and come up with some options to invest in your future. By purchasing shares in steady stocks, you can bring in cash, even decades after you retire. Bank stocks are a great option, as each Big Six Bank has over a hundred years of steady growth and dividends that have grown year over year, sometimes even during severe economic downturns.

If youre looking for a great bank option, that will even give you strong dividend income during retirement, right now, Canadian Imperial Bank of Commerce is an excellent choice. It has the highest dividend income, is a bargain share price, and has plenty of room to grow. Todays investors can lock in a 6.41% dividend yield. You can even use that income to put aside travel money. After all, just because you arent going to retire today doesnt mean you cant have fun!

The post Hoping to Retire Early? DONT! Even if You Can appeared first on The Motley Fool Canada.