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<p><a href="https://www.businessinsider.com/category/rethinking-retirement"></a></p><div type="image" title="a couple kiss on their wedding day under a sign reading &quot;craft beer rules&quot;" height="683" width="1024" msid="92111168" hostid="261"></div><ul class="summary-list"><li>I used to think I'd retire like my dad; he worked for the same employer for decades and achieved "Freedom 55."</li><li>With life and work so uncertain in COVID's wake, though, I shifted gears to focus on something new.</li></ul><p>My dad retired at 55 with a wide-open horizon before him: no plans, no commitments, no worries. After decades in the child and youth services industry, he was ready to kick up his feet, flip on the radio, and settle into his golden years — with a healthy pension to support him and my mom.</p><p>As a union worker employed by a municipal agency in Toronto, he knew early on in his career that if he worked hard for long enough, he'd have a guaranteed income in <keyword id="11909870" type="UNKNOWN" weightage="60" keywordseo="retirement" source="Orion">retirement</keyword>. I can remember hearing about his "Freedom 55" plan from a young age, watching him go out for strategic promotions that would boost his pension.</p><p>In 2010, when I started my career, I had moved to the US from Canada and the dust from the Great Recession was just beginning to settle. It is an understatement to say I was walloped by culture shock. I had no idea <a href="https://www.businessinsider.com/personal-finance/what-is-401k">what a 401(k) was</a> let alone how to use one when it was offered, and it frankly hadn't occurred to me that I'd have to save <em>on my own</em> for retirement. I was 23 and knew only one retired person, my dad, and I thought pretty much everyone's retirement looked the same. Suffice to say I missed out on many years of savings before finally getting it together.</p><p>When I did start tucking money into a 401(k), around 30, it was with the expectation that I'd follow in my father's footsteps — I'd stop work at a reasonable age (say 65 or so), then enjoy relaxing days with my family and friends, traveling, seeing movies and live shows, working on house projects, and generally taking it easy. But the COVID-19 pandemic flipped a switch in my brain. </p><h2><strong>I suddenly started rethinking my ideal 'retirement'</strong></h2><p>Maybe it was watching my friends get laid off left and right, or feeling, suddenly, the fragility of life, work, and the balance of the two, but at some point in 2020 I abruptly stopped picturing my cottage-oriented retirement and suddenly started to think about building my own business — something that was mine, something that would bring me joy. A pandemic cliché, I know, but it's a cliché for a good reason. </p><p>When I casually mentioned my small-business dreams to my husband one night, he said he'd been thinking the same thing. Maybe it was all the reality restaurant TV we'd been watching during lockdown, or lingering memories of <a href="https://www.businessinsider.com/personal-finance/wedding-budget-tricks-learned-as-bridal-editor">our brewery wedding</a>, but we started dreaming of a place we'd want to be, many years into our retirement: a <keyword id="11939754" type="UNKNOWN" weightage="60" keywordseo="brewery" source="Orion">brewery</keyword> with a stage where we could host live shows — theatre, dance, poetry. There would be food trucks, there would be laughter, there would be art and friends and very good beer. Watching so many Americans shift from day jobs to entrepreneurship during the pandemic convinced us it was possible — we just needed the time… and the money.</p><p>Ah, the money. While we're nowhere near throwing open the brewery's doors today, we've started to think about how to finance our "retirement" dream (because let's be honest, "retirement" today does not mean Freedom 55 for most people — it means leaving your 9-to-5 at whatever age and doing work that can sustain your lifestyle but doesn't require punching a clock, so to speak). We've got a few strategies going to get our financial ducks in a row.</p><h2><strong>1. We can leverage our house</strong></h2><p>Before the brewery, I really only had one big-picture money goal: to buy a house. I didn't think it would happen for me until much later in life, but in 2020, my husband and I decided to move from expensive Los Angeles to a lower cost-of-living city and buy a home. </p><p>With our relatively small mortgage of less than $250,000, we can make extra payments toward our principal now and be in a position to <a href="https://www.businessinsider.com/personal-finance/home-equity-loan-vs-heloc">leverage our home's equity</a> in about a decade or less. </p><h2><strong>2. We're saving and investing</strong></h2><p>We're still saving into traditional retirement accounts (because life is long and we'll need that money eventually) but we're also setting aside cash every month into savings and brokerage accounts with a plan to put it toward our business. </p><p>Our "education savings" account is there to support us as we learn new skills, and the money in our brokerage account will be available to cushion us if and when we get the business off the ground.</p><h2><strong>3. We're building our credit scores to take out a small-business loan</strong></h2><p>I'm sure we'll need to borrow money for the brewery at some point, whether it's to buy the industrial supplies we need to start brewing or to rent a space to house the business. With good credit, we can get the best rates available. So we're doing everything we can now to <a href="https://www.businessinsider.com/personal-finance/ways-boost-credit-score-in-day-period-2022-4" target="_blank" rel="noopener">bump up our scores</a>, like paying off our credit cards in full every month and keeping our credit utilization rates low.</p><h2><strong>4. We're investing in home-brew supplies to actually learn the craft of beer-making</strong></h2><p>If you've been rolling your eyes while reading this <keyword id="11898458" type="UNKNOWN" weightage="60" keywordseo="essay" source="Orion">essay</keyword> wondering what skills I think I have, exactly, that would qualify me to open a brewery, I don't blame you — I frankly have none. This business is a <em>dream</em> at the moment, and it'll take work to get to the finish line. </p><p>For now, we're investing in home-brew supplies and turning our basement into a workshop. We have to start somewhere. Come by for a drink?</p>

The pandemic upended my lazy retirement plans, and now I'm taking 4 steps to save for my new dream: owning a brewery

<p><a href="https://www.businessinsider.com/category/rethinking-retirement"></a></p><div type="image" title="woman lying in a hammock texting" height="1060" width="2120" msid="91946721" hostid="261"></div><ul class="summary-list"><li>I hear it from clients and friends all the time: Everyone is experiencing some level of <keyword id="11937119" type="UNKNOWN" weightage="60" keywordseo="burnout" source="Orion">burnout</keyword>.</li><li>I recommend taking a <keyword id="13440253" type="UNKNOWN" weightage="60" keywordseo="sabbatical" source="Orion">sabbatical</keyword>, or an extended break from work, if you need to reset.</li></ul><p>The past two years have been stressful for so many of us. Whether I'm speaking with friends, colleagues, or clients, I notice that everyone is experiencing some level of burnout. </p><p>Do you feel like you need a break from the daily grind that a one- or two-week vacation is not enough? Has the pandemic caused you to rethink your priorities and career path? Taking extended time away from work — otherwise known as a sabbatical — comes with many benefits. It can help reduce stress and give you the time needed to relax. It can also be an opportunity to learn new skills or plan your next move. </p><p>A sabbatical might seem far-fetched if you don't have a lot of money. With proper planning, though, it can be closer to your reach than you'd think. Here are a few tips on planning for a sabbatical and making the most of your time away. </p><h2><strong>Get your financial ducks in a row</strong></h2><p>Very few companies offer a paid sabbatical to employees, so making a plan for your finances is essential if you're looking to take extended time off. If your company offers a paid sabbatical, review the policy in detail. If there is no sabbatical policy, you have several factors to consider. </p><p>Start by reviewing your current income and expenses. How much do you need to cover your basic living expenses? Will you need additional funds to cover hobbies, travel, or educational costs that you have planned? How much cash do you have set aside? Do you have a spouse or partner who can help cover expenses or children dependent on your income? You'll need enough cash to cover your bills while you're not working plus an additional cushion to cover any <a href="https://www.businessinsider.com/personal-finance/how-to-budget-for-unexpected-expenses-2021-1">unexpected expenses</a> that may come up. Save as much as you can ahead of time. The more you can save, the better. </p><p>In addition to current expenses, consider how a sabbatical might impact your long-term <keyword id="11909870" type="UNKNOWN" weightage="60" keywordseo="retirement" source="Orion">retirement</keyword> or financial freedom goals since you probably won't be in a position to save while you're away from work. Depending on the amount of time you want to take off, a sabbatical could also affect your future earnings potential. There's a chance that you could extend the timeline for a promotion or miss out on an opportunity to grow your career. Understanding this upfront will help your decision-making process.</p><h2><strong>Decide how you want to spend your time</strong></h2><p>Do you want to travel or spend quality time with loved ones? Are you considering a new career and need the time to develop new skills? Is this a good time to dedicate to a passion project or giving back? Thinking about how you will spend your sabbatical in advance will help you make the most of your time away. Having an idea of what you want to do gives you direction on how much time you may need off, what time of year makes sense, and how much money you'll need. </p><p>It's ultimately up to you to determine why you're taking the sabbatical and what you'd like to accomplish during your time away. Make a list of all the possibilities, reflect, and narrow the list. Then, factor in associated costs and the time needed to accomplish your goals. No matter what you decide, take the opportunity to relax and unwind in the beginning of your sabbatical. That way, you can return to work or start your next endeavor with a clear head. </p><h2><strong>Create your own paid sabbatical</strong> </h2><p>Taking extended time away from work without pay is not always feasible, but you still might need a break if you're experiencing burnout. Consider the right time to take leave. Assuming you plan to return to your current company, you want to feel secure about your position and prioritize any important projects or deadlines. </p><p>It's a good idea to start a conversation with your employer early. Explain why you want to take a sabbatical and how the timing has been well thought out. Be prepared to discuss how taking leave can benefit your employer, how much time you'd like off, whether you will be accessible, and whether you will return to the same position. Sharing details of your plans, especially if they involve learning new skills, can help your employer get on board. </p><p>I've had a few clients with <a href="https://www.indeed.com/career-advice/career-development/unlimited-pto">unlimited paid time off (PTO)</a> take extended vacations for up to six weeks. An easy way to do this is to plan around existing holidays. For example, maybe it's possible to take off between Thanksgiving and New Year's Day or between Memorial Day and Independence Day. Even with unlimited PTO, your employer may need to approve an extended period away from the office. </p><p>Should your employer deny your request for a sabbatical, you might contemplate quitting your job. Or your leave could be sandwiched between jobs or a career change. Factor this into your budget so you're in a good position in any situation. </p><p>Having time to rest and recharge throughout your career instead of waiting until retirement can be a gamechanger. If you're lucky enough to work for a company that offers paid sabbaticals, take full advantage of this rare opportunity. If not, don't worry! Sabbaticals can be possible and meaningful with proper planning.</p>

A financial planner says retirement isn't the only way to combat burnout — a sabbatical might be the answer

<p class="headline-regular financial-disclaimer">Our experts answer readers' investing questions and write unbiased product reviews (<a href="https://www.businessinsider.com/personal-finance/investing-rating-methodology" class="not-content-link" target="_blank">here's how we assess investing products</a>). Paid non-client promotion: In some cases, we receive a commission from <a href="https://www.businessinsider.com/personal-finance/our-partners" class="not-content-link" target="_blank">our partners</a>. Our opinions are always our own.</p><div type="image" title="Financial planner Jovan Johnson" height="2244" width="4480" msid="91795435" hostid="261"></div><ul class="summary-list"><li><keyword id="14029591" type="UNKNOWN" weightage="60" keywordseo="early-retirement" source="Orion">Early retirement</keyword> is popular with my clients right now, and I always offer the same advice.</li><li>If you're retiring early, make a plan for your new free time. And plan for healthcare and other costs.</li></ul><p>A common theme that I have been noticing with my clients lately is the desire to retire early. Many people are considering an early or partial <keyword id="11909870" type="UNKNOWN" weightage="60" keywordseo="retirement" source="Orion">retirement</keyword> for more fulfilling roles. However, the reality of leaving work early can be far different than expected. </p><p>Early retirement is not for everyone. According to an <a href="https://www.ebri.org/docs/default-source/rcs/2020-rcs/rcs_20-fs-2.pdf">Employee Benefit Research Institute (EBRI)</a> 2020 survey, only 11% of today's workers plan to retire before age 60. If you fall within the 11% crowd, there are a few things you need to consider before deciding on early retirement. </p><h2><strong>1. Figure out what you want to do with your time during retirement</strong></h2><p>During our working years, we typically have many activities happening throughout the day to keep us occupied. Whether you are passionate about various hobbies, volunteering your time, or traveling the world, it is essential that you figure out how you want to spend your time during retirement. Many people believe that they will be able to easily fill their time, only to find themselves bored during their transition. </p><p>Now is the time to partake in all the things that you may have put off for years. Make sure that you come up with a plan for <a href="https://www.businessinsider.com/personal-finance/financial-independence-retire-early">early retirement</a>. </p><p><em><strong>Related</strong>: The <a href="https://www.businessinsider.com/personal-finance/best-retirement-plans">best retirement plans</a> »</em></p><h2><strong>2. Know that there may be a lack of human/social connection due to your peers still working</strong></h2><p>With a traditional retirement, many of your peers/friends will also be retired or nearing retirement. Therefore, you could have endless dinner parties, brunch dates, and time with the people you love and care about the most. </p><p>With early retirement, many individuals start to experience a lack of social interaction since their peers are all likely still working. While you may have time to play golf or go to the beach during the day, your friends who are working 9-to-5 don't have that luxury. </p><p>In fact, I have seen clients opt for partial retirement and work part-time just so that they can continue to engage with their peers. If you do not have a big family, grandkids, or the ability to make new friends to occupy your time, this is something to consider before retiring early.</p><h2><strong>3. Be realistic about your monthly retirement income needs</strong></h2><p>Many people approach early retirement the same as traditional retirement when it comes to their <a href="https://www.businessinsider.com/personal-finance/best-budgeting-apps">budget</a>. However, you will spend more money than you think during early retirement. </p><p>In the early years of retirement, when you are younger, healthier, and have a lot of free time, you may find yourself spending more than you did before retirement. It is common for new early retirees to splurge on travel, home renovations, relocations, and other retirement activities. With no work to do, you are constantly seeking new activities to partake in, which usually have a cost. </p><p>Some other expenses that you may have compared to traditional retirement are mortgage payments, childcare expenses, and debt payments. To prepare for all these expenses, it is important to create a budget and structure where you pay yourself on a set frequency, like a job.</p><h2><strong>4. Plan for unexpected medical expenses or future needs</strong></h2><p>It is inevitable that medical expenses will be one of your largest expenses during retirement. While it is nearly impossible to plan for exact medical expenses, it is important to have a big cash cushion set aside for these needs. When you are analyzing how much of a cushion to set aside, consider factors such as where you plan to retire, how healthy you are, and your estimated life expectancy.</p><p>In addition, Medicare doesn't start until age 65. This means that you will most likely have to apply for private health insurance until then. Private health insurance can be costly, as you do not have the benefit of your employer covering some of the cost. It is essential that you consider this expense before retiring early. </p><p>Another thing to consider is the fact that healthcare costs increase annually due to <a href="https://www.businessinsider.com/personal-finance/what-causes-inflation">inflation</a> and other factors. To plan for these expenses, you should consider at least a 4-5% annual increase for out-of-pocket healthcare expenses during retirement. </p><h2><strong>5. Create passive income to help make your money last</strong></h2><p>With improved healthcare and technology, many people are living much longer. The greatest risk to a successful retirement is that your money will run out at some point. According to <a href="https://www.medrxiv.org/content/10.1101/2022.04.05.22273393v1.article-info" target="_blank" rel="noopener">recent research</a>, the average life expectancy in the US was 76.6 years in 2021. Let's say you decided to retire at age 40. You would have to make your savings last for 36.6 years, on average, compared to 11.6 years if you retire at age 65. This means that your savings would have to last much longer. </p><p>If you are not sure whether you will have enough money to sustain your needs throughout retirement, it may be beneficial to consider creating some <a href="https://www.businessinsider.com/starting-side-hustle-common-questions-answered-2022-5" target="_blank" rel="noopener">passive income streams</a> during your early retirement years. Whether you plan to invest your money in long-term funds that pay dividends or have a rental property that generates positive cash flow, you will not regret having an additional stream of income during retirement.</p><p><em>This article was originally published in May 2022.</em></p>

5 important things to consider before retiring early, according to a financial planner

<p><a href="https://www.businessinsider.com/category/rethinking-retirement"></a></p><div type="image" title="Jen Glantz outside with microphone and headphones" height="1573" width="3147" msid="91647702" hostid="261"></div><ul class="summary-list"><li>My parents' retired friends take luxury vacations thanks to their dividend-paying stocks.</li><li>I want to live like them in <keyword id="11909870" type="UNKNOWN" weightage="60" keywordseo="retirement" source="Orion">retirement</keyword>, so I'm budgeting to invest more in <keyword id="13969756" type="UNKNOWN" weightage="60" keywordseo="dividend-stocks" source="Orion">dividend stocks</keyword>.</li></ul><p>One of the topics I like to chat about with my parents is retirement. Both of my parents recently turned 70 and they aren't retired yet. However, many of their friends (who are around the same age) have been retired for years and they seem to live affluent lives. </p><p>When I've brought this up to my mom and asked how her friends are constantly taking fancy trips, living in expensive houses, and driving nice cars, she simply says that many of her pals are living off their dividends.</p><p>At first, I wondered what that actually meant. Was that some sort of retirement planning secret I didn't know about yet? But the more I looked into it, the more I realized living off your dividends was a tactic that, while requiring strategy and good planning, could set a retiree up for a comfortable life when they stop working. </p><p>So what does it mean to live off your <keyword id="11911187" type="UNKNOWN" weightage="60" keywordseo="dividend" source="Orion">dividend</keyword>s? If you invest in dividend-paying stocks, mutual funds, or ETFs, which provide distributions of stocks or cash to shareholders, over time, the cash generated by those dividend payments can supplement your income when you retire. Depending on how much money you have in those stocks or funds, their growth over time, and how much you reinvest your dividends, you could be generating enough money to live off of each year, without having any other retirement plan.</p><p>This appeals to me because I started planning for retirement in my 30s. Before then, I didn't put any cash away in a 401(k) or IRA. I've always felt behind on my retirement savings goals, and since I want to retire in my 50s, adding dividend stocks and funds to my retirement plans seems like a viable option. Here's how I'm working now to be able to tap into dividends when I retire. </p><h2><strong>I'm researching the best dividend-paying stocks and funds for me </strong></h2><p>While I already invest in a few <a href="https://www.businessinsider.com/personal-finance/how-to-invest-in-dividend-stocks" target="_blank" rel="noopener">dividend-paying stocks </a>through my <a href="https://www.businessinsider.com/personal-finance/sep-ira" target="_blank" rel="noopener">SEP IRA</a>, I want to invest in individual dividend-paying stocks in a taxable brokerage account as well. To pick the right stocks, I need to spend time researching companies that meet my criteria, which include long-term profitability, solid cash flow, and a track record of dividend payouts from years prior. Because this isn't my expertise, once I have a list of potential stocks I'm interested in, I plan to consult a financial advisor for their advice and guidance. </p><h2><strong>I'm determining how much I want this to make up my retirement plan</strong></h2><p>While living off of dividend checks is something I hope to do when I retire, I don't want to make it my entire plan. For the past four years, I've stuck to a regular and robust <keyword id="12161610" type="UNKNOWN" weightage="60" keywordseo="sep-ira" source="Orion">SEP IRA</keyword> contribution plan and want to use that retirement fund to support the majority of my lifestyle when I stop working. While I do have some dividend-generating stocks in my SEP IRA portfolio, it's a very small amount.</p><p>In addition to what's inside my SEP IRA, I want to continue to work toward a strategy that has my retirement plan shaping up to include 20% future income from dividend stocks, 30% passive income from real estate and small business investments, 30% income from my SEP IRA (including some dividend stocks), and 20% from side hustles that I'd like to do when I officially retire. </p><h2><strong>I'm budgeting a certain amount to invest quarterly </strong></h2><p>Currently, I'm on a strict budget that allows me to contribute a set amount of cash every month to my SEP IRA. Now, I also want to budget a certain amount every quarter to invest in more dividend-paying stocks and funds. </p><p>Since this isn't my top priority right now, I'll determine how much to invest based on what other financial goals I've met that quarter. As I get more financially savvy and earn more money, I plan to increase my contributions.</p><h2><strong>I'm deciding how much of the dividends to take before retirement </strong></h2><p>One of the best ways to really make dividend-yielding stocks a worthwhile source of income in retirement is to make sure that you're reinvesting the distributions you receive to buy more stocks. That way, the amount of cash you have in that stock or fund can grow over time. </p><p>However, if there's a big financial move I want to make now, I can use some of those dividends to help support that thing I want to purchase and the distributions would be taxed as income. I've decided, unless it's for a financial emergency or to buy an investment property (that will generate passive income), I'd like to plan to re-invest all the distributions I receive back into that stock or fund while I'm still working.</p>

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The pandemic upended my lazy retirement plans, and now I'm taking 4 steps to save for my new dream: owning a brewery

Stephanie Hallett

A financial planner says retirement isn't the only way to combat burnout — a sabbatical might be the answer

Chloe A. Moore

5 important things to consider before retiring early, according to a financial planner

Jovan Johnson

My parents' retired friends live luxuriously thanks to a smart investment move, and I'm planning to follow their lead

Jen Glantz

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