This article was originally published by Investopedia.

Nearly all young and middle-aged clients have asked themselves the same question at one point or another: Should I quit this job and retire early?

Clients can enjoy their later years without the worries of work, but will also lose the additional earnings. Here are six signs to determine if clients might be ready for an early retirement.

DEBTS ARE PAID OFF
Mortgages must be paid off and client cannot have any outstanding loans, credit lines, or large credit card balances. Obviously, clients will likely not be able to afford making large payments during retirement. Free of debt, clients’ retirement income will be available for expenditure — and free to use in the event of an emergency — rather than having it tied up in paying off large bills.

SAVINGS EXCEED RETIREMENT GOALS
Another good sign a client can take early retirement is if they have met or exceeded their retirement savings goals. However, keep in mind that if clients leave work several years before planned, their savings must be enough to cover these additional retirement years. Advisors should recalculate the length of their clients’ savings, including these additional years. Also, depending on age, clients may not yet be eligible for Social Security or Medicare.

"Think 'Rule 25.' Prepare to have 25 times the value of your annual expenses," says Max Osbon, partner at Osbon Capital Management in Boston. "Why 25? It's the inverse of 4%. At that point, you only need to achieve a 4% return per year to cover your annual expenses in perpetuity.”

PLANS DON’T HAVE EARLY WITHDRAWAL PENALTY
No one likes to pay unnecessary penalties, and early retirees going to a fixed income are no different. If a client’s retirement savings include a 457 plan, which doesn't have an early withdrawal penalty, retiring early and withdrawing from the plan won't cost extra in penalties. However, clients will still pay income tax on withdrawals.

There's also good news for wannabe early retirees with 401(k)s. If a client continues working for the employer until 55 (or after), the IRS will allow a withdrawal from only that employer's 401(k) without penalty.

Slideshow
7 roadblocks to early retirement
More than half of all American workers said they were on track to retirement 20 years ago. Today, that number is less than a quarter.

"There is a caution, however: If an employee retires before age 55 [except as noted above], the early retirement provision is lost, and the 10% penalty will be incurred for withdrawals before age 59-1/2," says James Twining, founder and CEO of Financial Plan in Bellingham, Washington.

A third option for penalty-free retirement plan withdrawals is to set up a series of substantially equal withdrawals over at least five years, or until the client is 59-1/2, whichever is longer. Like withdrawals from a 457 plan, clients still have to pay the taxes on withdrawals.

HEALTHCARE IS COVERED
Healthcare can be incredibly costly, and early retirees should have a plan in place to cover health costs during the years after retiring and before becoming eligible for Medicare at age 65. If clients have coverage through a spouse's plan, or can continue to get coverage through a former employer, this is another sign that early retirement could be a possibility. Take a look at the cost of an ambulance ride, blood test or monthly, non-generic prescription to get an idea of how quickly health costs can skyrocket.

Another option for early retirees is to purchase private health insurance. Health Savings Accounts can use tax-free distributions to pay for out-of-pocket qualified medical expenses no matter what age. It is too early to say how health insurance and its costs will change and how affordable private healthcare will soon be, but keep in mind that COBRA may extend healthcare coverage after leaving the workforce. To learn more, see What You Need to Know About COBRA Health Insurance.

LIVE REASONABLY ON RETIREMENT BUDGET
Retirees living on fixed incomes including pensions or retirement plan withdrawals usually have lower monthly incomes than they did when they were working. Clients should practice sticking to their retirement income budget for at least several months. If they don’t, they may be in for a shock. Advise client to test out a reduced retirement budget to get an immediate sense of how difficult living on a fixed income can be.

"Humans do not like change, and it is hard to break old habits once we have become accustomed to them. By 'road-testing' your retirement budget, you are essentially teaching yourself to develop daily habits around what you can afford in retirement," says Mark Hebner, founder and president of Index Fund Advisors in Irvine, California.

PLAN OR PROJECT FOR RETIREMENT
Leaving work early to spend long days with nothing to do sounds like the ultimate vacation, but could lead to an unhappy early retirement. Tell clients to think about having a defined travel, hobby or part-time employment plan. Even the outline of a daily routine can help ease into early retirement. Perhaps clients replace sales meetings with a weekly golf outing, or volunteering, and add daily walks or trips to the gym.

If clients can think of realistic, non-work-related ways to enjoyably pass the days, early retirement could be a viable option. Like test-driving a retirement budget, clients may want to take a week or more off work.

BOTTOM LINE
When it comes to deciding if clients should retire early, there are several signs to watch for. Becoming debt-free, with a healthy retirement account, is an essential first step for clients thinking about early retirement. If client can withdraw from retirement accounts without penalty, and get access to affordable healthcare coverage until Medicare kicks in, are other important signs. The best way to be sure clients can successfully make the transition is with a robust financial plan.

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