If you're hoping to retire early and have thought about it for some time - you're probably ahead of the curve. Why am I assuming that? It's NOT EASY to retire early as you need to save and invest for income that lasts for 40+ years.

Here are five common mistakes to avoid when retiring early:

1. Continuing to work if you don't need to.

If you're financially secure and you don't have to work, there's no reason to keep doing it. Sure, you might enjoy your job, but it's important to remember that retirement is a time to relax and enjoy your life. So unless you're really passionate about your work, don't keep working if you don't need to (assuming the financial plan shows you that you're in a comfortable position). 

2. Being too conservative too quickly with your investments.

When you're retiring early, you have a lot of time to make up for any losses in the market. So there's no need to be too conservative with your investments. In fact, you might want to be a little more aggressive in order to grow your money as much as possible since you do need this income for 40+ years. I've seen countless people become too conservative too quickly. 

3. Not considering part-time income.

Part-time income can play a much bigger role than most imagine. I'm going to assume you had a healthy income of $300,000 and you may be wondering why on earth you'd go work for $30,000 (although less stress may sound desirable). Most people compare $30,000 to $300,000 and determine it's not worth doing - what they fail to realize is that $30,000 less gets taken from your portfolio which allows that to compound faster - that's the true value of part-time income.

4. Not "practicing" retirement.

It's important to make sure you're ready for retirement before you actually retire. This means getting clear on your expenses, learning how to spend your time in a fulfilling manner, and finding activities that you'll enjoy doing in retirement. The best way to do this is to start practicing retirement while you're still working.

5. Going with the 4% rule.

The 4% rule is a guideline that says you can withdraw 4% of your retirement savings each year without running out of money. However, this rule is based on a number of assumptions, and it's not always a good fit for everyone. If you're retiring early, you might need to withdraw a little more than 4% each year - I bet you might and you shouldn't freak out if that's the case. The 4% rule was designed to last for 30+ years invested in two asset classes. I don't believe in the implementation of the 4% rule for my clients.

The Guardrails Approach

The Guardrails Approach is a more comprehensive way to plan for retirement. It takes into account all of your individual circumstances and goals, and it helps you create a plan that's right for you so that you can maximize your income to withdraw 5.2% - 5.5% that's designed to last for 40+ years. I know, that sounds a lot better!

Here are some additional tips for avoiding common mistakes when retiring early:

  • Start planning early. The earlier you start planning for retirement, the more time you have to save money and make sure you're on track.
  • Be flexible. Things change, so be prepared to adjust your retirement plan as needed.
  • Speak with your partner about what you're most excited to do - it makes adding those dollars to your 401(k) a whole lot easier every paycheck.