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6 Steps for a Railroaders Plan for Early Retirement Thumbnail

6 Steps for a Railroaders Plan for Early Retirement

Tier 1 Tier 2 Video Retirement Financial Planning


Thinking of leaving the railroad early? Let me show you a roadmap to get you there.

Welcome, everyone, to another edition of the Highball Advisors Railroad Retirement Whiteboard. My name's John McNamara of Highball Advisors, and today we're going to talk about those railroaders that are thinking about leaving the railroad early. So it's starting to go off in your head a little bit. "Listen, I want to get out of here. I don't even know where to start." So I thought I'd lay out these six steps to help you trigger the process, get it going, understand what you want to be doing.

So the first step is what's driving the decision, right? Why you want to leave the railroad? Why are you anxious to retire? Those type of things. I hear a lot of reasons, so I'm sure you have your reasons, also. So that's the first one, right? Just because, "Oh, I'm 62 or I'm 60. I have to retire." No, something's driving the decision, so get to that. That's very important.

And then define what early retirement is. Right? So if you're thinking of leaving at 55, 56, those type of earlier type retirement, what does that mean? "I'm never working again," or, "Oh, maybe I'll do part-time work." Then we have current connection issues. Or, "Maybe I'll start a business or do consulting," or whatever it is. But get a clear understanding of what that early retirement is going to look like. All right?

So let's go out to number three. It is obviously review your current investments, and I'm not just talking about 401ks and IRAs and all that stuff, but also, "Hey, my railroad retirement. What does that annuity look like?" Maybe you have a pension. So you have to understand all the tools that you're going to bring to this early retirement that you're thinking about. So you've got a lot of moving parts there. That's very, very important.

Then four is plan for healthcare. Big, big cost, right? So how are you going to do it? Is there a medical retiree plan? Some companies have that. Maybe your spouse is working. You can get on that plan. Or you might have to say to yourself, "Oh, let me check out the state exchanges," that maybe you can pick up a plan from the Affordable Care Act. They have those state exchanges. So that's a big expense. So check out that number four.

And then as we get to number five is create the retirement spending plan. So what does that look like? So I know I have a certain amount of money coming in. What do I want to spend every month on? And that's to understand what your retirement looks like. Obviously you're going to have your housing and food and all those type of costs, keeping the lights on, so to speak. But, "Hey, am I traveling a lot in retirement? What am I doing?" Hobbies, all those type of things. So create that monthly budget and understand what that is. And then always add in a little cushion also, because it never really quite comes down all the time.

So those are five great ones. And then finally, number six, once you have all those first five done and the plan put in place is get it reviewed, right? Have somebody else look at it. So because you just never know. This is a big decision and you don't want to say, "Oh, I know what I'm doing." No, there might be assumptions that you didn't think about, and there could be other alternatives, other different strategies that could help you achieve that a more cost effective way. So reach out to somebody to get that plan reviewed. All right?

So these are the six ways to think about putting those early retirement plans together. All right? Feel free to reach out to me if you have any questions on this. All right? Share this with other railroaders, especially this, as you're thinking of getting to that retirement also reach out. Go through that boarding for railroad retirement process. I'll go through a lot of this stuff with you, and a lot of railroaders find that really, really helpful. Subscribe to my YouTube channel as always. Click on the notification bell. We're over 4,000 subscribers. We're really excited to hear about that. So until next time, everyone, please stay safe, stay on track, and take care. So long everybody. Bye.

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Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. Highball Advisors encourages you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Highball Advisors, and all rights are reserved from Highball Advisors, and all rights are reserved.