The road to early retirement is rarely a smooth one. More likely than not, the savings necessary to create the financial leverage necessary to say goodbye to full-time work before your 60s means tight monthly budgets. Yet, life goes on; emergency situations don’t wait for a healthy pocketbook. If and when circumstances arise where hundreds or thousands of dollars are needed at once, it can place great strain on the household finances of a would-be early retiree.
Tapping into those early retirement savings ought to be the last desperate act of a house on a tight budget. While prevention and planning won’t save the day for every life emergency, various preemptive habits and choices can make a big difference in the likelihood of costly surprises down the line. Here are several common life emergencies, with ways to reduce or even eliminate the amount of money needed to withdraw from savings:
Automobile breakdowns are some of the leading savings-drainers out there. Most car owners know it’s not unusual to pay anywhere between $300 to $1200 for repairs, or more, depending on what needs fixing. However, such repairs can be thwarted with regular maintenance, such as oil changes and other scheduled fluid replacements. Better yet, find a “mom and pop” mechanic, one not beholden to corporate quotas, with a reputation around town and online for being fair and true. Such a mechanic will likely charge less and be less pressured to push unnecessary extras.
If and when you or a loved one is hurt in an accident and liability is a debatable part of the circumstances, seeking legal representation as soon as possible is crucial. But who has the money for an accident attorney when on a tight budget? Find a personal injury lawyer willing to work on contingency. In fact, it’s probably a good idea to have a few names in mind in the event their services are ever needed. This way legal action can be taken immediately, regardless of the injured party’s current financial circumstances.
Last minute travel
When sudden events beckon us to travel long distance quickly, whether “back home” or wherever loved ones are living, the resulting tight spot can mean an expensive airline booking. It may be at the bottom of your priorities in the moment, but forking over thousands of dollars for a last minute round trip flight ought to be avoided if money is tight. To remove the need to worry about it at the time, consider using a credit card with the best miles rewards points. Use it to pay for groceries and pay off the balance every month to avoid interest. This way, if ever there is a reason to book a flight on the fly, the financial burden won’t be so severe.
Fire and theft
It will never happen to us – until it does. Fire, theft, and other ways to have personal property destroyed or taken can be the source of massive financial headaches in the days, weeks, months, and even years to follow. Insuring against these risks is, of course, the numero uno way to reduce the financial losses of damaged or destroyed property, but not everyone has the means to be insured to the hilt and save every month. The simple truth is, your car and house are not the best places to store valuable jewelry and other high-value items. If they’re worth keeping, they’re worth keeping in a deposit box.
The financial consequences of losing a loved one suddenly are of little matter to the grieving survivors in the days to follow. Yet in the weeks, months, and years to come, household financial security may falter as a result of the unexpected death of a breadwinner. To this end, life insurance is really the only way for survivors to weather the storm of financial loss, even if the grief of losing a loved one never completely goes away. If a loved one is dodging the issue of their final plans, make a point to encourage them to take the proper steps.
Getting to early retirement almost always means saving every penny possible for decades. When sudden life emergencies occur – and in a 20 to 30 year span they certainly will – it’s crucial for households on tight budgets to have a plan. While dipping into those savings may be the only solution, minimizing the amount needed is easy to accomplish with some proactive forethought. In other situations, pulling money from early retirement savings may be avoided entirely. This allows men and women to better stay focused on early retirement, in good times and bad.