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Retiring early -- possibility or pipe dream?

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2. Give yourself an income
Early retirees have to take special care not to whittle away too much of their nest egg in the early phase of retirement. One way to insulate savings and establish a steady income stream is to purchase an annuity.

"Annuities can help anchor your portfolio and bring back some of that peace of mind," says Weil, who recommends allocating roughly 10 percent of one's total investment pool to an immediate annuity for the stability it provides, but keep the remaining assets invested in securities that meet or beat the inflation rate.

3. Adjust asset allocation
This is especially important for early retirees. Weil's model portfolio: 70 percent divided between domestic and foreign stocks, 10 percent in cash, 10 percent in immediate annuities and 10 percent in bonds. Also, view the portfolio recommendations in Bankrate's story on asset allocation.

4. Get health insurance
Even the most diligent savers with more than enough money to retire early may find themselves unable to leave the work force if they can't find affordable health insurance. Buying a high-deductible health insurance policy can help lower your premiums and many professional associations offer better benefits for the money.

5. Prepare for all contingencies
Be prepared to meet unexpected expenses, such as roof repairs, that may suddenly loom. Look at the various ways to hedge your retirement bets, such as buying longevity insurance.

6. Make sure you really want to retire
While thoughts of early retirement may sustain you through those endless meetings with the boss, thinking it and doing it are two different things. 

"Not everyone likes retirement, especially sharp, trained professionals," says Rose. "You can only read so many newspapers and drink so much coffee before you get bored. Plus, a lot of professionals associate their identity with their work so they sometimes feel they've lost their sense of purpose."

Conversely, many of Rose's clients who have quit working while still in their 50s have the opposite experience. "They travel a lot, play golf and visit the grandkids," he says. "I can never tell which ones are going to enjoy it and which ones are not."

For his part, Warner says the unexpected financial setbacks they experienced have forced him and his wife to reduce their discretionary spending, which limits their ability to travel. But, he adds, he has no plans to return to work.

Since retirement, Warner has begun volunteering as an accountant for his church and, with his wife, has become certified as a master gardener to help teach classes for the county.

They also attend exercise classes twice a week at the local university, where sports medicine students get hands-on training. "We love retirement," he says. "I don't know when I would have time to work with all the activities we've got."'s corrections policy -- Posted: May 1, 2007
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