One of the biggest problems financial planner Patrick Astre sees from people getting ready for retirement is the lack of a long-term plan. 

One of the biggest problems financial planner Patrick Astre sees from people getting ready for retirement is the lack of a long-term plan.

“A lot of people, they plan vacations better than they plan their retirements,” Astre said. “You would never go on vacation by waking up one day and deciding to leave. It should be the same way with retirement.”

For most people looking at an early retirement — whether by desire or need — just quitting one day and living happily ever is probably not a sustainable option.

Financial planners say taxes, spending, health-care coverage and activity levels are issues that should be dealt with before anyone considers early retirement.

Here are five tips for people looking at early retirement, whether it’s in three years or 10:

1.  Don’t go overboard with the investments. People looking at early retirement often decide the way to do it is to put money in higher-risk, higher-reward investments, such as volatile stocks.
But many planners advise the opposite: stay conservative, avoid overexposure to the ups and downs of the stock market and guarantee long-term income by staying with safer bets, such as bonds and CDs.

“Some people think Wall Street got the memo that they want to retire early,” said George Wells, a wealth adviser based out of Auburn Hills, Mich. “But the truth is, the market goes up and the market goes down. You need to be in position to get steady income.”

2. Figure out your spending and your saving. Early retirement can quickly become difficult if you outspend your means. Many retirees don’t take into account how much money they’re going to spend in retirement, particularly those first few years.

Astre tells his clients to “save ‘til it hurts.” Matthew Tuttle, a financial planner from Stamford, Conn., said early retirement often means making some tough choices — are you ready to save more money than you spend? Are you willing to find a part-time job? As medical advances improve, are you going to be able to support yourself for another 30 years after retirement?
“Sometimes you have to reduce your expectations,” Tuttle said.

3. Get rid of your debt. Debt, particularly on credit cards, can be a crippling blow to someone looking for an early retirement. If you are paying hundreds a month in interest, early retirement might not be possible. If you have little savings and a lot of debt, then early retirement might be impossible.

“If you’re 50 years old, saved nothing, have a big mortgage, no 401(k), and credit card debt, you’re not going to retire at 55,” Astre said.

4. Beware of taxes. Perhaps the biggest pitfall for early retirees is unforeseen taxes and penalties for prematurely tapping into retirement funds like your 401(k) and IRA.

If someone removes money from a 401(k) or IRA before turning 59½ years old, that person pays a 10 percent penalty on top of the income tax.

An early retirement plan that involves closing an IRA too early can be a problem, financial planners warn.

Most of these problems are avoidable by planning and by knowing the rules.