Quitting while you're ahead - Black Enterprise

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Black Enterprise Magazine September/October 2018 Issue

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At 34 years of age, with two children under the age of four, Debra Taiwo is thinking about the day she’ll no longer have to worry about her 9-to-5. “I want to retire by the time I’m 50,” Taiwo, of Raleigh, North Carolina, declares boldly. “I figure I’ll need several million dollars saved up in order to live the way I’d like, with a retirement income of more than $100,000 per year.”

A marketing executive for an Internet infrastructure company, Taiwo is off to a good start. She has maxed out her 401(k) contributions, put additional dollars into an IRA account, and has pieced together a diversified equity portfolio. By her calculations, she’s about a quarter of the way there, and has put in motion a plan to fill in the gaps over the next decade and a half.

Taiwo is one of the legions of investors who seek to join the ranks of early retirees-those who want to have comfort and freedom long before their Social Security benefits kick in. But not everyone is lucky enough to come into a windfall or work for a company that provides roof-blasting stock options. It almost goes without saying that you have to do the math to figure out what you need (see “Retire Rich,” in this issue) and identify tax-deferred investment vehicles that will help your money grow. You have to be committed. According to the American Savings Council’s 1999 Minority Retirement Confidence Survey, 59% of African Americans were motivated to start saving for retirement because they saw seniors struggling in retirement.

But becoming an early retiree requires meticulous planning. Before you take the plunge, know how much money you’ll need, how you will protect yourself from unforeseen calamities and health issues, and what you will do each day when you are no longer employed.

Let’s cut to the nitty-gritty. It takes more than commitment to beat the gold watch. It takes all-out aggression. According to Genevia Gee Fulbright, a CPA and financial advisor, investing as much as 25% of your income to build up a multimillion-dollar fund might seem ambitious, but it may be necessary to reach your goal. “People who retire young want to maintain their lifestyle,” she says. “Even if your home is paid off, you might need an income that’s 70% of your preretirement income. Social Security won’t begin paying benefits until age 62, at the earliest, and when it does, it will replace only 20% to 30% of your earned income. Thus, you need to use other investment vehicles to make up the difference.”

A major concern for all early retirees is, of course, health insurance. Medicare coverage doesn’t commence until age 65. Therefore, you need to have some form of insurance to protect yourself and your family from the mammoth bills that might result from an illness or injury. If your spouse is still employed and covered by an employer’s plan, family coverage may be available. Otherwise, consider continuing coverage under your former

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