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3 signs you’re ready to retire early in 2020

As the financial independence movement continues to gather steam, many of us may wonder if we too are ready to retire early and be free from the shackles of full-time work.

I’ve looked at 3 factors that are worth considering before you pull the plug and retire early in 2020.

1. You’re more worried about your ASX portfolio than your job

Instead of putting your head down and working hard in that 9 to 5, you’re increasingly finding yourself checking out how that ASX portfolio is performing.

Whether it’s checking that Afterpay Touch Group Ltd  (ASX: APT) investment or seeing when the next BHP Group Ltd  (ASX: BHP) dividend payment date is, you’re increasingly focusing on portfolio management rather than income generation.

If this is the case, it could be a sign that you’ve got enough wealth built up in your investments to out-earn your full-time job, meaning an early retirement might not be far away.

2. You’re comfortable living off your dividend income

One of the scariest parts of early retirement is wondering whether you’ll have enough income to sustain your current or expected lifestyle into your later years.

While it can be hard to accurately forecast expenses, particularly those around healthcare as we get older, a solid dividend income from your ASX 200 portfolio could provide a great safety net.

High-yield ASX 200 stocks such as Alumina Limited (ASX: AWC) or National Australia Bank Ltd. (ASX: NAB) can provide that extra boost as you transition towards retirement, knowing that you’re not going cold turkey on earning cash in the immediate future.

3. You’ve got your personal finances in order

One huge step in the retirement phase is making sure that your financial house is in order, and this is where an experienced financial advisor can be worth their weight in ASX gold shares.

Before pulling the plug and walking away from a salary that may never be on the table again, it’s crucial to evaluate your financial situation and include detailed scenario analysis for the future.

Once you’re comfortable with where your finances are at, and have preferably sought out a second (or third) opinion, that’s when you can seriously consider taking up your next offer of pina coladas on the beach.

Foolish takeaway

The reality is that while retirement might seem scary, a good investment portfolio and solid financial planning can lighten the load.

One good way to test the waters could be to cut back to part-time hours at work, try your hand at a new hobby or side business or take a few months of long-service leave to see if early retirement is right for you.

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Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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