"If I want to retire early, I should solely focus on saving money as much money as possible right now. I'll figure everything else out later!"
This is a common way to think, especially for young people who want to retire early.
But as a former portfolio manager and the head of retirement solutions for JPMorgan Chase's asset management group, I've seen how this popular belief — that you should save money first, then map out your retirement lifestyle — holds people back from a financially stress-free retirement.
Many young people say they want to retire early and plan a savings goal based on what their spending and lifestyle looks like at the moment. But they fail to realize how significantly different their spendings might look like once they do retire.
Holding off on making decisions about your retirement lifestyle can mean spending years second-guessing your decision to leave the workforce, as well as wasting money to figure out things like how you'll spend your time or where you'll be happy living.
In fact, deciding how you want to live as a retiree will take pressure off your initial retirement savings goal. Who knows? Maybe you'll want to take on a meaningful part-time job or a side hustle. Or you might want to move somewhere with a lower cost of living.
My point is that you can't possibly know how much you need to save or when you can retire until you have an idea of how you plan to spend that money.
I've spoken with many people who plan to move when they retire, whether to another city, state or even country.
If you're thinking about relocating, make sure you spend a good amount of time there as a local, not as a tourist. A trial run in the "off season" — or even better, multiple seasons — is essential.
For example, my husband and I packed up our bags and moved to Italy shortly after we got married. We imagined spending most of our days walking around beautiful villages and eating fabulous food at sidewalk cafes.
That wasn't the reality. We spent weekends doing household chores just like everyone else. We missed being close to friends and family. The activities weren't readily accessible. Plus, we didn't have a car, so we had to walk to and from the grocery store. Ultimately, we realized that living in Italy wasn't the fantasy we'd imagined, and moved back to the U.S.
It's always a smart idea to test out your retirement goals before actually leaving the workforce. If you plan to spend your time giving back to the community, get to know the organizations and people you will be working with to make sure your vision and goals align with theirs.
Similarly, if you plan to spend a lot of time in a club or playing a sport, decide if you like the hobby and the associated people before dedicating your lifestyle to it.
Lastly, side hustles are very common among early retirees, so it's important to get that in order, too. If you plan to earn additional income by working part-time or starting your own business, lay the groundwork before leaving your full-time job so you can be confident that your plan is achievable.
It's impossible to predict exactly how much money you will need. The age that you retire at, your ability to earn supplemental income, the markets, and your own health and longevity are all uncertain.
The key to navigating this is to be as informed as possible about how you will spend your money and your time, and to save a more than you think you may need.
I typically tell people to aim to replace 70% of your annual pre-retirement income, at minimum. But if you plan to take expensive vacations every year or to live in an area with a higher cost of living, you might want to increase that percentage.
To know when you'll have "enough" money to retire, use an online retirement calculator based on your goal lifestyle and budget. Consider factors like supplemental income, including side hustles and Social Security. The Social Security Administration has a wealth of resources to help you calculate your expected benefits.
Anne Lester is the former Head of Retirement Solutions for JPMorgan Asset Management's Solutions group, where she advanced the firm's market-leading retirement investment services and developed investment products integrating data and insights from behavioral economics. Follow Anne on Instagram @savesmartwanne.