Is early retirement good for credit scores?

Is early retirement good for your credit scores? Take it from Billy and Akaisha Kaderli who save, spend and travel the world. They are both fifty-four years of age but they retired sixteen years ago. In their late thirties when they retired, both decided that they were working too hard and came to the decision that they would retire in two years. “Every time I looked at a latte or a new pair of shoes, I decided I didn't need them," says Akaisha. "If you are clear about what you want, it becomes easier. You can either buy this or be days closer to your goal."

By 1991, both had earned around $500,000, including income of around $100,000 from the sale of their home. They saved this money and decided to retire and to see the world. They headed to South America and then onto the Caribbean Islands and to the whole of the United States. They have been to the South Pacific and to Asia and they return home once in awhile to take care of their parents.

So with such an early retirement, is there an effect of early retirement on your credit? Are there things to consider aside from going on vacations and traveling?

On the website Retirementegg.com, it says that it really doesn’t matter whether you retire at age 60 or younger; what truly matters is that you have some sort of savings to back you up in retirement. So what do you do in order to attain this amount of savings? “The first step to determining how early retirement will affect your retirement needs is to calculate (as accurately as possible) all current monthly expenses,” the website says. “Some expenses, like utilities, are easy to figure out on a monthly basis because that's how they're paid. Other expenses, like property taxes and insurance premiums, are often paid annually and should be factored accordingly.” (source: http://www.retirementegg.com/pages/retirement-planning/early-retirement.php).

Here are some of the things that you need to know when going into early retirement – and the effect early retirement may have on your credit.

Refinance your mortgage- If you are a person going into retirement (even an early one) with a mortgage; a good credit report and a high credit score is a necessity. This will give you the ability to refinance your mortgage if rates drop allowing you to save on your monthly mortgage expenses. If you find yourself in a financial crunch, a cash-out refinance can help solve your financial woes and worries.

Get the best in credit card rewards- When you have a good credit score and report (even if you have retired early you can avail yourself of good credit cards with rewards programs provided you are you are paying your monthly expense on time and in full. When you have a good report and high credit score, doors of opportunities are open to you - such as a platinum-level travel cards which can allow you to see the world via their perks. Often these cards provide points for food and hotel accommodations at no cost for you.

Keep the insurance rates great- Homeowners and car insurance use credit scores as part of their price metrics. The higher your credit score means the lower your insurance premiums. This indicates to the insurance company that you will be responsible in paying your premiums. When you retire, make sure that you shop around for insurance. If you have a high credit score, you have the power and the ability to negotiate with insurers and other companies for the best deals.

Identify identity theft- Retirees, even the early ones, think that when they have reached that stage in life, their credit history doesn’t matter anymore. Unfortunately this is not true. Retirees are still vulnerable to these identity theft attacks. Before this is a concern and you become a victim; diligently and periodically make sure you do a credit check at least once a year.

Have that second act- Retirement means getting a chance in life to do the things you haven’t done before; not just to stop working. This means finally getting to do what you love to do. While there are some activities that don’t really require much money, others do. With a good credit score and report, you can fund whatever activities, travel, business that you would like to indulge in.

Author Bio:Joy Mali is an active finance blogger who is fond of sharing interesting finance management tips to encourage people to manage their personal finances. More specifically, she advocates that people should check credit reports and scores regularly.