Can You Retire Earlier? Ask These Questions When You Make Financial Plans for 2022 Have you ever dreamed of early retirement? Find out if it's possible before launching into the new year.

Have you put a plan in place to figure out exactly what you need to do to retire with a certain amount of money in the bank — by a certain age?

A total of 49.9% of Americans expect to retire before they turn 62, according to the Federal Reserve Bank of New York.

We can point to a booming stock market, soaring house prices and even the results of the pandemic to inspire Americans to change their retirement timeline.

Millions of Baby Boomers (28.6 million) said they left the workforce in the third quarter of 2020. This added up to 3.2 million more compared to those who said they were retired during the same period in 2019, according to a Pew Research report.

If you want to retire earlier, don't forget to dig deep and ask yourself the following questions.

Question 1: What are my retirement goals?

What are your goals for retirement? What's the magic number at the end of your career that you should aim to save?

Americans believe they need $1.7 million to retire, according to a survey from Charles Schwab, which examined results from 1,000 participants in 401(k) plans nationwide.

The amount you need depends on how much you currently earn and can live off of comfortably in retirement.

The rule of thumb used to be saving 80% of your current income — you can theoretically save less than your current income because it's assumed that you'll have fewer expenses in retirement.

Need an exact formula? The retirement savings formula looks like this: Subtract your estimated Social Security benefits from your current income and divide by 0.04 to get your number.

Question 2: Have I been saving enough to reach those goals?

How much are you currently saving to get to your target number? Just over half of households with workers aged 55 to 64 have retirement accounts. The median value of the accounts oges up to $134,000, according to a report from the Center on Budget and Policy Priorities.

The old rule of thumb was to save 15% of your pre-tax income each year, including your employer match. However, based on your target retirement goals, it's a good idea to figure out whether 15% will be enough to maintain your current lifestyle in retirement, particularly if you got a late start on saving.

Question 3: How old do I want to be when I retire?

It can't get any more basic than that. Funny enough, many people don't consider that they should work backward in order to figure out their retirement strategy — many have a hazy idea that they want to retire "sometime in their 60s." However, identifying a target date means you can pin down much you need to save per month.

Of course, deciding on your retirement date comes down to a lot of unknowns — whether you'll feel "ready" to retire by a certain age, whether you're in good health or not, the status of your kids and other family members (think aging parents or a daughter who has triplets and desperately needs help) and more. Obviously, you can't know any of that when you're 30 and actively saving for retirement. However, you can start to speculate on your target age now and assess whether early retirement sounds like something you'd want to do.

Question 4: Do I have the right asset allocation to meet my goals?

Your asset allocation means dividing your investment portfolio among different asset categories, like stocks, bonds and cash. Where you decide to put your money among these types of assets will look different for everyone and will depend in large part on your time horizon and risk tolerance.

One guideline suggests that you make your stock allocation equal to 120 minus your age. For example, a 39-year-old individual's portfolio would contain 81% stocks. A 50-year-old's portfolio would contain 70% stocks.

As a side note, the recommended allocation has long been 60% stocks and 40% bonds in retirement, but some financial professionals suggest holding 75% in stocks and 25% in bonds due to today's low bond yields.

Question 5: Am I monitoring my portfolio like I should?

With the goal of retiring earlier, you'll need to keep tabs on your portfolio. That might mean regularly meeting with your financial professional to check out your asset allocation or checking out your robo-advisor to make sure it's still helping you achieve your goals. Regular checkups also give you a chance to rebalance, or realign the weightings in your portfolio.

Ultimately, you want to make sure that you still have the right investment portfolio for every goal you've set for yourself.

Question 6: Have I taken advantage of the right types of investments?

What do you like to dabble in? Stocks? Cryptocurrencies? Real estate? Nonfungible tokens? Whatever it is, have you been investing in the right types of investments for your needs?

If you love investigating Bitcoin or Ethereum, does it make sense to invest every penny you own into crypto? (Maybe not — cryptocurrencies carry a lot of risk.) Are you addicted to acquiring real estate? ESG investments might make sense for you if you're passionate about investing in sustainable companies.

Anyway, the point is, have you chosen investments that fit you? Just like a pet dog or cat, you're more apt to keep track of them and treat them with TLC when you love them.

Can You Retire Earlier? Find Out!

If you can say, "I have no idea if I can retire early," it may be time to consider when you can or want to retire. Does 60 sound like the magic age? 50? 40, even?

Now that we're walking into a new year, you might want to consider putting a plan together right now. Start by walking backward from your ideal retirement age, and from there, determine how much you need to save. It can give you a lot of peace of mind and also make it more likely that you'll achieve your goals of retiring earlier.