The ‘Trump bump’ boosted my $1.3M investment portfolio by $82,000. I’m 42 years old and single — should I use those gains to help retire early and move abroad ASAP?

Are you prepared for stock market fluctuations?

The first big consideration is whether you should cash in your gains from the Trump bump if those gains even still exist. On November 15, the Associated Press reported that the Dow Jones Industrial Average fell 305 points and the S&P 500 dropped by 1.3%. This decline was attributed to the fading Trump bump and the unexpected market reaction to Robert F. Kennedy Jr.'s appointment as Secretary of the Department of Health and Human Services.

However, at 42, transitioning to conservative investments too early can limit long-term growth, making it harder for your nest egg to last potentially five decades. This is a big downside of early retirement: without a big portfolio, you risk running out of money either because you moved into conservative investments or market downturns that force you to withdraw funds at inopportune times.

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Have you considered the short- and long-term costs?

Aside from investment strategies, early retirement presents unique financial challenges. Your savings must support you for a much longer period, and you'll also need to cover your medical care until you become eligible for Medicare at 65. Social Security benefits won’t kick in for at least 20 years, leaving you reliant on personal savings and investment income.

Plus, retirement plans like 401(k) and IRAs come with early withdrawal penalties if access them before you're 59 1/2. You'll need sufficient liquid investments to cover expenses, including costly medical insurance coverage plus all the other expenses of day-to-day life.

Retiring at 42 could also shrink your Social Security benefits. These benefits are based on your average wages over a 35-year work history. If you dramatically reduce your average wage and end up claiming benefits early due to early retirement, you'll get a fraction of what you should receive.

With a $1.3 million nest egg, producing only around $52,000 per year in income (assuming a 4% withdrawal rate) may not be enough to cover all you need when you retire early.

Do you understand the implications of retiring abroad?

If you plan to retire to lower your cost of living, be sure to evaluate the potential risks.

• Legal and financial considerations: Research the tax implications, health care access, property ownership rules and banking requirements in your chosen destination. Many countries have specific visa or residency requirements for retirees, often tied to age or asset thresholds.
• Lifestyle adjustments: A move abroad represents a major lifestyle shift. Have you tested the waters with extended visits? If living overseas doesn’t work out, will you have the financial resources to come back to the U.S.?

Retiring abroad might offer affordability and adventure, but it comes with complexities. Consider whether you'll truly be happy living abroad, whether your nest egg will produce enough money for your lifestyle and if your investment strategy aligns with these goals.