Retirement is a big transition that you need to prepare for. Retiring before age 60 has even more challenges. While there are many financial obstacles for early retirees, personal challenges could be even more difficult. Here are some ways you can ease the transition into early retirement:

Finance. Early retirement can be financially challenging. Leaving your job will reduce your income significantly, and your retirement benefits may not kick in right away. The earliest age that Social Security benefits will be available is 62, and leaving the work force early could negatively impact the size of your Social Security checks. You also generally can't access your individual retirement accounts (IRA) until you are 59 1/2 without incurring a 10 percent penalty. You need to take these ages into consideration and plan accordingly.

If you are thinking about early retirement, you probably have other sources of income. These sources can be from your pension, spousal income, rentals, investments in taxable accounts, CDs, or peer to peer lending investments. You need to add all these up to come up with a monthly income figure.

Income calculation. For example, if you want to retire at age 55, then you need to estimate your retirement income at various ages. You may want to delay retirement account withdrawals to avoid the early withdrawal penalty or postpone signing up for Social Security in order to get bigger payments later on in retirement. Here's an example of retirement income streams you might begin to tap at various ages:

55-60: Income from a pension, spouse's job, rentals, savings, or investment accounts

60-67: Add income from IRA and Roth IRA withdrawals

67-70: Add income from Social Security

70+: Add income from required minimum distributions from retirement accounts if applicable

The biggest challenge is funding retirement from 55 to 60 because of the reduction in income. Once you get passed this stage, you will have your IRA and Social Security to draw upon.

Expense calculation. The other side of cash flow is your monthly expenses. Some of your expenses will go down when you retire, but some other costs will increase. Job related expenses will drop, and you can estimate some of these.

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