Working with a financial advisor can help you plan for your retirement, enabling you to have enough funds on hand to support you for the rest of your life. The following are some considerations worth exploring if an early retirement option is something that you might explore.
Step Up Your Savings
To retire early, you need to save as much money as possible. This includes maxing out your 401(k) contribution, investing in stocks and bonds, and having enough funds in your rainy day account to avoid going into debt.
The only debt you should carry is for your home and you will want to have that paid off by the time you retire. If you have children, set aside enough funds for their college education. If loans are needed, it should be in their names only and paid back by your children.
Build Additional Income Streams
Quite easily you could work your regular job and hold down a part-time job on the side. So much work makes for a dull boy or girl! Besides, all that work can be hazardous to your health — you might not enjoy a long retirement if you reach it worn out.
You can earn money on the side by building additional income streams. For instance, if you enjoy buying and selling, you might consider building up your eBay presence. You could also turn a favorite hobby into side income, perhaps selling those wooden rockers you love to build.
Consider Social Security
Always a matter of conversation, Social Security is not a funding source you should rely upon for your later years. The system is not quite bankrupt, but all signs point that benefits will be cut as more retirees enter the system. Quite frankly, there are not enough workers in the pool to support our burgeoning retirement base.
Taking early retirement means that you may want to begin tapping your Social Security as soon as you can. That age is 62, but it comes at a significant price: your benefits will be about one-third less than had you waited until your normal retirement age which is now 67. The longer you can put off tapping Social Security, the more likely you’ll have a larger monthly pay out when you need it.
Your Health Care Coverage
There is one very important matter that could scuttle your retirement plans. And that is health insurance coverage. These days we are trying to figure out how the Affordable Car Act also known as Obamacare will fit in: will we be covered and, if so, how much will that coverage cost? And, will it be sufficient for our needs?
Health problems can ruin your retirement dreams never mind cost you your life. Know that whatever retirement plan you have when you leave the workplace, it may not be enough. Expect to supplement your basic plan with a plan upgrade, one that you will have to pay for yourself.
Plan, Plan, Plan
Early retirement may seem out of reach especially if you are older and your finances are tenuous at best. Still, by carefully evaluating where you are now and where you would like to see yourself down the line (in a home by the lake, for example), you may have the motivation you need to effect change. Make your plans, refine them and revisit them several times each year to ensue that you’re on the mark for an early job exit of your own doing.
See Also — 7 Ways to Prepare For Retirement
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