What about you? Do you want to retire early? If so, the following strategies pursued sooner rather than later can help you.
What You Need
How much money do you need to live on when you are retired? If you have a spouse, take their needs into consideration too. Likely, you can live on a smaller amount than when you were working, perhaps half to 60 percent of your income.
For instance, if you expect to make $100,000 per year in your final work years, you may be able to live on $60,000 per year once you retire. The lower amount reflects a number of expenses that you no longer need to carry including your mortgage, commuting costs, some taxes, and other overhead related to your work.
Pay Down Your Debt
It is important that as you approach retirement your major forms of debt are paid off. Or at least paid down to a manageable amount. All credit card and personal loan debt should be paid off. These represent higher interest rate loans anyway or debt that can eat into your net worth.
Some experts suggest paying off the mortgage before you retire. If this is possible, then do so. If not, no worries here especially if you plan to downsize anyway. You’ll sell your home, pay off your home loan debt, and have the funds left over to buy a less costly home or money for rent.
Invest in Your Retirement
Many employers offer retirement accounts such as 401(k) accounts. If so, contribute money toward your retirement. This money accumulates tax free until it is withdrawn. Also, if your employer provides a match, take full advantage of that.
Other ways to save for retirement can come through an IRA, another tax-free way of saving money for your later years. And if you like to invest, money set aside for stocks, bonds, and land or other property can offer a return too. Just know that the sooner that you pursue any course, the better for you.
Seek Financial Advice
Get with a financial advisor, especially an individual that has experience working with retirement-bound folk. Your retirement plans are peculiar to you — this professional can help you reach your goals.
Your advisor should provide a clear path to help you reach your goals. This may mean making some life changes now such as setting aside a lump sum of money to pay for a child’s college tuition. This individual should be tax savvy too, providing ways for you to protect your assets from government overreach.
You’ll also want to have a health savings account in place for your later years. And, yes, your final resting place plans should be completed too.
Stay the Course
Once you understand the direction that you should take, then stay the course. It can be tempting to make decisions that will have a big financial impact on you later on such as withdrawing money from a retirement account too early.
If as you approach your planned retirement age that you find your funds not quite sufficient, you may need to adjust your plans. That may mean extending your working years by several months or years, or scaling back on your retirement plans. Either way, you need to find a revised plan that you are comfortable with.
See Also — Planning the Nest Egg for Retirement
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