Tips for Retiring Early
The minimum average retiring age is usually between 65 and 70, but many seniors are looking for ways to retire early. By retiring early, you get the option of quitting your job sooner and enjoying more years with your loved ones, for traveling, and just to enjoy your life. Unfortunately, retiring early means losing a chunk of your social security benefits and you may only get a percentage of your retirement funds, such as from your 401K or IRA plans. However, it is possible if you plan ahead.
Start Saving Now
It doesn’t matter how old you are currently; start saving your money. Whether you want to retire in a year, 5 or 15 years from now, start saving as much as you can. You may need to re-think what you spend your money on in order to save even more. Start putting away more into your 401K until you reach the maximum contribution amount. If your employer matches what you invest, you should be putting in as much as you possibly can and still have enough leftover for daily expenses. Aim for at least 70 percent of what your pre-retirement income is, but preferably closer to 100 percent. Consider money from other sources when you decide how much you need to save, such as from your spouse’s income, all of your retirement accounts combined (if you pull out the money early) and Social Security if you retire early.
Decide How to Spend Your Retirement
Another thing you should be thinking about if you want to retire early, is exactly how you want to spend your retirement. This can be helpful when you decide how and how much to save before you retire early. If you want to buy a motorhome and travel the country for a year after retiring, make sure you have enough money to pay for this trip, and still have enough when you return for the rest of your retirement. You may need to adjust some of your retirement dreams if you are adamant about retiring at an earlier age.
Calculate Your Expenses
You also need to calculate what your expenses will be, in order to properly prepare for an early retirement. This means planning for your housing situation, insurance and healthcare, possible assisted living later in life, transportation, recreation and spending money, and how many years of your life there will be post-retirement. Obviously if you retire at 40, you have considerably more time than if you retire at 60.
Work One More Year
Sure you want to retire early and soon, but can you handle at least one more year of work? Make this your goal so you know you’re still retiring soon, but it givs you long enough to make the right preparations, save money and earn another annual living. Depending on your salary, it might mean another $40,000 or more to put toward your expenses and savings. For another year before retiring, this can be extremely helpful.