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People are living longer and in better health than they were just a few decades ago. Even with this being the case, many people dream of retiring early so that they are still able to do some of the things they’ve always wanted to.
Speak to a financial advisor
However you look at it, earlier retirement is going to come down to money. Can you afford to sustain the lifestyle you want in retirement? But before your friends greet you with "congratulations on your retirement", ask yourself if you can afford to sustain the lifestyle you want in retirement.By talking to a financial advisor, you can get an overview of your financial situation and work out a way to get from where you are to where you want to be. They will be able to recommend, strategies, reverse mortgages for seniors, and investment opportunities for you. It is often recommended that you have 20-30 times your annual expenses invested or saved.
Decide what you want to do with your early retirement
Your vision of early retirement might be different from someone else’s. Do you want to travel the world? Or do you want to relax at home and spend time with your family? Again, these things require a different level of funding.
Pay off your mortgage early
By overpaying your mortgage, you can knock years off your repayment term and save thousands of dollars (or more). Check with your lender and they will be able to tell you how much you can overpay without penalty, though in some cases, these penalties will still be cheaper than the interest you will be paying.
Once you’ve paid off your mortgage, you can put this money towards your retirement savings.
Cut your spending
You’re going to have to live well within your means to start making it towards your retirement goals. Get realistic about what you’re spending and look to make savings in all areas.
Make extra money
Take any opportunity to make some extra money outside of your main career. You can use your existing skills to provide consultancy services or develop a side business from one of your hobbies.
Take advantage of retirement accounts
Retirement accounts such as IRAs can come with huge tax breaks, especially if they are sponsored by your employer. This, coupled with your 401(K) can add substantially to your retirement fund. You will not be able to withdraw from your 401(K) until you are nearly 60, but you can withdraw from your IRA at any time without incurring extra taxes.
If you reach your annual savings limits on your retirement accounts, put any remaining money in a high-interest savings account or invest it in a low-risk index fund.
Conclusion
So many people dream about retiring early. Getting to enjoy life without having to go to work every day. Perhaps it a time to finally take it easy or finally have all those adventures you wanted.
Unless you win the lottery, saving for early retirement is going to take a lot of planning and commitment from you over a sustained period. You’re now one step closer to that early retirement you deserve.
