5 Ways to Plan for Early RetirementDavid Macino
After decades of hard work, many people are thrilled by the prospect of early retirement. It is possible for almost anyone, if you are willing to do some planning. However, because the planning often begins when you are still years away from retiring, it can be difficult.
Follow these five rules to set yourself up for early retirement.
Save Money Now
Even though retirement may seem incredibly far off, it is important to start saving money now, especially if you want to retire early. Do not wait to start until you are only a handful of years away from retiring. Cut back on non-essential expenses and set that money aside for retirement. If you save for decades, you may have enough to retire early.
Create a Strategy and Invest Wisely
Sit down and plan for your early retirement. Take advantage of retirement account options such as Roth IRAs, 401(k)s, and insurance products.
As you are choosing what to invest in, pick investments that have lower fees and taxes. Fees can take a significant chunk out of your retirement fund and the highest expense for people in retirement is taxes. Make a plan that will have you paying little in taxes.
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Pay Off Your Debts
A good general rule is to pay off any debts as soon as possible. This is especially important for people who want to retire early. Studies have shown that most Americans still have debt when they are middle-aged. You will not be able to retire early if you still have car loans, mortgage debt, or anything other debts to pay off.
Understand What You Will Need
To know how much money you need to retire early, you must be aware of the expenses that you will have. Create a specific budget. Do not forget to factor in taxes and insurance, as your employer will no longer cover you once you retire.
When laying out your expenses, think about long-term care. You may end up needing to go into a nursing home or have a live-in nurse as you age. These can be expensive so make sure you think about these costs when planning for early retirement.
Track Your Fund Over Time
Make sure you are tracking your retirement fund throughout the years. By tracking your progress, you can make any necessary changes to ensure that you are always saving as much as you can for early retirement.
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