3 Steps Towards Early Retirement

Early retirement seems like an unrealistic dream for many people, but it is possible. With careful retirement planning and smart financial decisions, you could potentially retire early and not have to worry about being financially stressed. Here are some tips to help you reach your goal.

Set a Financial Goal

Whether or not you retire early, it can be costly. Your expenses do not decrease when you retire. In fact, you could potentially pick up more due to changes in your health, children in college, and other late in life expenses. How much you need to retire influences exactly how you plan to leave the workforce early. 

A financial planner can help you determine how much you will need to retire. He or she will take into account a number of factors, including the cost of housing, possible medical expenses, and changes to the cost of living in the future. 

Look for Free Money Opportunities

There are many opportunities to collect free money all around you, but you are most likely missing them. For instance, if your employer offers to match your contributions to your 401(k), make sure you are getting the highest contribution possible. You might need to adjust your contribution to a higher number, but it will pay off in the end. 

Another free money opportunity lies with your credit cards. If you have a card that offers cash back, you can deposit those funds into an investment account. When you do have to charge something, use that particular card to get the most money back. 

Keep Your Money Out of Reach

One of the downfalls of many people who are saving for retirement is that their savings is easy to access. As life events occur, you could be tempted to dip into your retirement funds so that you can meet a financial problem. Unfortunately, the more you take out of your savings, the less you will have towards your early retirement goals. 

To protect your money, you need to make it difficult to access. For instance, placing the money in a government-sponsored retirement plan. Getting money out of an account early could mean heavy fines and even a waiting period. After reviewing the terms of an early withdrawal, you most likely will decide it is not worth it. 

There are many other ways you can save for an early retirement. Work with a financial planner to determine the best methods for your particular financial situation. 

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