Even though the average age for retiring is 65, you are probably considering you’d like to do so early. Here’s what you need to consider.
If you found yourself hating the idea of having to work for many years yet, then maybe it’s about time you’d started planning your way towards an early retirement. Each year, more and more individuals are deciding to retire before reaching 65 and to start to enjoy retirement from an early age.
Plan your savings
Try to save as much money as you can. There are a few low-risk options, but with little return rates, that you might want to explore: you can open up a savings account for accessible money but with low-interest rates, you can opt for a Money Market Account, that has withdrawal limits buy pays a bit more interest. You might want to get a certificate of deposit, making your money inaccessible for a short period of time but that will pay higher interest.
Start a retirement plan as early as you can
You can start your plan as early as from your first paycheck and always put some money in it. Every month. Make a habit out of it. This fund will generate interests that you can, in turn, invest to generate interest in your interests.
Your employer will most likely set up a 401(k) plan and match your contributions, but in case that option is not available, you can start your own portfolio with Roth Individual Retirement Plan (Roth IRA), which you can open on most banks and contribute up to $5,500 each year. Just keep in mind that you open a Roth IRA, you can’t withdraw your money until you reach the age of 60, but it is tax-free income.
Avoid withdrawing from your retirement accounts early.
It may be tempting when you see a sizable balance to take a lump sum out for a large purchase, however the longer your assets are invested, the more potential for growth. Another reason not to withdraw from your retirement fund: in most cases, the IRS charges a 10% penalty for withdrawals taken before age 59.5, in addition to having to pay ordinary income tax on the amount withdrawn.
Try to earn some extra cash
Besides your regular income, if you are planning on retiring early, it is a good idea to increase your income by doing some extra activities and earn more money.
Whether it is using some apps to do some freelancing in your spare time or turning your hobby into a business, find the best way to earn some extra money, and make your retiring fund even juicier. The sooner you start planning, the closer the dream gets!