You don't think you can wait until 65 to retire? Well, early retirement is not an utopia if you have a plan. In order for not waiting that long, you will have to check out youre best retirement options and also start saving. Here you will find some tips that will ease your task!
TIPS TO PREPARE FOR AN EARLY RETIREMENT
Although the standard retirement age is 65, it's not necessary to wait until then to actually retire. You just need a plan to save enough to reach the required portfolio for retirement. With a plan and some simple steps you will be able to reach this requirements and begin to enjoy your early retirement!
1. Save & Invest
The first thing you should do is open a retirement account. Some employers offer this kind of accounts, but if that's not your case, then you should start analyzing your retirement account options to open your portfolio.
In some cases, you can invest up to $5,500 each year! Pay special attention to the condition of money withdrawal, as most companies do not let you do it before the age of 60.
If you are willing to retire before you can withdraw the money, then you should start making your money work for you. If you learn how to be a good investor, then you can retire earlier and live on those investments while you wait to withdraw your retirement pay.
There are some risk free options to invest and save your money, you just have to take into account the interest rates and the period in which you can access the money invested.
Some options are savings account, where you can access money easily but with lower interest rates, or a certificate of deposit, in which money will not be accessible for a short period of time but pays better interest.
2. Spend Less
It may seem obvious, but it's not always easy to achieve.
You need to cut those luxurious expenses and identify your necessities. Just reduce the unnecessary spending and focus in what you really need to spend your money on.
For example, you can change your cell phone plan to a cheaper option, reduce your spending in clothes or try to avoid having huge credit card debts.
3. Earn some extra cash
Although the idea of extra work seems exhausting, you have to remember that you are doing this to retire earlier!
So, start checking if you have a hobby you could capitalize or if you can dedicate a few hours a day to add some freelance work.
You have many options available, like painting, delivering pizzas or writing in blogs. Choose the one you like the most and start working extra for an early retirement.
START ORGANIZING YOUR FIRST RETIREMENT SAVINGS PLAN
We know you are already handling several monthly expenditures nowadays, like student loans and rent, and speaking about retirement plans may seem crazy. Nevertheless, if you start planning your retirement now, you will definitely have a better pension once you actually retire.
If you start putting away some money every month, even if they are small amounts, you will end up enjoying the retirement you've always dreamed of. Read the following guide and start organizing your future!
1. Understand The Keys of a 401(k)
You will have to learn that the amount of money you end up once you retire will depend on a few numbers:
- The amount you put into the fund - This number will obviously have a major impact on your account. It depends on how much you desire to invest in your future.
- The amount your employer is putting in - This will always reflect a portion of what you are putting in.
- How much your account will grow year-on-year - The more money you put in the account, the more it will grow.
2. Check The Taxes
Retirement plans aren't tax-free, so you will have to learn how much you will be paying on taxes for the account and research the fees of other plans before you choose one.
Check how the taxes work, when will they be applied and how much you will be expected to pay. In some cases, the taxes won't have to be paid until you take the money out of the account.
3. Stay Within Your Expenses!
Although you may be tempted to open an account and put in thousands of dollars each year, you need to check your expenses first! You need to set a payment you can actually cover in the present.
Make a list of your monthly expenses. Once you have them under control, then it's time to start contributing to your retirement plan. Make sure you won't have to be struggling to achieve all of your payments by the end of the month!