Who wouldn’t want to retire early and pursue their own goals and desires? The problem is that without sensible retirement planning it can be difficult to save up enough to retire at 65 and even harder to get to that point early. To help, here are five things you can do to help get yourself there a little quicker.
1. Track Expenses
The first thing you need to know is “Where is my money going?” Follow the money to see how much you’re spending on what. With this information, you can determine if you’re spending your money wisely and what luxuries you can do without on a monthly and annual basis. Are you working hard just to pay for cable TV, fancy cars, and gasoline? What can you cut out? What is a necessity? You’d probably be surprised to learn just how much you can do without and still live comfortably. Matson Money Blue is an online tool you can use to track expenses.
2. Save More
Easier said than done, to be sure, but with what you’ve learned by tracking expenses you’ll see that you can probably save more than you think. The sad truth is most people save much less than they should. Some experts advise saving 10% or 15% of your paycheck for retirement, but some people, by cutting unnecessary expenses, have been able to save 50% or even 70%!
This has two effects. The first is that by saving more you will be able to retire earlier. The second is that you will acclimatize to a less-expensive lifestyle and your retirement nest-egg will go even further, providing even greater security.
3. Side Jobs
For some people, even cutting out every last unnecessary penny still won’t get them to where they want to be. The obvious answer is to increase your income. This can be done a number of ways. If you have experience in a given field, you can become a consultant or a freelance writer. Handy with tools? Some people make spare money assembling things such as IKEA furniture for the “less-than-handy”. If you keep your eyes open, you can find focus groups to participate in that offer financial compensation. Some of you can even dust off your old baby-sitting skills. Make a list of your skills, even non-job related ones. Which ones might bring in a bit of extra money?
4. Start Early
The longer you wait, the harder it will be to retire early. Compound interest works greatly in your favor if you start in your 20s or 30s, and despite its ups and downs, the stock market can be a good wealth generator if you have a long horizon. But what if you’re past your 30’s? Is it too late? Absolutely not! CDs and bonds are safer investment vehicles. It may not be as wild a ride as the stock market, but it’s certainly more stable. Be sure to educate yourself on which vehicles are right for your investment and retirement plans.
5. Price Health Insurance
One drawback to early retirement is that you still won’t qualify for Medicare until you’re 65. Until then you’ll have to buy your own health insurance, and the cost will increase as you get older. Shop around for a plan that fits your budget, and don’t forget to see if you qualify for any federal subsidies.
It takes a lot of planning and preparation to retire early. If you’ve been fortunate enough to be able to save since your first job, you’re way ahead of the game. But if you’ve had to wait until later to be able to save, you still stand a chance by including these five steps into your game-plan.
By Financial Social Media and Jimmy Hancock