Early Retirement Requires Early Planning
When it comes to planning for early retirement, debt can play havoc with any plans you may be devising. Unfortunately for many people who feel that they will have enough saved in order to live comfortably once they have retired, this is not likely to be the case. Today in the US alone around only 3 in 10 people will have begun saving towards their retirement while working. So what can someone do to ensure that if they want to retire early, they can?
In this article we will take a look at some things that should be done in order to help them on the way to getting themselves prepared.
1. Develop your retirement plan
You should work out just how much your lifestyle at the moment is costing you and then start to think about the kind of lifestyle you want to lead once you have retired. It is important to remember that once you retired you will be on a fixed income and so there are certain things which you will need to take in to consideration. One of these being that you will need to cover all your long term health costs through the income you have once you retire. A great way of seeing just how much you will need to save in order to provide you with an income that will make your retirement years relatively comfortable is through using a retirement income calculator.
2. Make your retirement a two stage affair.
It is best if you devise a financial plan that is for the period before you reach 59 and the period after. So you need to figure out just which of your assets produce income for you and so you may decide it is time to start investing in these a little more aggressively now in order that they produce a greater rate of return for you.
Plus you may consider that it might be advisable to sell your home as it will not suit your needs when you decide to retire. So check out the Taxpayer Relief Act of 1997 which in a lot of cases allows the homeowner when they sell their property to keep the capital gain that they have earned on the sale. Certainly this money may well help a person to get through the first few years of their early retirement.
3. Use Tax Deferred Opportunities wherever possible.
A great way of doing this is by enrolling in either a 401k plan or a Roth IRA as soon as you start working. Although most employers allow their employees to start paying contributions in to these plans from the day they commence work with the company there are others which may suggest you wait a few months before doing so. But the sooner that you are able to join such a retirement plan then the sooner you can start to save for early retirement. |