Five Financial Pointers to Help You Retire Earlier
Early retirement is thought of as the dream for most people, but have you ever actually realized just how feasible it can be with careful planning and budgeting? Retirement looks different for everyone, but regardless of your retirement plans, the key is starting early and setting realistic goals for yourself. We have assembled a list of tips below to put you on the right track if early retirement is on your horizon.
Contribute to Your Employer’s Established Retirement Plan
Many businesses and companies offer retirement savings plans such as one of the most well known, a 401(k). Make sure you’re always contributing at least the amount your company is willing to match as this is the easiest way to adequately save for retirement. To start, talk to your HR representative about maximizing retirement savings through your employer.
Avoid Withdrawing Funds from Your Retirement Accounts Prematurely
As your retirement fund grows over the year, you may find yourself tempted to dip into it every now and then. However, it’s important to avoid this whenever you can since the longer your assets are invested, the more potential there is for financial growth. You could also find yourself served with a penalty for making withdrawals before a certain age. Thus it is always best to avoid pulling from your retirement fund to maximize your savings for the future.
Invest Early & Often
To help yourself retire early, consider directing a portion of your earnings to an investment account designated for savings and retirement. The power of compound interest means the earlier you invest, the greater your rewards will be once you retire.
Establish Multiple Sources of Income
Gaining a little extra income never hurts, and could even be easier than you think. Some examples to consider are investing in income-generating assets such as a rental property or small business. However, if that’s not something you’re interested in, you could also consider finding a part-time job or side hustle that fuels your passions. Alternate income is an excellent way to help cover your cost of living so that you can save more money and invest in your future retirement plans.
Make a Plan & Stick to It
Budgeting is an irreplaceable step in the retirement savings journey, so it’s important to make a plan that allows you to conceptualize how much money comes in and goes out each month. This helps you establish how much you want to put toward retirement. Some examples of expenses you should consider in your budgeting include housing, food, travel, entertainment, transportation, insurance (home, car, health, etc.), and any other additional debts (such as student loans). If you stray from your budget, try to get back on track as soon as possible to take your retirement dreams closer to reality.
Retire Earlier with Greater Goals
Regardless of your retirement goals, having a well-thought out plan and starting early is an essential first step. By following the tips provided you’re on the right trajectory toward achieving early retirement.