Jan

29

Early Retirement Planning- What Can You Do To Retire Early?

Posted In: Investing Tips

Early retirement planning is very important and it determines whether you can live independently after you retire. In fact, you should think about retirement planning when you are in your 20’s or 30’s. Statistics shows that only about 5% of all American are financially independent when they are in their retirement age. The remaining has to live on their family support or government financial assistance. Many have to work beyond their retirement age in order to have an income to support themselves.

Early retirement can occur somewhere between 50 and 58 years old, but if you have a feasible retirement plan and prepare earlier, you can be retiring at a much earlier age.

First you should start saving as early as possible. You should be saving at least 10% of your retirement just to cover the basic necessities. However, if you want to live comfortably, the number should be increased to 20%.

You ought to determine how much money you will need to make annually in order to cover your living cost after retirement. If you retire at 55 years old, and you expect yourself to at least another 30 years, you ought to save enough money to support yourself for those 30 years.

Don’t forget about inflation when you calculate your needed savings. For example, you can expect to live off $30,000 a year right after you retire. However, after 20 or 30 years, the amount of money you need yearly many increase to 100,000 due to inflation.

Another important thing you ought to do first before start saving is getting rid of all debt. You should work steadily to pay all your debts down as quickly as possible, while putting in at least 10% of your income in to a retirement saving plan.

The last but also very important point when it comes to early retirement planning is that you have to spend prudentially. Don’t splurging your money on expensive luxuries; put it towards your retirement savings in stead. It doesn’t mean that you have to live dirt-cheap; it means you have to be frugal in your spending. Early retirement is not easy and it is necessary that you have to make some sacrifices in order to obtain the desired result. While spending your money on a Louis Vuitton handbag may sound like a great idea, if you are not wealthy, doing so will keep you away from being able to retire early. And by the way, while you are saving for your retirement, be happy and enjoy life as well. Don’t bother too much that this month you haven’t saved enough or that month you will need to put away $5,000 to cover for the previous month. Living happily is the key to feeling fulfilled in life and you should be enjoying every moment of your life.

Planning to retire early is definitely a great goal, it allows you to enjoy your golden years and spend time with family, but in order to retire early you must plan your retirement investments accordingly.

Article Source: Early Retirement Planning- What Can You Do To Retire Early?