Extreme Early Retirement – How to Plan?
Given their present day lifestyle, many would dream of retiring early. In fact, it’s not hard to achieve that dream if one is willing to work hard during productive years and make some smart investments that give good returns, sufficient to take care of their retired life. Unless you are able to accumulate sufficient funds for living comfortably after retirement, you’ll need to work longer. Here are some tips for those seeking an early retirement:
1. Get rid of all your debts. It is not just desirable but preferable to have paid even your full mortgage before you get retired. Moreover, there should not be any debt against your credit card. If any student loan is still pending or you have any other liabilities to be paid, draw concrete plans to pay them off before moving to the next step.
2. Find out the amount of money you’ll need monthly or annually to live comfortably after retirement. Experts are of the opinion that you would need at least seventy percent of your last yearly income to keep living in your present style after retiring. It is realized that people who opt for early retirement are quite inclined to undertake more of traveling, compared to people who retire after having put in more years to working. Therefore, it would be worth keeping extra margin on this account.
3. Irrespective of the age you decide to take retirement, keep accumulating as much money as you possibly can. Start making savings early in your life. This is especially necessary for those planning to retire early. As far as possible make such investments that yield passive income, like long term deposits with banks that keep accumulating interest or you Amy choose to invest in properties having rental value that would give you regular income even while you are working.
4. Learn to handy money smartly. The more you save while young and working, the more you will have by the time you retire. Prepare your budget and check how far you are able to stick to it. It will help you to keep a track of you expenses and thus you’ll be able to bring down unnecessary expenses.
5. Pay the maximum permissible amount to your 401K or IRA. In case your company too provides a corresponding system, you should take advantage of that. This will be significantly important if you get retired after working for less than thirty years and could also affect your social security benefits.
6. CNN provides an easy way to calculate the amount of money you would need for retiring. Using the CNN money tool just needs you to enter your present age along with your yearly salary and it tells you the amount of money you would have already collected if you were to retire at the age of sixty. When planning to retire early, just put in the years to your present age.