In addition to your regular full-time income from your job, creating streams of passive income will help jump-start your retirement planning (via New Retirement). Furthermore, it could also carry you through difficult periods of retirement. Some people rent out spare rooms through Air BNB to earn extra income. Other ways to earn passive income include establishing a website or blog that generates money through advertisements or affiliate marketing. Setting that passive income into a retirement fund that generates interest or using it to pay off debts can make a huge difference in your retirement planning (via New Retirement).
You may think that people who retire to exotic locations, such as Tahiti or Cancun, have copious amounts of money at their disposal. While some obviously do, many people retire overseas because the cost of living is so much lower (via GOBankingRates). If you speak a second language or don’t have significant relationships where you currently live, you may want to consider retiring overseas so that you have lower retirement expenses (via GOBankingRates). If this idea sounds like a good one, begin doing your research now to determine if the location of your dreams will help you meet your retirement goals.
16. Join The Tiny Home Movement For Early Retirement
One of the absolute best ways to lower your monthly expenses so you can stash more into savings is to move into a tiny home. If you think this trend is just for millennials, consider that 40 percent of people who own tiny homes are over 50 (via GOBankingRates)! Selling your larger home and dramatically downsizing your possessions is not for everyone. However, if you are able and willing to, you may find that you pay less than $20 per month for utilities (via GOBankingRates). Having a tiny home on wheels can be an even bigger bonus, especially if you enjoy traveling or want to travel in retirement.
While investing enough money is critical to retiring early, not preparing your home for retirement can derail your retirement after you have already retired (via Forbes Advisor). If your roof needs to be repaired or you want to put in solar panels, you need to do those things sooner rather than later. Not only will making repairs cost less if you make them sooner but relying on your retirement nest egg to cover expenses could spell serious trouble for your plans (via Forbes Advisor). If you plan to downsize, start looking at making that a reality now.
The safest investments will generate the lowest amounts of interest, and these tend to work much better for those who plan to retire closer to age 60 (via Nerd Wallet). For those who want to retire earlier, their investments have less time to grow before they need to begin withdrawing. Aim for accounts that are riskier but will generate higher interest. A diverse portfolio is usually safest, with a portion of the money invested into lower-yielding funds and some invested in higher-risk, higher-yielding funds (via Nerd Wallet). Once those higher-yielding stocks have generated enough interest for you to feel comfortable, you can begin transferring money towards lower-yielding funds.
Did you have a 401(k) or another retirement account at a previous job but lost track of it? You may actually have a small fortune sitting around waiting for you to claim it. Talk to your former employer to see if you have any funds from that job and roll them over into your current retirement plan (via Yahoo). Also, consider if your employer offers any kind of pension that could be added to your retirement planning (via Yahoo). Furthermore, you may not be able to rely on an inheritance or massive book deal. However, if those funds are already available, incorporate them into your portfolio.
Do you buy a cup of specialty coffee at Starbucks on the way to work in the morning? It may feel like that little indulgence that helps get you through the day. However, have you considered the price? If you spend five dollars each workday on a cup of coffee, that amounts to $25 per week and $1300 per year. Without even investing that $1300 to generate interest, that amount could cover a week’s worth of expenses in retirement. Start thinking about those little indulgences (via New Retirement). You could be guilty of nights out that add up to a hundred dollars or eating out for lunch every day. Consider how long those habits are keeping you from retirement (via New Retirement).
Studies have shown that people who retire early tend to die at an early age, and the jury is out as to exactly what the reason is (via New Retirement). Nevertheless, one thing seems clear. It seems having a purpose in waking up each day, keeping busy, and maintaining meaningful interaction with peers are critical to maintaining health (via New Retirement). If your idea of early retirement is being able to stay in bed until noon every day just because you don’t have to go to work, you may want to reconsider how you plan to spend your time.
One of the best ways to help fill your days during retirement is to continue earning income, albeit not from the 9-to-5 that you will be getting away from (via Forbes Advisor). The gig economy offers many ways to make money in their free time; the key is finding something that works for you. Some retirees look for part-time work that is more meaningful than their nine-to-five, such as working in the church office or at a community-service organization. The bonus of earning a (diminished) income during your retirement years is that you will be able to continue growing investments (via Forbes Advisor).
If your employer offers matching contributions to your 401(k) and you are not taking advantage of them, you are leaving free money on the table (via Yahoo). Retiring early requires much more than saving and investing your own money; getting those employer contributions can dramatically increase your retirement portfolio, especially when considering the interest earned. Make sure that you contribute at least enough to reach the maximal employer contribution. To make even more of an impact on your retirement nest egg, make sure your spouse or partner is also getting those matching employer contributions (via Yahoo).
Having healthy habits through your retirement can dramatically decrease healthcare expenses. Not only that, but it can extend your life expectancy. Healthy habits will help you have the most meaningful and fulfilling retirement years possible. Reduce or even eliminate your consumption of red meat, which has more adverse health effects than positive ones (via Yahoo). Up your intake of fruits and veggies, reduce your sugar, and start working out regularly. While taking the stairs instead of the elevator is a great start, going to the gym a few times a week is even better. Getting into those healthy habits now will help you have a longer and happier life into early retirement (via Yahoo).
You may not realize how necessary having your legal affairs is in order before retirement. The sooner, the better. Some people have living wills in place before they turn 30. A living will states your desires if you develop a life-threatening condition. Having one takes away guesswork that could cause family members immense pain (via GOBankingRates). A power of attorney says who will be in charge of your affairs if you become incapacitated, and you should not wait until your health begins failing to put one in place (via GOBankingRates). Other important documents include wills and trusts.
6. Prioritize Saving For Retirement Over Children’s College Funds
This one may sound harsh. After all, isn’t your responsibility as a parent to do everything you can to prepare your child for adulthood? However, consider how many options are available to help finance your children’s education, everything from student loans to work-study opportunities to AmeriCorps stipends to scholarships and grants (via GOBankingRates). Nevertheless, these options are not available for retirement, and borrowing against your retirement fund will cause you to incur some hefty penalties (via GOBankingRates). You can help your children plan for college without sacrificing your own financial future to pay for their school.
You may have hit a mid-life crisis. Is it causing you to think that retiring early is the only way to get your life on track? Perhaps you aren’t sure how to fulfill your own personal goals. However, given how long people live nowadays, compared to just a couple of decades ago, retiring early could mean that you have to save enough money to last for 50 years. Instead, consider taking a year-long sabbatical from work so that you can explore the world, write that novel, take those courses, and develop your own interests (via New Retirement). Then you can get back to work with renewed vigor and energy because of the improved perspective (via New Retirement).
For many people, getting a raise at work is ideal. Nevertheless, if you’re trying to get your finances in a row to retire early, keep living at the lower salary and put the income from the raise into savings (via New Retirement). You will basically be saving that higher standard of living from the raise for your retirement years when you will have more time and freedom to enjoy it. Furthermore, whenever you pay down debt, instead of taking on another debt, please put the amount you were paying each month into savings for retirement (via New Retirement).
One approach to saving money is to consciously deposit cash into your account every month. That way, you can check that item off your box with confidence. Another method is just to hope that saving happens whenever you get around to it. Do you often just hope to have enough money left over at the end of the month? The best method to saving money is automatically transferring a certain amount of your salary into savings each month (via New Retirement). This approach has been proven to be the most effective way of saving for retirement (via New Retirement).
There are many reasons to give to charity such as the feeling of fulfillment and joy. It comes from making a sacrifice that you know will help others live a better life. Another good reason to give to charity is getting a tax deduction as a side dish to that good cheer (via GOBankingRates). Making charitable donations in retirement can be a powerful way of offsetting taxes while also helping you maintain connections that make life meaningful. You can also donate your time, but you probably won’t get a tax deduction for it (via GOBankingRates).
So you want to retire early. No matter how old or young you are, the key is to begin planning now. Start paying down debts and avoid taking on new ones (via Forbes Advisor). Develop aggressive savings habits that will allow your money to grow through the magic of compounded interest. Create passive income streams that will enable you to sock away more money now. Improve your diet and increase your exercise time to boost your health. Furthermore, you will lower your risk of developing expensive health complications during your retirement years. Don’t wait until you are well-established in the career of your dreams to start making the choices that will prepare you for retirement (via Forbes Advisor).