Many people hit a certain part of their life where all they can think about is retiring. They yearn to stop waking up early every day to go into work and instead get to spend their time freely, living life to its fullest. Unfortunately, many of those same people struggle to actually make retirement happen and have it happen at a reasonable age. A lot of work and preparation goes into the retirement process, and if you don’t take the time to prepare properly, you may be working much longer than you ever wanted to. Read on for a few things you can do to help you retire early.
Figure Out A Savings Goal
Retiring early is entirely possible, but far from easy. The first thing you’ll want to figure out is how much you actually want to save up because you’ll need it to last the rest of your life. One of the biggest factors of retiring early is that you likely need more money since it will have to last you longer, while also having less time to actually save that money. Other Important things to consider when looking to retire early include the age you would like to retire at, how long you think you’ll live in retirement, and how much money you think you’ll spend every year. It’s not possible to get 100% accurate answers to these questions, especially because unexpected expenses tend to pop up, but it’s always wise to overestimate these types of things so you’re not left high and dry and have to go back into the workforce.
Live Below Your Means
A common problem with many in the workforce is the tendency to live above their means. This means that they spend more money than they earn, whether it’s buying themselves nice things, eating out a lot, or other similar expenses. You’ll want to focus on reducing your largest expenses, which are most commonly transportation, food, and housing. While this is easier said than done, it can make a bigger difference than you might realize. The hard part is changing from a lifestyle you may be used to.
Max Out Retirement Accounts
Retirement accounts such as a 401(k) are an excellent way to make sure you’re passively saving money every year you work. Retirement accounts are a pretty common strategy and anyone who retires early will likely claim they were a big factor in being able to do so. Many retirement plans are employer-sponsored and can provide great tax benefits as well as investment growth. One of the only issues with using retirement accounts is that they usually have restrictions on withdrawals until you’ve reached a certain age. For example, you can’t take any money from your 401(k) until you’ve reached age 59 and a half. Make sure you think about this when deciding when and how you’ll retire early.