Early Retirement Strategies to Make Now
The appeal of a cruise around the world may be irresistible, but can you do it in your 70s? Today, people value their financial independence and have started planning for life after employment early in their career. Government statistics show that, on an average, men stop working around age 64, while women retire around age 62. The cause of this may be illness or unemployment, but close to a third of them exit this early simply because they can afford it.
If you want to be one of them, it’s important to lay the groundwork in advance and follow a few key steps that will allow you to retire early.
- Plan a Savings Strategy and Stick to It
Early retirement is a decision that cannot be taken lightly. It takes a lot of discipline to reach your goal, and you must understand what it implies – the trade-offs and compromises you need to make and what you may be forced to give up. A Dallas financial planner could help you navigate through the sea of information and options.
Keep in mind that the percentage of savings from your income should be at least 30%, as opposed to up to 15% for regular retirement.
- Live Below Your Means
The more you earn, the more you spend. Specialists call this phenomenon a “lifestyle creep“ and warn that you can sabotage your plans if you give in to it. Of course, you would want to treat yourself to a nice dinner or a vacation overseas from time to time, but try to stick to a scale you can afford. Think about it this way: the dollar you don’t spend now is a step closer to retirement at 60, rather than at 65.
- Budget for Your Medical Expenses
Although people expect to spend less when they retire, the truth is that some expenses, such as medical costs, may turn out to be a lot higher. Seniors may join Medicare before they reach age 65, but you need to cover your health insurance until then. One idea is to set up a health savings account which has some tax advantages. Another is to invest in long-term care insurance, which covers you even if you are above 65 or have a chronic or disabling condition. Discuss with your Dallas financial planner and ask them to help you choose an option that fits your needs and budget best.
- Choose Where You Want to Live after Retirement
This decision is important for various reasons, from the quality of healthcare to the weather conditions. But you should also keep in mind that some states have lower property and sales taxes than others. Early retirement should allow you to enjoy life more, not think about how long your savings need to stretch.
- Look for Part-Time or Freelance Work
It’s good for the mind and it’s good for your budget. If you retire at age 50, you will have another 15 years at least until you claim your social security payout (as the age threshold rises by increments). This is the perfect time to earn some money doing what you never dared to do. So give freelancing or teaching a try… or, why not, selling homemade jam.
If you’re looking for a professional Dallas financial planner, we at Exemplify can help. Our team can help you choose from various investment tools and retirement plans. Start planning your early retirement at your own terms.
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