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6 Ways Savvy Investors Can Retire Early Before Age 55

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By    |   Thursday, 07 Sep 2017 02:53 PM

Early retirement conjures up images of sitting by a pool or on the beach and doing whatever you want. However, you’ve got to have the money to get there first, and that means accumulating enough wealth to retire early.

The good news is that you don’t have to be an entrepreneurial wizard for financial independence. You just need to learn how to spend and save wisely while being patient.

These six ways to retire early could help reach your retirement goal before age 55 or earlier:

  • Know your net worth now — Figure out how much money you have at this point by adding up the value of your home, retirement accounts, investments, cash, and other assets, Dave Roos writes in HowStuffWorks. Then subtract debts from credit cards, loans, mortgages, and other sources. Depending on what you plan to do in retirement and when you want to retire, you can figure out how much you’ll need in retirement.
  • Don’t live beyond your means — It might be nice to buy a new car every three or four years to impress friends, but that extra money could be used for savings to retire early. People can be frugal and comfortable throughout the years for riches in the near future.
  • Save as much as you can — Some financial advisers recommend saving at least 10 percent of your income, but saving 15 percent makes early retirement closer. Saving even more as your income increases builds up your retirement account at a faster rate. Some people are in a position to save as much as half their income for an early retirement.
  • Tax-deferred retirement plans — The money in qualified retirement accounts, such as IRAs, grows rapidly without being taxed. Or, if you prefer, Roth plans have taxed contributions, but are tax-free when it comes time to withdraw. Many employers offer matching contributions for 401(k) plans. Take advantage of these retirement plan options as early as possible.
  • Pay off debts — Nothing delays retirement like debts owed. Avoid credit cards as much as possible and pay with cash or what you have available in your bank account. Pay off a mortgage as soon as you can. A mortgage may take up as much as 25 percent of your budget. Without debt, people have more money to sock away to retire early.
  • Make more money — This could involve taking on a part-time job or turning a weekend hobby into extra income. Perhaps you could start an online business that offers products or services people want. It might turn into something you love doing during early retirement, CNBC reports.

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These six ways to retire early could help reach your retirement goal before age 55 or earlier.
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Thursday, 07 Sep 2017 02:53 PM
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