13 Tips to Retire Earlier and Wealthier
Most of us bear the day-to-day grind only because of the dream of retiring early and enjoy all pleasures of life whether it is a round-the-world cruise or lazy days on an isolated, remote sun-kissed island. However, these dreams also have a border of sadness that comes from the bitter uncertainty about whether we can do it. The good news is that you can retire earlier and richer than you think, no matter how much money you earn!
1. Talk to Your Employer
It’s a good idea to talk to your employer about your early retirement plan. Many people plan to get into earlier retirement by keeping working part-time with their current employer or in a new job as far as possible. This is a good idea because you can be saved from paying a large amount as tax and your working expenses will be low, your income doesn’t stop. And if the mortgages have been paid off, you may have enough for living without having to dig into your retirement savings.
Another good idea is to discuss with your employer about taking periodic breaks instead of total retirement while working full-time otherwise. This may be quite appealing for the employer because the company can use your expertise for training younger employees who can ultimately replace you. With this you too can see a slice of life after retirement.
2. Save Actively and when Young
As per a report by the Pensions Policy Institute, those who take benefit of a happy retirement with a good pension have contributed more during their working days. Large contributions is the primary determining factor for comfortable retirement; hence it is vital to start saving in the young age.
3. Watch Out if You are Spending Unnecessarily
As mentioned earlier, starting to save early is very important factor for retiring comfortably. In that context, you should do a self-analysis of whether you are spending even though it’s not necessary. And if you find that you are doing that, eliminate those habits at once. This exercise should be done every month and not once. Every month, sit with your bank statement and examine how much you have spent. You might find some expenses which you are not even using. It may be a membership of a club you never visit or a subscription of a magazine which you never read.
Another way to stop unnecessary expenses is to shop your cable TV, wireless service, internet and other services newly at regular intervals to see if you can get better rates.
Spending less is saving. So, by cutting these unwanted expenses or expenses that are larger than they should be, you will be surprised to see the addition you can make to your saving.
4. Make Saving a Routine
Saving should be just a routine like you eat, go to work and sleep. It should not be an option; it should be a daily, monthly or yearly necessity. Set up automatic deposits to an account like an IRA account or brokerage account and let that amount get cut from your paycheck. Once it starts cutting automatically, the chance that you may stop those contributions gets eliminated.
5. How much are You Saving Annually?
On an average an American has been found to save 8.5% every year. However, according to most retirement experts, this figure should be at least 10% (though 15% is ideal) to make your retirement comfortable.
I know that it’s difficult when you start out. However, you can definitely increase your saving amount when your income increases, and slowly achieve a 15% saving.
6. Spread Your Investments
All investment experts keep telling this for a reason. Don’t put all eggs in only one basket. If you invest in only one stock and that stock fails, all your money is gone. Make a healthy investment portfolio by keeping a good mix in it of mutual funds, stocks and bonds.
7. Check Fees
If you invest in mutual funds, check the processing and other fees; otherwise there can be a significant reduction in your returns after paying fees.
8. Invest in Real Estate that will Generate Revenue
Real estate that can generate revenue is a good investment to make sure that your retirement is comfortable and rich. For example you can buy and improve homes to grow equity. You can also buy rental homes to generate a passive income in your retirement.
9. Think of Alternative Income Sources
Just as spending less is saving, earning more can also be saving. Think if you can find an alternative income source. It may be a hobby that you can convert into an income source, like gardening or photography.
10. Is a Big House Good Investment?
No! With a big house, a big mortgage comes in along with high insurance, maintenance costs and utility. All these expenses cut down your savings. If you already have bought a bigger house than you need, try to downsize as soon as possible to cut the costs and add to the savings.
11. Find a City where Costs of Living are Low
Another fine way to save is to move to a city or even country where costs of living are low. If you do this in the retirement, you definitely do savings. But if you do it before retirement, you contribute even more to your savings for a happier retirement.
12. Anyone with a Better Retirement Plan?
You can also try to find a job where you can get a better retirement plan. While a 401K match is nice, a pension which is a constant income stream is even better. It’s also true that a great pension plan is even better than a great salary. Especially if you are short on retirement, you should look for a job with a better retirement plan.
13. Professional Advice
Approaching a financial adviser may not assure you of retiring rich, but it can definitely increase your chance of doing so. If you approach a correct professional, s/he can help you form a perfect financial plan and stick to it, so that you can retire early and wealthy.
Visit Retire-Earlier.com to get effective tips to retire early and wealthy. Here you will find amazing concepts of retiring with a comfortable financial status and self-improvement.