How to retire early? In your 50s, 60s and above
You may think it’s only in your dream, but I want to say it’s possible.
This article is enlightened on 5 steps to help achieve your dream of retiring early.
- Sweat out the details how much money you’ll need to retire early
Get an inventory of your savings, future benefits, and income, investments, pensions, health benefits, Social Security benefits or even an inheritance.
And then work on your expenses – health care costs, living expenses plus any other relevant expenses.
Calculate your need until the ripe old age of 95. Add everything together and you’ll get the amount you need to accumulate through investments, benefits, and Social Security. Don’t be shocked if it accumulated in “millions”!
Calculate how much you need to save per month. Don’t be shocked again that it’s a huge amount.
- Save, not when in your 30s, 40s or 50s but in your early 20s
The best is to start saving as soon as you start to work. Each month, stash away the amount you need to save by automatically deducting it from your paycheck. In this way, it’s less painful for you because you would naturally get round to adjust your spending to the money that’s left over.
When you’re young, time is on your side – the power of compounding interests on your savings is tremendous!
Try comparing the amount you can accumulate when you start to save in your 20s and when you start in your 30s, 40s, and 50s.
No rocket science here. Its plain fact you win out when start saving in your 20s. Your money runs way ahead of one who starts to save in his 30s, 40s, and 50s.
You might think you can delay because you can catch up on lost time by saving more in later years but sorry to tell you that money don’t work that way.
- Study and research diligently on the stocks so you’re well-informed, hence can form intelligent decisions whether to invest in them. Invest smartly and wisely by having a portfolio mix of stocks that have long-term growths with reasonably lucrative returns.
There’s no way you can retire early if you don’t venture into investing in stocks. Stocks though are risky, on average, they yield you higher returns than your savings put in a savings account, checking account or money market account. Since you’re retiring early, you got a long stretch of life that’s without full-time work and income, so you really need more of the “juice” that stocks generate.
To keep costs down, choose low-cost investments, like index funds, over annuity and life-insurance products, whose high expenses and fees make them unattractive options?
- Stay absolutely out of debt, except maybe a house mortgage
This is especially so for credit card debts, college education debts, and car loans.
If you’ve all these debts, you’ll be tied down in paying them and disrupt and distract you from your savings effort.
- Find out about any penalties that you may incur due to early retirement
Do you know IRAs and pensions typically charge a 10% penalty if you retire before the set retirement age?
So, check out when you can retire to avoid the penalties.