I am not ready for retirement just yet simply because I love what I do for a living. However, when I decide I want to retire, I want to be ready for it. Admittedly, I will likely want to retire, at least partially, earlier than the standard retirement age. I have worked hard and if I plan carefully I will be able to accomplish this goal. Saving money for early retirement is very important if this is a goal. If you want to know how to retire early, consider some of these money saving tips:
Of course it is imperative to save money for early retirement. But before you can really implement a savings plan you need to know how much you need to save to meet your retirement goals. If you are serious about early retirement it may be beneficial to consult with an expert. A financial advisor who specializes in retirement planning can help you determine how much you will need to have saved in order to retire at your desired age. Your expected lifestyle, debts, inflation and health expenses will be considered to determine how much money you will need each month to sustain your lifestyle. Then your expected life span will also be taken into consideration.
Once this is determined then a total amount will be determined. After this is set on, a plan will be put in place to get to that goal as quickly as possible. You will have a plan on how to accumulate that much money and how to continue having your money work for you through retirement. Planning carefully and being disciplined in your savings can ensure you have the ability to retire early and not run out of money for your desired lifestyle through the duration of your retirement.
Early retirement Money Saving Tips
Immediately invest the maximum amount of money in your matching 401K provided by your employer. If you are employed with a company that provides a matching 401K and are not taking advantage of this, you are throwing away free money. Contribute as much as possible in your 401K so that your employer matches your contribution. Not only will you be able to use your money to grow your savings but your employer’s as well.
In your 401K and other investments be as aggressive as possible when you are young. The risk in aggressive investments is greater but the rewards are also greater. You should diversify your portfolio but the greatest percentage put into aggressive funds should be higher when you are younger and slowly move to primarily conservative as you get closer to your target retirement age.
If you live in an area of the country where the cost of living is extremely high consider moving. The same amount of money you have saved will take you a lot farther if your expenses are diminished. Instead of high mortgage or rent payments you can have a comparable home at much less money. The same holds true for shopping and utility payments. Consider areas of the country you would be happy living that has a more reasonable cost of living.
Whether you move or not, consider downsizing. This is especially true for those who retire early and do not have dependents who live with them. If you are single or it is just you and a spouse with no children or grown, independent children, consider moving to a home that is comfortable for two instead of the entire family. You can save a lot of money and have a home that is more convenient. You may not want to clean such a large space as you get older. A condo or townhome where lawn maintenance is taken care of can also be convenient.
Plan to work part time when you retire. Perhaps this is not retirement in the strictest sense of the word but semi retirement certainly has its advantages. You can continue to supplement your income and invest your money to make it grow for you. Part time work is flexible especially if you are self employed. You can set your own hours and do something you enjoy. You will have the freedom to do what you want but still have a continuing income stream.
Get rid of luxuries and take a hard look at your living habits. If you are in the habit of spending money needlessly now is the time to tighten your belt. You can live comfortably on less you just need to be disciplined to do it. The money you save can be used to invest and let your money grow. Added to this is a change in lifestyle habits that will serve you well through retirement. You can splurge on occasion but if you get into the habit of living frugally you will continue this as you get older. Some frugal living money saving tips for early retirement include:
Becoming more energy efficient to save money on utility bills
Reduce entertainment expenses or get creative so you are not spending as much on going out
Cook at home instead of eating out often
Purchase off brand items and less expensive brands if the quality is comparable
Buy used items at a discount
Sell your used items you no longer need
Carpool or live closer to work to reduce commuting expenses
Do it yourself instead of hiring someone to do it for you