How to Take Early Retirement
Retiring early is a dream for many Americans. It’s also a dream that can be achieved if you’re willing to work hard during your early productive years. Like with everything, retirement is a number’s game: Those who have enough money accumulated to live comfortably can think about retirement, while those who have debts should stay in the workforce.
Other People Are Reading
Instructions
-
-
1
Pay off your debts. Ideally, even your mortgage should be completely paid off by the time you retire and you definitely should not have any credit card debt. If you currently have student loans, credit card debt or other liabilities that need to be repaid, start working towards canceling that before you move on to the next step.
-
2
Calculate how much money you need to retire comfortably. Experts estimate you will need at least 70 percent of your current yearly income in order to maintain the same lifestyle. Keep in mind that people who retire early tend to travel a lot, so you may end up having more expenses than the average retired person.
-
-
3
Accumulate as much capital as you can. This is wise no matter your retirement age, but it’s especially important if you’re planning early retirement and have many years ahead. The best investments are those that produce passive income, such as properties you can rent out or bank deposits that accumulate interest.
-
4
Get smart about money. The more you save now, the more you will have by the time you retire. Figure out a budget, see where your money is going and then find a way to cut down on excesses.
-
5
Contribute the maximum allowed by law to your 401K or IRA. If your employer has a matching system, take advantage of it. Even a few extra dollars will make a difference after years of accumulating percentage. This will become especially important if you retire after being in the workforce for less than 30 years, which can have an impact on your social security benefits.
-
6
Use the CNN money tool to estimate how much money you need to retire. By entering your current age and your annual salary, you’ll be able to get the total you should already have accumulated in order to retire by the time you’re sixty. If you want to retire early, simply add years to your real age.
-
1
Tips & Warnings
Keep inflation in mind when calculating how much you’ll need to live after retirement. As low as it may be, it will become significant after 10 or 20 years.
