Strategies for Early Retirement
Retiring early can be a great thing for you and your family, but to do so you need a sound strategy and you need to stick to a budget. For more information about how to retire early visit us today at http://HowToRetireEarly.net.
A wise man was once quoted as saying that retirement would kill a person sooner than years of hard work would. Conversely, it is not unusual to hear of companies offering early retirement packages due to downsizing or restructuring the business. Most companies do this in an effort to dramatically reduce their overhead expenses. There are a number of strategies for early retirement that you can engage in.
It’s a harsh reality, but over 20% of the working individuals out there feel that they will not have saved enough to retire comfortably. Additionally, 1/3 of all the individuals in the US who are currently employed do not have any kind of retirement savings plan. Whether you have recently graduated from college and begun your career endeavor or are older is not significant. The key is to start planning for your retirement immediately and develop a plan.
The following are some suggested strategies for early retirement:
The first thing you want to think about is how you are going to be able to afford this change in lifestyle. In other words, you want to make sure you start planning for retirement NOW! The longer you wait to start doing something about it, the more difficult it is going to be to realize your dreams.
Determine when you want to retire. How old do you want to be when you want to stop working. You will need to consider your life expectancy and then determine how many years of income you will need to meet your life expectancy demands. The current statistics today are revealing that retiring at age 50 means that you will need retirement income for the next 35 years once you call it quits.
Look at your current annual living expenses to determine the total amount of money that you are going to need to survive your retirement years. If you are currently paying out $50,000 annually, a terrifying though. If you multiply that $50,000 the 35 years mentioned above, you’re going to need $1.75 million just to make it. That dollar amount is going to grow even larger once you factor in inflation.
Now how about a little good news? Let’s assume you have some type of retirement account or savings that is earning 5% interest compounded annually. Also, assume a 3.5% rate of inflation. By the time you retire, the interest alone that you will accumulate while saving will be enough to live on for 10 to 11 years before you start taking the principal. The key here is that you need to get started on some kind of a retirement savings plan, even if it is a standard savings account.
Strategies for early retirement also include building what we like to call a “safety net” so that you alleviate as much investment risk as possible. Divide your investment monies in increments of 25% as follows: Invest 25% in blue chip stocks, invest another 25% in CD’s (Certificates of Deposit), invest 25% in US Treasury notes and lastly invest 25% in Triple-A-rated bonds. This will give you a nice safe investment and a decent return.
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