Early retirement is a dream of many Americans. Although retiring before the age 50 may seem difficult, it is very possible. If you want to retire before the age of 50 years, you need to come up with a well thought plan, stick to that plan and be willing to bend a few rules. Being able to retire before the age 50 means you need to have enough money to keep living for the rest of your life. So, you should make sure you have enough money or investments before retiring; you want money to keep flowing in for as long as you live. In this article, we are going to discuss what you need to do in order to retire before the age 50;
If you want to retire before the age 50, you will obviously need to save much more of your income than somebody who plans to work till normal retirement age. Therefore, the earlier you start saving, the better your chances of accumulating a sizable amount for early retirement. From your 1st job on, you need to set something aside in the retirement savings plan. You can save a little more money every month or whenever you happen get a raise. Also try to contribute enough to get the whole employer’s 401(k) match.
2. Cut Out Excess Expenses
Review the monthly expenses and then determine if there are any which you can cut out. If you really want to retire before the age 50, you need to free up more cash for savings. You can cancel the magazine subscriptions you no longer read, you can cancel the gym membership if you have not gone to the gym for the last 6 months, you can even consider becoming 1 of the many Americans who cut cable subscription and opt to watch Netflix. You can take the cancelled monthly payments and then turn them into transfers into your retirement savings account.
3. Retirement Investing
In order for you to be able to retire before the age of 50, you need to make enough passive income even after retirement. You should consider investing your money in places where you can earn at least 4% each year. Some of the best ways of earning a sizeable passive income include investing in real estate and IRAs. With that said, try not to dip into the retirement funds before time comes. In case you happen to find yourself facing a tight financial condition, you may get tempted to take some money from the retirement savings, do not. Instead, look for other ways to cut your costs so that you don’t drain your retirement funds.
4. Consider Long Term Care Insurance
Even a properly funded retirement savings plan could end up getting decimated in a few months in case you end up getting sick and require round the clock home health care, or if you are put in a nursing home. Long term care insurance can prevent this from ever happening, however, you should make sure it actually fits your particular budget. Keep in mind that the health insurance costs rise much faster than the inflation, especially when you consider the recent changes in the health insurance. If possible, you can look for policy which has low deductibles and co pays which cover dental costs, prescriptions, doctor visits, vision care and hospitalization.