7 Moves That Will Help You Retire Early
What can make retirement even better? Retiring early, of course! Understandably, most of us are working hard towards the goal of retiring on time, which seems like a task in itself. But with a few tricks and some extra determination, you could be reaching those retirement years sooner than anticipated.
So, what can be done to speed along the retirement prep process? Here are 8 moves that will help you retire early.
1. Save, and save early
It’s no secret that saving is the route to retirement, but the sooner you begin saving the sooner you can retire. Don’t put off your retirement savings due to concerns of affordability or make the mistake of not contributing enough. Work out your budget to prioritize your savings as much as possible. Look for ways to reduce your monthly bills in order to increase how much you can contribute.
2. Utilize the right savings methods
Saving is the first step but ensuring your savings are growing as they should is key to obtaining the funds needed to retire early. You can optimize your savings using some of these options:
- Take full advantage of your employer's 401k plan, especially if they match what you contribute. Try to max out your contributions as much as possible.
- Open a Roth IRA and contribute as much as possible after you’ve maxed out your 401k.
- Obtain low-cost mutual funds at lower than 1%.
- Hire a financial advisor to help you take advantage of all savings, investment, and tax break opportunities.
Don’t skip this step - make sure your money is working for you.
3. Cut your spending
Reducing your spending is a key step to early retirement. Not only will cutting your spending habits free up more money for you to save, but it will also put you in a better position to live on less (more on that later).
Take a look at your budget and see where you can make potential cuts in your spending. Consider the following:
- How can you reduce your utility spending?
- How much are you spending on groceries?
- Is a lot of your outgoing money being spent on unplanned purchases that could be reduced?
- How often are you eating out?
Remember, every dollar saved is one you can put towards your retirement savings.
4. Consider calculated risks
We’re definitely not saying invest all of your savings into one opportunity and hope for the best, but it can pay off to take certain calculated risks. Look into real estate investments or even peer-to-peer lending. These are areas in which you can invest some of the money you have saved to try and make a profit that you can invest further or save.
5. Increase your income
Looking for ways you can strategically increase your income can go a long way to retiring early. Taking on extra shifts, working a part-time job, selling unused items, or even taking surveys online can all positively increase your income; the more you earn, the more you can save!
6. Learn to live on less
Not only will living on less free up some of your income to go towards retirement savings, but it will also reduce your bottom line and can shave off a decent amount of money you need to save for to support your lifestyle in retirement.
7. Get rid of debt
Debt is not your friend when you have the goal of retiring early. Not only will debt reduce the amount of money you have available to save for retirement, but it will also impede on your finances during retirement. When you retire, you want to free up and simplify your budget as much as possible. Take a look and see what you can do to reduce or pay off your current debt as quickly as possible; making this a priority will definitely pay off.