Early Retirement In 4 Easy Steps

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Retire early

It’s Easy To Retire Early With Right Financial Moves

Early retirement is not about earning a lot of money or being rich.   It’s about knowing what to do with the money you have so you can invest more of it.

If your goal is to retire at an early age you can do it if you make the right  financial moves.

1st – Start With A Plan|Stick To The Plan

  • Early Retirement Needs An Investment Plan

To retire early, you need be absolutely certain that you have enough investment money to last at least 30 years.   Unless you expect to go back to work after you leave the workforce, your retirement investments need to last as long as you do.

An investment plan will help you reach early retirement faster; statistics continue to show that those investors who follow an investment plan will save 5 times more than those who do not.

Sticking to your investment plan through good times and bad is just as important as creating your plan.  Even if the bad economy has wiped out a decade of your retirement plan investments, stick to your plan.

  • Your Investment Plan|Your Retirement Outline

Stick to your plan.

  • Determine a target investment amount.
  • A retirement calculator will help you determine your target amount.
  • Select investments which fit for you, not your financial planner, but you.  What investments are your comfortable with…individual stocks, mutual funds, index funds, bonds, etc.
  • Know when to fold.   Understand when you should hold an investment and when you should dump it.
  • Continue automatic contributions to your retirement plan even when the market is in the slumps.   In a down market, equities are on sale so you can buy more shares for less money.
  • Never look back.  Continue to max-out your retirement plan contributions regardless of market conditions; especially if your employer is giving you free money with matching contributions.

2nd  – Continue With A Plan

  • A Spending Plan With Retirement In Mind

A spending plan holds you accountable to you.

By following a spending plan you will keep more of your money, you will stay out of debt.    Overspending is just a bad financial habit.   If you expect to retire early, you need to kick that bad habit.

Many financial planners consider debt to be a curse because it robs you.

With proper planning and the right moves, you can retire early
Image by Grant MacDonald via Flickr

When you factor in the interest and fees you pay on debt, the cost of goods and services double and sometimes triple.   All that money wasted on interest and fees could be invested into your retirement plans.

Buy what you need, not just what you want.

To retire early you must save now so you can spend later.   To do that you need to base your spending plan on essentials, not thrills.   Yes you would love that $3000 coffee table but can get by with a $700 one.   Who wouldn’t want a $400 purse, but a $40 one will suffice.

3rd – Protect Your Money

  • Consider Annuities

Many investors use annuities as a hedge.

The best part about annuities is the protection they provide.   Annuities help protect your retirement income from a decline in value.   When the market dips you will be less concerned about a market correction if some of your retirement assets are invested in annuities.   Ask your financial planner about how some annuities may fit into your retirement plans.

Some investors use what is sometimes referred to as a “ladder” approach with the purchase of annuities.   This simply means buying them gradually over a period of time so that you lock in at different interest rates.    Investors use the same approach with bank certificates of deposits.

4th – Take Advantage of Financial Tools

There are many financial tools available in the market place.   There are financial questionnaires, money management tools, and retirement calculators.    When you are ready to do your hard-core financial planning, you want to use as many financial tools as you can.

Retirement calculators can be a great benefit when you are running your numbers to determine your target investment amount.

Financial questionnaires and money management tools are used to determine your financial direction.

You can stop feeling overwhelmed about early retirement if you use the right financial tools, review the proper investments and start out with a plan.   If you need help with any one of those steps, seek the advice of a financial planner; they have the financial tools and knowledge.

 

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