The Leading Financial Institution for Structured Settlements and Annuities
It wouldn’t be unreasonable to think that, following the financial crisis and stock market crash of 2008, most people who had any thought of retiring early would be making other plans right now. But, if you ask many people, especially those younger than age 50, they still have their sites on an early retirement. Is this just a pipe-dream, or do they know something the rest of us don’t?
The fact of the matter is that an early retirement is not out of reach for most people. For people scrimping and saving throughout their working years, it’s not a slam dunk, but it is doable with discipline and a some creativity. The thing that holds most people back from envisioning and early retirement is the outdated notion that you need to have a million or two million dollars in retirement savings to be able to pull off a comfortable life style. Obviously, the more savings the better, but by applying some simple techniques in your planning efforts, you could be exiting the rat race sooner than you imagined.
Know what you Really, Really Need vs. what you want
The first thing to do is to tear up those silly formulas that tell you need to replace 70 to 80 percent of your earnings in retirement. Who says? If an early retirement is truly important to you, wouldn’t you be willing to moderate your life style vision? Certain things need to fall into place for you. For example, your children really need to be; and, hopefully your parents are healthy and self-sufficient. Considering that you won’t have those large retirement contributions or mortgage payment (of course, that is key to an early retirement), so, your biggest expenses will be behind you. You won’t need any more big toys, and you’ll also realize that those expensive trips overseas are overrated. And, if you only dine out once or twice a month, you could easily shoot for 50 percent as a retirement income target.
Dial down Your Life Style Now
All of those things that you might have to cut out during an early retirement “ lavish dining, travel, massages, Starbucks coffee, red meat, premium cable “ why not cut them out right now? If an early retirement is your most important priority, you can not only increase your current savings, but you will also be able to ease into a moderated life style by practicing one now.
Get Smaller: Top Targets Are Your House and Cars
Along the same lives as a dialed back life style, it would also make sense to shrink your house and car. You won’t need the five bedroom house anymore. Maybe you already had plans of downsizing at retirement, but why wait. You can reduce your housing expenses right now and save towards some extra retirement perks.
Convert Home into Income You Can Get Right Now
If you are going to trade in your big house for a condo you can shore up your retirement income by investing the equity difference right now into an annuity that will generate a guaranteed, inflation protected income that you can’t outlive. For example, if you sell your home for $450,000 and buy a condo for $250,000, the $200,000 of equity proceeds can be invested into an annuity the generate an income you can’t outlive. On top of your other savings, which might be invested more aggressively, this will provide you with a much needed income safety net.
Get Your Business Idea and Plan Ready
Most people who consider early retirement envision themselves pursuing another income earning opportunity “ either another vocation or a business of their own. For most of us, retirement won’t really be retirement, just the start of another life cycle in which we will learn, earn and become self-fulfilled. But, you shouldn’t wait to plan your business. By starting it now, it will be generating a sustainable income by the time you retire “ early.