The concept of retirement came from the fact that a person is incapable of working till he drops dead, as his or her physical and mental health declines and thus should refrain from it for the last few years of life. During this retirement period, a person generally does not have a financial influx similar to the working days and will be more reliant on the savings during the working days. However, recent trends have suggested that though people earn more money these days they do not have enough savings to sustain themselves during the time of retirement. They must think and move towards their financial planning and learn about different saving plans, ways or tips for early retirement.
On top of that, if your work demands excess physical and mental involvement, draining you out faster than normal and you are contemplating an early retirement to dedicate more time to pursue your passion or simply relax, your savings plan should be more dedicated and rigorous.
Factually speaking, you will need more money to comfortably lead a retirement life of close to 30 years if you are planning an early pitstop as compared to the conventional 15-20 years of post-retirement life. This requires planning and smart investments so that the possibility doesn’t seem to be a far-fetched one. In the following article, 6 intelligent tips for early retirement have been mentioned, following which you can settle into your life quite comfortably.
Chalk out a proper plan
Like mentioned earlier, the tips for early retirement from your occupation and keeping aside a considerable amount of time to pursue your interests seems to be an alluring one. However, it is easier said than done and experts believe that a normal retirement plan will not suffice the requirements of an early one. To matters into perspective, the points you need to consider while looking at your financial situation is the amount you have dedicated to saving and the amount of time you want to keep contributing to this.
Whims won’t get you far, you need to sit down and calculate and lay down a plan on how you plan to save money and how much you want to keep aside every month from your payroll and how long you need to do it so that you could retire at a particular age of your choice. Moreover, while you are working, early retirement may excite you but as you resort to it, you might get bored and might crave to get back to work. Therefore, think it out properly before you make that commitment.
Be ready to spend on financial education
There is no denying the fact that there is hardly any education imparted to students in school, high school or even colleges as long as managing finances is concerned. Sometimes, the concepts of debt and credit are alien even though you are on the brink of stepping into adulthood. There are so many other factors like taxes, deductibles, tax-free incomes, different kind of accounts and the various benefits of it, interest rates, investment in stocks etcetera that falls under financial education.
Since you are not adequately equipped to take the best decisions, it is a good idea to take some courses separately, mainly in the form of short courses or certifications. Yes, this may lead to some investment initially but the benefits that you can rear out of it will easily surpass that.
Start saving early and invest smartly
Anyone who has an idea and knew the tips for early retirement will tell you that the important part is not your income during your working days but how much money you can set aside from that income and convert into a saving that is going to be really crucial. If retiring early is your plan, quite naturally you will have to start saving from an earlier age as well. It might seem a little difficult because during earlier years, student loans and saving for a house may be the priority instead of saving but you somehow have to find a way around this obstruction.
A saving spanning close to a quarter of a century is mathematically more than 10 years of saving. To assist in additional saving, start making smart investments from your 20s itself. Buy real estates and properties that have good returns and indulge in a cautious and profitable stock market. Siphon all these extra money other than your monthly paid income into a saving account meant for post-retirement only.
Many people look at the option of shifting to somewhere smaller and convenient once their children or other dependent people are well settled and off the hook. The only thing keeping them away from this commitment is if they feel that the real estate return that they may be getting from their property is not quite as much as they were expecting. This makes them hold on to their bigger properties for long.
If you consult any financial advisor, they will suggest that you don’t delay the transition to a downsized house and consequently lifestyle for too long as you can save a lot of money lost due to taxes, maintenance etcetera. This will also enable you to save more during the fag end of your career as you will not be spending as much as before since your expenses will reduce as well. Therefore, downsizing is definitely a viable option.
Set your investments on autopilot
Once you are a salaried employee, you should plan your expenses and investments in such a way that money automatically gets laundered where required and you don’t have to spend too much time and effort in figuring it out every time. Once that payroll hits your salary account, a certain part should immediately be transferred to a savings account, a part of it should go towards insurance, some money should be kept aside for your monthly expenses and the rest should be used for investments. By setting your finances on autopilot, you will have one less thing to worry about and it will make sure that there is no obstruction in your post-retirement saving plan.
Long-term care insurance one of the best tips for early retirement
Your complete retirement saving may go for a toss if you get involved in an accident or contract a threatening disease that may need a longer duration of hospitalization. This is where insurance comes to the rescue. This plan may not necessarily be for early retirement but is more apt for retirement in general. It covers your costs in case of the above-mentioned cause but for a specific time period instead of a lifetime from when it is invoked.
Generally, a person spends around 2-3 years in a hospital so a 5 year fixed period plan makes sense. Since the time becomes limited, the premium to be deposited also decreases. The only downside is the amount of premium may be slightly on the higher side.
Not everyone gets into an occupation out of complete choice and maybe only doing it because it was the best available option and it pays well. Early retirement is definitely on the radar for them and these 6 tips for early retirement are going to be very useful in achieving that dream.