Oct 16, 2014 5 Essentials for Early Retirement Planning
Who wouldn’t want to retire early and pursue their own goals and desires? The problem is that without sensible retirement planning it can be difficult to save up enough to retire at 65 and even harder to get to that point early. To help, here are five things you can do to help get yourself there a little quicker.
1. Track Expenses
The first thing you need to know is “Where is my money going?” Follow the money to see how much you’re spending on what. With this information, you can determine if you’re spending your money wisely and what luxuries you can do without on a monthly and annual basis. Are you working hard just to pay for cable TV, fancy cars, and gasoline? What can you cut out? What is a necessity? You’d probably be surprised to learn just how much you can do without and still live comfortably.
2. Save More
Easier said than done, to be sure, but with what you’ve learned by tracking expenses you’ll see that you can probably save more than you think. Some experts advise saving 10% or 15% of your paycheck for retirement, but some people, by cutting unnecessary expenses, have been able to save 50% or even 70%!
This has two effects. The first is that by saving more you will be able to retire earlier. The second is that you will acclimatize to a less-expensive lifestyle and your retirement nest-egg will go even further, providing even greater security.
3. Side Jobs
For some people, even cutting out every last unnecessary penny still won’t get them to where they want to be. The obvious answer is to increase your income. This can be done a number of ways. If you have experience in a given field, you can become a consultant or a freelance writer. Handy with tools? Some people make spare money assembling things such as IKEA furniture for the “less-than-handy”. If you keep your eyes open, you can find focus groups to participate in that offer financial compensation. Some of you can even dust off your old baby-sitting skills. Make a list of your skills, even non-job related ones. Which ones might bring in a bit of extra money?
4. Start Early
The longer you wait, the harder it will be to retire early. Compound interest works greatly in your favor if you start in your 20s or 30s, and despite its ups and downs, the stock market can be a good wealth generator if you have a long horizon. But what if you’re past your 30’s? Is it too late? Absolutely not! CDs and bonds are safer investment vehicles. It may not be as wild a ride as the stock market, but it’s certainly more stable. Be sure to educate yourself on which vehicles are right for your investment and retirement plans.
5. Price Health Insurance
One drawback to early retirement is that you still won’t qualify for Medicare until you’re 65. Until then you’ll have to buy your own health insurance, and the cost will increase as you get older. Shop around for a plan that fits your budget, and don’t forget to see if you qualify for any federal subsidies.
It takes a lot of planning and preparation to retire early. If you’ve been fortunate enough to be able to save since your first job, you’re way ahead of the game. But if you’ve had to wait until later to be able to save, you still stand a chance by including these five steps into your game-plan.
Leonard Rickey Investment Advisors, PLLC (“LRIA”), is an SEC registered investment adviser located in the State of Washington. Registration does not imply a certain level of skill or training. For information pertaining to the registration status of LRIA, please contact LRIA or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov).
This is provided for general information only and contains information that is not suitable for everyone. As such, nothing herein should be construed as the provision of specific investment advice or recommendations for any individual. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. There is no guarantee that the views and opinions expressed herein will come to pass. This newsletter contains information derived from third party sources. Although we believe these third-party sources to be reliable, we make no representations as to the accuracy or completeness of any information prepared by any unaffiliated third party incorporated herein and take no responsibility therefore.
Any projections, forecasts and estimates, including without limitation any statement using “expect” or “believe” or any variation of either term or a similar term, contained here are forward-looking statements and are based upon certain current assumptions, beliefs and expectations that LRIA considers reasonable or that the applicable third parties have identified as such. Forward-looking statements are necessarily speculative in nature, and it can be expected that some or all of the assumptions or beliefs underlying the forward-looking statements will not materialize or will vary significantly from actual results or outcomes. Some important factors that could cause actual results or outcomes to differ materially from those in any forward-looking statements include, among others, changes in interest rates and general economic conditions in the U.S. and globally, changes in the liquidity available in the market, change and volatility in the value of the U.S. dollar, market volatility and distressed credit markets, and other market, financial or legal uncertainties. Consequently, the inclusion of forward-looking statements herein should not be regarded as a representation by LRIA or any other person or entity of the outcomes or results that will be achieved by following any recommendations contained herein. While the forward-looking statements here reflect estimates, expectations and beliefs, they are not guarantees of future performance or outcomes. LRIA has no obligation to update or otherwise revise any forward-looking statements, including any revisions to reflect changes in economic conditions or other circumstances arising after the date hereof or to reflect the occurrence of events (whether anticipated or unanticipated), even if the underlying assumptions do not come to fruition. Opinions expressed herein are subject to change without notice and do not necessarily take into account the particular investment objectives, financial situations, or particular needs of all investors.
For additional information about LRIA, including fees and services, please contact us for our Form ADV disclosure brochure using our contact information herein. Please read the disclosure brochure carefully before you invest or send money.
Market Update: February 2023