10 Tips for Early Retirement Planning
Early retirement is a dream for many. The thought of being done with the workforce years ahead of your peers is a satisfying one. Here are 10 retirement planning tips that can help you throw in the towel early:
1. Make a plan
Map out your path to early retirement. Even if you do not make a great deal of money right now, it is important to figure out what you need to do to reach early retirement.
2. Consult a professional
One of the best things you can do is consult with a financial planner. For $200 or $300, you can get a general idea of what you need to do. It never hurts to get professional advice, even if all you do is get a second opinion on the plan you already have.
3. Create a budget — and stick with it
Once you have made a plan, create a budget that will help you reach your retirement goals. Then you have to have the discipline to stick with it.
4. Save
As you might guess, good retirement planning requires that you save your money now. The younger you start, the better. It is particularly important to save consistently.
5. Invest While you do need to keep some money in liquid accounts for emergency purposes, you should be investing, too. Put what you can in tax-advantaged retirement investment accounts and similar vehicles.
6. Cultivate additional income streams
Early retirement often requires that you have multiple income streams, especially if you plan to retire before 59 1/2, the age when you can access your retirement accounts penalty free. Start now to develop alternative income from the Web, dividend paying investments, P2P lending or other sources.
7. Pay off debt
One of the keys to a successful early retirement is living debt free. Make a debt plan that helps you get rid of all of your debt — including your mortgage — by the time you retire.
8. Live within your means
You will be at different stages of income throughout your life. At each stage, it is important to live within your means and avoid piling up debt. You may have to start out small, but as your income grows, more of it can be put toward your retirement goals. It can be helpful to keep your spending in line with a lower income, and put the excess toward your early retirement.
9. Consider downsizing
If you want to retire early, you can consider downsizing. Depending on your goals, it might be worth it to get rid of the things you no longer need or use. You can also downsize your home into something smaller — especially if travel is part of your retirement planning.
10. Don’t lose sight of enjoying today
While early retirement is a worthy goal, it is important to enjoy time with friends and family now. Remember to set aside some funds to enjoy yourself a little bit today.
