Looking for retirement tips? Well, retirement tips are a dime a dozen but we have some key recommendations. If you’re like most workers, you want to retire early and enjoy life after work. You can see visions of yourself relaxing on the beach with a drink in your hand and not a care in the world. However, the only way you’ll be able to reach your retirement goals is if you start making preparations as soon as possible. Although retiring early might seem out of reach, it is possible if you prepare, and these retirement tips can help.
Before giving you the direct retirement tips, we want to stress that it is imperative to have a solid back-up plan. Even if you have it all figured out and you’re on track for an early retirement, life happens. So make sure to have a backup plan.
Are you itching to retire early? It could happen. Here are some critical retirement tips for those saving or looking to retire early.
Move to a low-cost city
It will be harder to save for an early retirement if you live in a city where the cost of living is high. And once you do finally retire, you’ll likely blow through your money in no time and have to return to work. When daily living costs are through the roof it can quickly eat up your money.
One of the best things you can do for your nest egg is move to a city where you can enjoy a low cost of living. This way, your hard-earned cash will go a lot further, and you’ll be able to build your retirement fund with less financial strain.
That move can have a major, positive impact to your ability to retire early. Of course, you will want to make sure there are adequate health care facilities and other resources in your new area.
Start saving as soon as you start working. Each year you wait to start socking away cash is a lost opportunity. Don’t put off retirement savings until you get around to it or until you’re making more money. The time to start thinking about your future is now. Due to the power of compounding interest (this is when your earnings earn more earnings), saving earlier is more beneficial. Consider this:
You earn $30,000 a year, receive 4% annual raises, and plan to retire in 30 years. You save 4% of your salary a year and earn an 8% annual return. If you start investing today, you could have more than $220,000 by the time you retire. If you wait five years before starting, you’d have $164,878 (assuming the same retirement date, salary, raises, savings rate and return). Waiting five years could cost you $56,066.
Max out retirement contributions
Are you contributing the max to all your retirement accounts? If you want to exit the workforce early, you’ll want to do your best to max out retirement contributions. For 2018, you’re allowed to contribute a maximum of $18,500 to a 401(k). If you’re age 50 or older you can make an additional catch-up contribution of $6,000.
If you don’t have access to an employer-sponsored plan, Barnes recommends setting up an IRA. You can contribute a max of $5,500 for 2018 across all IRA accounts and a max of $6,500 if you’re age 50 or older.
Cut back on extras
It’s a simple, yet powerful, way to make sure you reach your early retirement goals. It’s often the smaller changes, not necessarily the big ones, that can help whip your finances into shape. Track spending for at least 30 days, so you can see where you should start trimming the fat. You might find that your lunchtime snack — and not your coffee habit — is what’s really holding you back from financial freedom.
Carve out some time to evaluate your spending. Remember, the key is to cut back, not completely cut out everything that makes you happy. That would just be a miserable existence. Denying yourself will eventually make you rebel and spend even more. Do everything in moderation.
Get a good financial team
Don’t put retirement savings on automatic pilot. Check on how your retirement accounts are performing, so you can gauge whether it’s time to rebalance your portfolio.
Stay the course
At some point, you might get discouraged. It’s important to keep cheering yourself on as you make the journey toward retirement. When rough financial times strike, you might be tempted to raid your retirement account. Don’t.
Stay the course, and continue to motivate yourself. Continue to save even when things get a little tight.]
The company you keep when it comes to financial professionals is also key to your financial success. If you do not have the time or knowledge to research and invest on your own, consider this one of our best retirement tips. Hire a certified financial planner to help you devise a financial plan and motivate you to stay on track. Also, seek the assistance of a certified credit counselor if you start to experience difficulty with credit and debt management. Solid financial advice will help you catch financial mistakes early and correct them before they become a bigger problem.
Get multiple streams of income
A major element that must be part of your retirement back-up plan is having multiple income streams. This way, if your main source of employment goes down the tubes, you’ll have another stream of money coming in. Don’t become overly dependent on your primary employer. You could get laid off or fired at a moment’s notice. However, when you have another source of money, such as real estate or a part-time job, you won’t be in such a cash crunch.
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