Saving for Early Retirement
Some people want to retire early at the age of around 50 or 55 years old. Early retirement is possible for anyone. If you are just starting out in the working world where the money is usually tight, if will not be difficult to plan for early retirement. Sacrifices should be learned and immediate gratifications deferred. It is important to have early retirement planning and a good retirement savings plan so that you will have financial security when your retire.
It is important to have a goal. Early retirement starts with it. If you will not alter your lifestyle when you retire then what you can do is to calculate your annual expenses based on your present lifestyle, and how much income you need to cover those expenses. Then multiply that number by the number of years left of your life expectancy. In this computation, inflation and unexpected emergencies like medical emergencies due to accidents or natural disaster, should be included.
You can calculate these yourself or you can go to the internet and make use of the free retirement planning tools to make the math easier. Or, you can hire a professional that provide retirement planning services that can help you.
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If you want to be financially able to retire early, then you should choose the right retirement savings plan. The traditional individual retirement account or IRA, Roth IRA, Keogh plan, and 401k plan are the most popular plans available today. What is beneficial about these savings plans is that they offer tax advantages that help money invested in them grow faster than in money was invested somewhere else.
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There are other traditional investment vehicles outside of the IRA, Roth, Keogh, and 401k plan and these are individual stocks, bonds, and mutual funds to diversify and spread the risk of investing. These investments simply give you more options for your investment money although they many not offer the same tax breaks as the IRAs and 401ks. Rental real estate and gold coins are other places where you can invest your money. Putting your money in one place is not good and also, do not spread yourself thinly.
If you are still new in the work market, you might not be making enough money to start an early retirement plan, so what you can do is to review your expenses and see where you can cut back and put that money in your retirement investment plan.
Starting early is a great thing no matter how little you are putting in your early retirement savings plan. If you start early, you will have more time to save money into the amount that you need to secure your retirement.