Retiring Early – Without Building Debt

Retiring early is possible. This despite the corporate America’s dwindling pensions, labor downsizing and job insecurity. In fact, if you’re a normal human being working a job, you have probably thought about it a lot more than once. The fact is, the idea of working well into your mid sixties or early seventies is simply not as appealing as it was just a generation ago. For many people, the idea of retirement is equal to freedom, with more time to visit family, enjoy hobbies and travel. The problem with early retirement as a concept is that few of us actually do much to ensure we can accomplish it. To retire early, one must have a pretty robust plan to ensure that when the time comes, debt is minimized.

Retiring Early – Some Tips

Ok, so you think you’d like to retire early. Here’s a tip that may seem obvious: start saving early. The fact is, many people want to have their cake and eat it too, which is obviously an impossibility, especially in today’s financial climate. The earlier you start, the sooner you can start benefiting from the power of compound interest, which will turn your nest egg into an entire chicken farm.

When planning for retirement, ensure you understand a few important things first. Like, ensure you are comfortable with how much money you can live on. This is not a number to skimp on, especially in light of the inflation picture you will have to deal with in the future. As well, be realistic as to how long your retirement plan money will need to last. Remember that as health care gets better and better, your life is likely to get longer, so always over-estimate how long you will live.

Tools That Will Get You There

When creating a retirement plan, many people take a look at their 401K as the main vehicle of access. But, if you plan to retire early, they can become a problem. The reason why? The 401K is designed to allow you to access your funds at 59 ½ years of age. But, if you intend to retire sooner, you simply cannot access this money without substantial penalties. Remember this point, as if you do not plan for this, you could find yourself with very little money during the initial retirement years. As an alternative, make sure you are taking advantage of Roth IRAs, which is one of the best structured vehicles for early retirement seekers. And because Roth IRAs are pre-taxed, they can be withdrawn at any time. The money is available tax free at any time, and has no penalties attached, so it is obviously preferred for people considering early retirement.

Early retirement is a goal that many of us will actually be able to accomplish and enjoy in the years to come. There is no trick involved – it simply requires proper planning, avoiding credit card debt and good discipline. Starting your retirement plan now and sticking to it rigorously will ensure your retirement is as you planned it.