Retirement is something we all look forward to, no matter how much we might enjoy our jobs–but it takes many years of hard work to get there. If you’d like to leave yourself with more years to really embrace life, check out these eight top tips on how to retire early.
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Don’t just dream of retiring early, do it with these 8 tips
These eight tips might sound simple, but they take plenty of dedication. Just keep in mind the payoff that’s waiting for you at the end as you put plans into place for accelerated saving and improved investments.
1. Work out the right approach
First and foremost, you need to figure out what you want when you retire. Do you, for example, want to get your head down and work hard now to achieve total financial independence in retirement?
Or, would you rather find a balance that allows you to enjoy what you’re doing today for a comfortable, slightly lower-key retirement? The approach you take to saving will rely entirely on what you want your post-retirement life to look like.
2. Make the most of your workplace retirement scheme
Look into the retirement plan your company has in place. As well as the Age Pension scheme, your workplace might offer something a little more flashy.
As an example, they might have an employer matching scheme in place, whereby when you put your own savings for your retirement, they agree to match it. Ask your boss or inquire in the HR department about what your company has to offer.
3. Pursue your own retirement plan
If you think you can do better than the retirement plan in place in your office, seek out alternative retirement plans. These could include personal pensions, such as retirement savings accounts and account-based pensions.
4. Keep your savings where they are
Good savings are key to early retirement, so don’t be tempted to touch them unless you’re planning to invest.
While it is all too easy to withdraw small amounts here and there or even one-off lump sums, they can make a big dent in an otherwise impressive pot of money. The same goes for your retirement account if you have the option of withdrawing from yours early.
5. Avoid loans and pay off debts
Avoid taking out unnecessary loans and always aim to pay off any debts you have in good time. This includes credit card debt. According to the Motley Fool, 61% of Americans have at least one credit card — with most people having four.
Collectively, in the first quarter of 2020, the total credit card debt was a staggering $893 billion. It’s important not to let that debt spiral. So, aim to pay off as much as you can as often as you can.
6. Invest in company stock
If your company offers stock plans, be sure to make the most of them. With discounts on high-performing stock, you have the potential to boost your income with little risk. Just be aware that right now, the markets are in “bubble territory,” and the best time to begin investing is when the markets are in a bear market.
As the adage saying goes, “buy low, sell high.” Just make sure that you have a strategy in place, whether that be dollar-cost averaging to accumulate more assets; lump-sum investing; or buying in bear markets, selling in bull runs.
7. Find other great investment options
As important as it is to leave your savings to grow unimpeded, there’s a lot to be said for making smart investment options with bigger sums of money.
Look into investing in real assets like property and precious metals that can promise a sizeable return when you need it.
8. Start a side hustle
Two income streams are always going to be better than one. And, with a side hustle, you can control just how labour-intensive any additional streams have to be.
If you’re enthusiastic about technology, there are some options that pay well without too much involvement, for example, rental services or selling items on eBay.
Planning for the future
Remember that any big changes or important decisions you make now will ultimately help prepare you for your ideal post-retirement future. Be sure to plan appropriate breaks for yourself as well as rest and success go hand-and-hand.
With these tips, you can get there faster and potentially have more money to play with than you initially planned. That’s crucial if you want to retire before your pension plan finally pays out.