How to Retire Early

Retiring early may be every working professional’s dream but it apparently isn’t enough. As a professional, you should be able to invest wisely as well as save a considerable amount of your monthly income in order to even have a shot at leaving work permanently at a very young age. In order for you to be able to retire young you should take into account that saving is a big chunk of what you need to be doing when you try to make an early retirement plan.

For example, if you are around 23 years old and you typically make around $80,000 annually. You could try to invest your money wisely by contributing around 10% of your monthly pay into your 401(k) which will be matched up to around 6 percent. This will also be a good time for you to invest around 5 percent of your money into a regular brokerage account as well as an extra 10 percent into emergency savings. If your company also has a pension plan, you might want to try to avail of that and figure out, through the help of a financial adviser how you can make everything that you’re doing work for you so that you’ll be able to end up retiring at the tender senior age of 55 or maybe even 50.

From the looks of it, this particular setup would make a good savings strategy simply because the total savings that you’re essentially doing is around 25% of your pay plus if your employer is also matching your contributions for your 401(k) with 6%, then it will amount to a whopping 31% percent. If you also have a retirement pension plan that is guaranteed to give you a check every month, then it will be more than enough for you to retire at around 50 years old. This particularly astounding type of saving behavior may grant you a spot in the list for those people who will be retiring early. But it would seem that there are other things that you should consider.

Just because you’ve calculated that if you do all these things harmoniously, you can retire at the tender age of 55, doesn’t mean that you’ll be able to do that. It’s because you will have to arrange your life several times due to some life-changing circumstances. It could be the time when your company is downsizing and decides to give you the boot or it may be marriage when you already have a wife, a mortgage and two kids. These are just the most common things that normal, hardworking people run into during their life as a professional.

However, it is still best if you do whatever you can in order to save whatever you can. Even if sticking to your current savings plan might pose as a challenge to you, you could try to still fix a few things in order to reach that target of retiring by the age of 50 or 55. Stocks or solid investments might do the trick for you or you could also consult with a financial adviser in order to see how you can attain your target retirement age even with the type of expenses that you have on your table. Ultimately, it’s all about being proactive in your savings while you can and being reactive when you need to be.


Posted by Ardent Editor on Apr 26 2007 in Retirement 101

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