How to retire early

Although a small number of Americans can afford to retire early, there are ways in which you can accomplish this. Of course, a lot of sacrifices will have to be made, but with a bit of effort and a strong will you can succeed in saving enough money for an early retirement.

If you want to pursue your goal of early retirement, careful financial planning is necessary. First, you’ll need to know exactly how much money you have. Calculating your net worth means adding all your assets (cash in accounts, the value of your home or of the buildings you own) and then subtracting all of your debt (mortgage loans, credit card debts and other loans). When you know how much you are worth, it is time to decide how much money you’ll need in order to retire.

The age at which you wish to retire can make a big difference in determining the total cost. Keep in mind that the average life expectancy in U.S is 78 for women and 75 for males. With proper care you can easily live to be above 80. If you retire at 40, you’ll need enough money to last you for 40 years if you plan on doing absolutely nothing to earn money.

retirement-age_0If you do not plan on drastically changing your lifestyle, you’ll be spending about 80% of what you spend now. So if you want to retire early, you have to start saving as soon as possible.

Living on a low income is something that you’ll have to get used to. It is possible to reduce your lifestyle costs and to live a comfortable life. If you wish to retire early in order to pursue some of your personal plans, consider selling your house and buying a residence in a low-cost area. If you plan on traveling you can purchase an RV and roam the country freely, but keep in mind that this will cost you a lot of money on gas.

Saving may not be enough for an early retirement. Earning more may be necessary. Working a part time job and investing the money earned in a retirement savings account will be a big plus to your retirement fund.

Finally, remember to take advantage of retirement plans like 401(K) and IRA’s accounts. Having a whole life insurance policy can also help you build tax-deferred cash value and it will also financially protect your loved ones!

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