Though many people think of retiring early, it is not an easy decision to make. Retiring early also means to think about many decisions and responsibilities related to finance. With the falling rate of interest and limited income, early retirement signals invite problems on all fronts.
Most citizens cannot afford early retirement. Rising medical expenses and cost of living makes it almost impossible to even consider an early retirement. However, here are five ways that one can afford after an early retirement.
Work on retirement income
Retirement incomes 401(k) and IRA are the treasured nest eggs, that no person can let go off. One way through which an average employee can afford early retirement is to speed up the retirement income. Putting all your savings in tax-deferred investments that can be beneficial during retirement days. Your retirement income will work for you and earn you big savings when invested wisely.
Cutting corners
This does not imply changing of lifestyle. It means cutting down unnecessary expenses that eat up your savings. Your expenses are more than you think. When you start looking around you, you realize that you are spending way more than you are saving. Retired couples can also consider living in a low rent house or giving up a part of their house for rent. Saving on living can make a considerable difference in your retirement days.
Taking up a part-time job
People take an early retirement due to various reasons like health issues, job change, or need of a break. Early retirement does not mean one has to completely stop working. One can consider other job options such as a part-time job, which can give extra income as well as bring some change. You can still invest some amount from your other job to build your portfolio and still get good returns.
Start building portfolio early
If you are sure of your life-goals and know that you want to retire early, it would be a wise move to start building portfolio early on and focus on long-term growth. Starting early has its own advantages when it comes to retirement wealth. When you retire, you are not cash-strapped or dependent on any other income, as your portfolio is working for you.
Pursue your hobby
If your spouse is still working, you can take early retirement and pursue your interest. That way, you can use one income for day-to-day spending, and other income for savings. Many people have other ambitions for themselves which they could not fulfill during their work commitments. Early retirement gives them the opportunity to explore in other areas of income. One can achieve balance and satisfaction when your heart is at the right place.
Retiring early is not at all that impossible when planning is done the right way. Once your debts are cleared and college tuition loan is all paid off, work on your goal towards early retirement. Once you retire early, your mind is clear and is capable to think much better in other directions as well.
