Friday, June 17, 2016

How To Retire Happy, 7 Simple Steps To Creating Your Ideal Retirement, June 2016, Key To Save Money, News.

How To Retire Happy, 7 Simple Steps To Creating Your Ideal Retirement How to retire early is a dream shared by most working adults. I'm going to give you a few simple tips that you can use right away to give yourself a better chance that you could be ready to retire early. The first thing is to start saving early. There's an old African proverb that says the best time to plant a tree is 20 years ago, the second best time is today. The same is true for saving for your retirement. No matter what age you are, the time to start is now. If you're already saving money, now is the best time to begin saving more. Here's a quick story about two friends, Steve and John who both just happened to turn 30. Steve tells John that he is going to start saving money in an IRA account, not a lot, just $2,000 a year. He saves $2,000 a year for 10 years and then stops. John decides that he will start saving "later". Right now John just has too many expenses, so he does nothing for the next 10 years. When he turns 40, after seeing how well Steve was doing with his savings, John decides that he would start contributing to an IRA account, and begins saving $2,000 a year for the next 25 years until he turns 65. Steve contributed a total of $20,000 over a 10 year period. John contributed $50,000 over a 25 year period but started later. Who has more money for retirement at age 65? Assuming they both average 8% per year... Steve's money would have grown to $214,301 John's money would have only grown to $159,909 Even though Steve contributed less than half as much as John, he still ended up with more money because of the 10 extra years of compounded returns. The moral of the story, start saving as early as you can. This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing. Manage your expenses. As you get closer to retirement, you will want to really hone in on your expenses. Start keeping track of what you spend money on right now, and what expenses might be different in retirement. Think about where you're going to live. Do you plan to stay in the house you live in now? Where you live might be one of your biggest expenses. If you really want to retire early, you could consider downsizing your house, or even moving to a less expensive area. Also, if you have any outstanding credit card balances or other loans, it probably makes sense to really work towards paying those off. Retirement is all about cash flow, money coming in and money going out. Paying off debts can significantly improve your retirement cash flow. Consider working part time. Getting a part time job can be another great way to enable you to retire early. Especially if you're retiring before you begin collecting Social Security, the money you make from a part time job can really help you through some of the early years. If you can find something fun, then its even better. I have several clients that work at their local golf course. Not only do they make some extra money, but they get to golf for free. Take advantage of employer plans. Make sure you are fully taking advantage of all the retirement benefits offered through your employer. If your employer still has a match, make sure you are at least contributing enough to get the full contribution from your company. This is free money. Don't leave it on the table. Also, many large companies offer contributory pension plans in addition to their regular pension programs. This is usually their way of taking care of their best employees and it's usually a pretty good deal. If your company offers a contributory pension plan be sure to look into it, and, if it makes sense enroll as soon as possible. Some public pension plans, like the ones for school teachers allow you to buy years of service. Another great way to set yourself up to retire early if its available. One final thing I'll mention here is that, many of the pension plans offered from large companies have what is essentially a Social Security bridge payment. If you retire before age 62, they will pay you an additional pension payment each month until you turn 62, and become eligible for Social Security. And lastly, Can you retire today? You would be amazed at how many people we meet with who are actually ready to retire right now. After running a detailed long term cash flow projection that includes, taxes and inflation, you may determine that you are in a strong enough financial position to retire today.

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