Though practically everyone views the number 65 as the magical age at which they will retire and start living the life they always wanted to, who says that 65 has to be the precise age to retire ? Why not 55 or even 45? While many people may feel that retiring early, even by just a few years, is an unrealistic expectation, this definitely does not have to be the case. Instead, consider making a few small lifestyle adjustments that will have significant, positive financial impacts later in life. Prior to consulting with a financial advisor in NJ,
consider the following eight steps which will help to save the most money for an early retirement.
- Live below ones means. While this does not mean forgoing basic necessities, it does mean that eating out every night and expensive coffee habits could be contributing to a later retirement age. Instead of multiple courses at restaurants, cut back to just an entree. Once this change has been made, consider cooking at home a few days each week. Other ways to save include finding a cheaper phone plan or even cutting down on expected monthly expenses by choosing less costly alternatives. Such choices will save hours of work in the future.
- Pay off debts. While this is intuitive, many people are content to let interest accumulate on their credit cards and other loans. Unfortunately, these interest rates will only get higher with each minimum payment, and the balances will increase as well. As such, start paying more than the minimum balance each month so that monthly income can be better spent on concrete things, rather than ephemeral interest.
- Consider other overlooked resources. While this does not necessarily mean that an inheritance is on its way, know that unexpected cash can often fall into someone’s lap. The question then becomes what to do with it. Rather than spending needlessly, resolve to automatically put that money into a retirement account so that it doesn’t spur wasteful spending habits. Furthermore, the money will be there upon retirement, just waiting to be enjoyed.
- Pick up odd jobs. People often have spare time in the day that they fill with watching television or browsing the internet. They may even do so at their full-time jobs. Rather than spending time in this way, consider engaging in something that can earn more money. Sitting on the computer? Take surveys for money or create a “For Hire” notice to advertise marketable skills that others can outsource at a reasonable rate.
- Invest early. Starting a retirement investment account should be a no-brainer, but many people put it off by convincing themselves that they will start investing with their next job, or when their employer matches their contributions. While everyone should take advantage of a program where companies match an employee’s 401(k) or ROTH IRA contributions, don’t wait. Ask the employer about the retirement savings plans that is offered, or consider starting an investment account independently.
- Vacation Smarter. While many people still view hotels as the norm for their travel, consider using discount rental sites such as Airbnb or HomeExchange.com to finance a cheaper vacation. And travel light! With minimal baggage, those cheaper airlines actually are cheaper than their major competitors.
- Buy used. Designer handbags and vehicles are status symbols for many working individuals, but they do not have to be purchased with retail prices. Find consignment websites online for designer threads – comb through theoutnet.com and therealreal.com for men’s and women’s high-end clothing. There are other vendors out there who do the same for high-end appliances, technology, and even vehicles.
- Consider enlisting. While this is a larger time commitment for many individuals, after six weeks of basic training, staying in the army reserves is a commitment limited to one weekend per month. And for that commitment, army retirees earn large pension plans and free health insurance, often for life. Note that military health insurance often extends to spouses and immediate family, sometimes for generations.
Saving for retirement does not have to be hard, nor should it consume the entirety of a person’s life. Rather, saving for retirement should be smart, and if done well, retirement can even come early. To learn more about retiring, contact a New Jersey financial advisor for advice and additional tips on how to better prepare one’s finances for early retirement.