August 24, 2022
Does retiring early and enjoying freedom from your 9 to 5 sound like a dream come true? With time and planning, any retirement goal is possible. Read on for tips on building savings and more.
How early is early retirement? This can look different for each individual, but this goal could be decades before 65 or just a few years prior. By choosing a target retirement age, you will determine how aggressive your investment strategy will need to be in order to reach your savings goal.
To retire by your target age, it is essential to determine how much you will need annually to live comfortably by developing a retirement budget. Look at what you are currently spending monthly to figure out what expenses to expect in the future. To calculate the cost of living during retirement, you must consider your needs in the future. If you have a partner and dependents, do you have the budget to support their extra expenses? Does your partner have retirement savings to support you as well? Do you have an emergency fund prepared for unexpected expenses along the way?
A majority of your income during retirement will be provided through your investments and savings. To increase your nest egg in preparation for an early retirement age, it is important to have a diversified portfolio that could include mutual funds, your employer’s 401k, stocks, bonds and even real estate. A well-balanced portfolio includes a blend of stocks and bonds in diverse industries to protect your savings from downturns in the market over the long run in retirement. An accelerated investment strategy can be more risky, so make reasonable savings goals.
By contributing more to your mortgage payments you can reduce or eliminate debt before you retire. Not only will this be one less debt to worry about, but it will minimize the amount of retirement income that goes toward interest payments. To avoid debt in the future, plan for medical expenses with long-term care insurance or by starting a health savings account. Our team at Citizens First Bank can help you find the right strategy to become debt free with budgeting and debt consolidation loans.
Retiring before age 62 and claiming Social Security early means benefits will be reduced. If you delay claiming your benefit, your monthly amount will be increased for each month of delay. Weigh the pros and cons of forgoing Social Security benefits before you decide on a target retirement age.
Our experienced team will help find the right strategy to help you save for an early retirement. Citizens First Bank offers various saving plans and loan options to help you succeed in fulfilling your financial goals. Feel free to stop in, give us a call, or visit our website to schedule a meeting with one of our financial planners today.