It’s no secret that people are working longer than ever before. The average retirement age in the U.S. is now 67, climbing yearly. But what if you don’t want to wait that long? What if you’re going to retire as early as possible?
There are many benefits to retiring early. First, you can enjoy your golden years while you’re still young enough to enjoy them. You’ll also have more time to travel and spend with family and friends. Lastly, you’ll be able to pursue other interests and hobbies. However, it can be a lot more challenging. But not if you follow these tips. Here are four ways that can help you achieve your goal:
Use Your Home Equity and Refinance
If you have equity in your home, you can use it to retire early. You can either sell your home and downsize or take out a home equity loan and use the money to pay off your mortgage. This will free up extra cash that you can use to invest or save for retirement. It’s a smart option if you can purchase a cheap home a few years ago since home prices have skyrocketed over the past few years.
Refinancing your mortgage is another option. If you qualify for a lower interest rate, you’ll be able to save money on your monthly payments. You can use this extra cash to make additional payments on your principal balance, which will help you pay off your mortgage faster. Once your mortgage is paid off, you’ll have more disposable income that you can put towards retirement savings.
Experts highly suggest refinancing any government-based loan you’ve made, especially FHA loans. The benefit is that an FHA loan already has a reasonable interest rate, which means you’ve already saved a lot from it. Refinancing your FHA loan and using it for investments means you can get much more from your money. It’s one of the best options to help you build up your funds for retirement.
FIRE
FIRE stands for “Financial Independence, Retire Early.” It’s a movement that’s been gaining much traction in recent years. The objective is to save as much money as possible so that you can quit your day job and live off of your investments.
Two main ways to achieve FIRE are to save a high percentage of your income or make a high income. You’ll need to be highly disciplined with your spending, whichever route you choose. You’ll also need to invest your money wisely.
One of the best ways to invest for FIRE is to use index funds. Index funds are mutual funds that track a specific market index, like the S&P 500. They’re a great way to diversify your investments and minimize risk.
Another option is to invest in real estate. This can be a great way to generate passive income and build long-term wealth. You can either purchase rental properties or invest in a real estate crowdfunding platform.
Either way, you’ll need a solid investment plan and stick to it. FIRE isn’t for everyone, but if you’re disciplined and patient, it can be a great way to retire early.
Save More Than the Average Person
This one is pretty simple: save more money than the average person. The average savings rate in the U.S. is just 5.5%. That means most people only save around $550 for every $10,000 they earn.
If you want to retire early, you’ll need to do better than that. Aim to save at least 10-15% of your income. If you can do that, you’ll be well on your way to a comfortable retirement.
There are a few easy ways to save more money. First, make sure you’re taking advantage of employer matching programs. For example, if your company offers a 401(k) match, make sure you contribute enough to get the full match. This is free money that can help you boost your retirement savings.
Another way to save more is to Automate Your Savings. For example, you can automatically transfer your checking account to your savings or investment account. This way, you’ll never even see the money and be less tempted to spend it.
You can also try the 50/30/20 budgeting method. This method allocates 50% of your income to essential expenses, 30% to discretionary expenses, and 20% to savings and debt repayment. Again, this is a great way to ensure you’re saving money monthly.
Start a Side Hustle
A side hustle is a great way to boost your income and save more money for retirement. There are endless possibilities when it comes to side hustles. You can start a blog, start a YouTube channel, or even do some freelance work. It’s a great option to start earning more money for retirement.
Retiring early isn’t hard if you’re willing to change your lifestyle. By following the principles and tips above, you can quickly retire years before you thought possible. All it takes is a little bit of discipline and some smart financial planning. So what are you waiting for? Start planning for your early retirement today!
