If your investment goals and dreams rely on winning the lottery, it’s the best time for you to look for another way to prepare for your retirement. Early retirement planning, though will not give you instant gratification, will surely grant you a wealthy nest egg to sit on comfortably in the future.
Based on the study conducted by the American Savings Education Council in Washington, D.C. through the 2003 Retirement Confidence Survey, only 21% of the saving citizens of the U.S. are confident enough that they will live contentedly and at ease after they retire. The research also showed that three in every ten workers have not started saving money for their retirement yet.
Debt and Retirement Planning
Financial planners and advisors strongly believe that debt is the chief restraint to growth of any investment. Thus, it’s vital that you start getting rid of your debts, particularly if you are dealing with debt that comes with high rates of interest like credit cards.
Designing a Retirement Plan
Determine how much your current way of living costs you. Then, consider the type of life you desire to have after your retirement. You should realize that you might retire at the midpoint of your life, so take your long-term health care expenditures into consideration.
An excellent tool to use when looking at early retirement planning is an expense calculator. This can help you get a good look on how much money you can save to generate that kind of income upon your retirement.
Always Think in Twos
This is not simply about having plan A and B. Your financial plan should cater to the needs of the two stages of retirement; before and after reaching 59 years of age. At the outset, lock in sufficient amount of money for the after-59 phase of your life with investments like IRAs, 401(k), annuities, pensions, savings, and Social Security. If you are thinking about investing your account in the stock market to obtain high return on investment, you should familiarize yourself about the stock market risks so you can manage your portfolio efficiently.
Funding your pre-59 phase of retirement is also critical. Recognize your assets that produce returns. You also want to start investing more insistently, since aggressive investments make good returns. If your present residential property doesn’t fit your retirement lifestyle, you can take advantage of the Taxpayer Relief Act of 1997, which permits you in many instances to save the capital gain when you sell your house. Such funds can assist you in the first years of your retirement.
The Tax-Deferred Benefits
Maximizing the funds that you place in your retirement account will keep your retirement years financially secured. Keep in mind that retirement accounts are win-win solutions provided that you invest continuously in these venues. You can benefit from compounding and tax shelters for the years to come.
Investing for Retirement
Proficient early retirement planning encourages you to place your available capital in non-tax-sheltered mutual funds. Study the most profitable retirement investing vehicles so you can make a decent return. Explore the mutual-fund columns of newspapers or business magazines and look for funds with no commissions and no custodial fees.