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Strategies to Retire at 50 by Cleo Gib
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Strategies to Retire at 50 |
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Finance & Investment
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Life expectancy is up, and people are healthy enough to continue working well into their golden years. You may be able to work past 50 or even 70, but you don’t have to. With some careful planning and a little outside-the-box thinking, you can clock out of the office at 50, never to return to a cube. A financial advisor in Greenville, SC, can assist you in this challenging but rewarding endeavor. Here are a few strategies to help you get off the clock and into retirement as early as 50 years old. The Sooner, the Better Obviously, if you want to retire earlier, you should begin saving as soon as possible. The later you begin saving, the more you have to save. If you saved $10,000 when you were 20, you’d have more than $57,000 when you reached 50. This is due in part to the magic of compound interest. In short, compound interest is earning interest from interest. Even in today’s low-interest market, this means setting aside $1,200 per year, or about $100 per month, in an interest-bearing account at the age of 33. This will net you a pay-off of $60,000 at age 70. Compound interest works at any age, but you’ll see greater returns the sooner you start. Earning compound interest is a long-term strategy. You can maximize your gains by investing in accounts which pay out interest as often as possible—monthly interest is better than quarterly interest, quarterly interest is better than annual interest. A trusted advisor can walk you through which interest-bearing accounts will work best for you, be they high-interest savings accounts, certificates of deposit, or stock dividend payments. Save More If you plan to spend your days sans time clock at age 50, you probably need to set aside substantially more money each month than the average person. In the U.S., the average rate of annual savings is 3.7 percent. You’ll need to go well beyond that to retire significantly earlier than your peers. Some experts recommend trying to save up to 75 percent of your income. Easier said than done, right? But the following items can help you do so. Stay Out of Debt Debt is essentially the other side of the compound interest coin. You’ll pay interest on almost all kinds of debt. Having large debt payments also limits the amount of money you’re able to invest or save. There are financial advisors who may encourage certain kinds of strategic debt. If the item you’re considering purchasing with credit will decrease in value as you are continuing to make payments on it, skip it. If your goal is to retire at 50, this may mean buying used cars and not carrying any revolving debt, like credit cards. Downsize Your Home There are two benefits to downsizing. First, a smaller home will generally be less expensive than a large one, and having less room for stuff may help you to put money into savings instead of buying a big screen television for three different rooms in the house—not to mention lower mortgage payments mean even more money to set aside each month. Second, once you retire, having a smaller or less-expensive home means fewer expenses in retirement. Ideally, your mortgage will be paid in full at retirement time, but you’ll still need to pay taxes and insurance on your home and energy costs. Consider a Move No matter your retirement plans, you may want to make your home base in a cost-effective place to live. Let’s face it: It’s just less expensive to live in some U.S. localities than others. If you’ve made your career in an expensive coastal city, you should consider moving someplace where homes and living expenses cost less. That also means considering the tax implications of your retirement home base. Texas and Florida residents do not pay income tax. You should also consider property tax and sales taxes. Find an Advisor If you plan to retire at all, you need a financial advisor. However, if you hope to retire early, a trusted advisor’s advice and counsel is critical. Whether you’re seeking a financial advisor in Greenville, SC, or elsewhere, an advisor will help you set realistic retirement goals, and he or she will create a roadmap to help get you there.
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