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Want to retire early? Whether you have dreams of volunteering, lazing on a beach or enjoying your retirement overseas, getting there can seem tricky. With high costs for things like health care, housing, child care and transportation, it can even seem like an impossible dream.
Punching out early — permanently — doesn’t have to be a pipe dream, though. It’s not only possible, but doable. The catch: You’ll have to work (hard) at it.
Start saving now
Gretchen Hollstein, Partner and Senior Investment Advisor at San Francisco Bay Area-based Litman Gregory says not starting early is one of the biggest mistakes people make when it comes to saving for retirement.
If you start saving £10,000 a year when you’re 25, which is £833 a month, you could have 300,000 by the time you reach 55, which may be enough to call it a day on working.
Jason Sherr, Senior Vice President and Investment Officer at Wells Fargo Advisors, says;
“Most people do not have a plan. Get something in place even if it is really basic, the plan helps to get you motivated and you know what you are working towards.”
Plan as far into the future as possible
With life expectancies rising 87 for women and 84 for men in the UK, more people will be living well past the age they thought they needed to plan for.
That also makes it important that people both plan ahead and see themselves as the protector of their future self.
Planning isn’t a one-and-done exercise though as life tends to throw up more than one curveball over a lifetime.
Go through different scenarios to see how your plan fares if things go well, poorly and everything in between and then you’ll be able to place more effectively.
You should start with 2019 and look at what the year has in store for you, does it include a holiday? buying a new car? moving house? If so, try to make a month by month plan in order to save where you can.
Businesses plan their strategies for the year ahead in January in order to grow and expand, and it should be no different for you if you want to start saving.
Pay off as much debt as possible
Maintaining outstanding debt balances, whether for loans or credit cards, makes your overall expense load higher.
If your debt is tied to the prime rate or some other floating rate, your interest rates could rise at the worst possible time, like just when you’re facing a large unexpected expense, loss of income or some other financial shock.
So pay off debt as quickly as you can.
Then use the cash flow you free up to add to your retirement savings.
For help and advice on how to reduce your debt, read any of the dedicated articles linked below.
Successful investing requires time, commitment and most important, a diversified portfolio. People face the most struggles with selecting investments and then re-balancing them as the market moves.
Property is usually a safe bet but if you don’t have the capital to invest, check out some of the best articles on MoneyMagpie for investing linked below.
Try to save money every day
A good habit to pick up is to try and save a little bit of money every single day.
That may sound challenging but it is actually an incredibly good way to save up for an early retirement.
Whether you save a pound by leaving that packet of Doritos in the shopping trolley, or turning the heating down by a few degrees, it all adds up.
If you can get into the habit of saving a few pound every day, you can save a fortune by the time it comes to a potential early retirement.
The articles below will give you advice on how to start saving money every day.