Do you want to retire early? It's something that most Americans dream of, but it often seems impossible. However, while it may be hard and take extra work, it's far from impossible. In fact, here are a few steps to get there.
Max Out Traditional Sources
While everyone saving for retirement should be doing as much as possible to save on a regular basis, it's even more important for those with an early retirement goal. Most American workers have access to traditional retirement plans, including Traditional IRAs, Roth IRAs, company 401(k) plans, and SEP or SIMPLE plans for the self-employed.
No matter what other steps you take, you usually do well to take advantage of any company match offers first, then contribute up to the maximum of whatever retirement options you already have. This gets you you well on your way and is a relatively easy first step.
Plan with an Advisor
After maxing out your retirement plans — or even while still striving for this goal — begin meeting with a retirement planning advisor. These professionals work with many other clients who have the same goal to enjoy a fruitful and pleasant retirement. They may also have clients who have similar early retirement goals as you do. Tell them your plans, your timelines, what other savings or purchase goals you have, and what steps you've already taken.
Work with your financial planner as a partner, recognizing that he or she is there to help you make money for your goals. Stay informed and stay honest about your situation so you can get the best results.
Utilize Alternative Options
Traditional retirement savings will likely not be sufficient to get you to early retirement on their own. You'll need to research and seek out alternative investments with a higher rate of return. Many investors find real estate a wise choice. Rental units usually grow in value at a higher rate than the stock market and they produce income right from the start. You may also want to investigate side business opportunities that you can build over time to create an income stream solely for investing.
Living a frugal life may not be romantic, but it's one of the biggest aids in achieving early financial independence. You should learn how to budget early and well, focusing on the goal of freeing up as much income as possible to shovel into investments. Frugal life does include denying yourself some things, but you can generally find ways to keep the things that bring the most joy to your lie while excising those things that just seem to have value.
Ready to start on your quest for early retirement? Follow these four steps to get on the road to success.