By : Kathrine Kreger
Retirement is something that certain people think about as being far off in the future. The truth is that planning and hard work could allow a person to retire much early that normal. The process is not easy and still takes years although the rewards are more free time to spend with friends and family. There are five ways to help make early retirement a reality.
Stick To a Plan
One of the main steps that will make early retirement possible is to create a plan and stick to it from year to year. The plan should include how much money needs to be saved every year to meet an early retirement goal. The plan should also account for investment earnings from retirement plans. A professional planner can often help with this. It is important to meet or exceed the numbers in the plan in order to retire early.
The reality is that a person can retire earlier if the income of the household is higher. This means finding ways to increase income for years at a time. This could mean working towards a promotion or completing education to increase salary. Any unplanned increase in income will lower the expected retirement age or create larger savings for later.
Manage Retirement Plans
Using retirement plans is essential for early retirement especially if there are matching employer contributions. This is the best way to grow savings safely over the years. It is important to take some active role in managing the plans. Reports should be carefully reviewed to make sure the investments are performing well. It is a good idea to talk to the plan manager and change investments if the account does not seem to be earning enough.
Switch to a Hybrid Loan
Saving money on a mortgage each month is another way to make early retirement possible.
The Department of Veterans Affairs (VA) offers special hybrid loans for veterans.
A VA hybrid loan is a type of adjustable rate mortgage (ARM). The difference is that
a VA hybrid ARM has lower interest rates that cannot rise more than 5 percent for the term of the loan although it can drop. This saves money if rates rise too much or if market rates drop over the period before retirement.
Be Proactive About Health
Medical bills can wipe out savings because of emergency costs. One way to avoid this is to pay attention to health and be proactive. This means getting regular checkups and preventative screenings and treatments. Eating right and exercising helps as well. Maintaining good health will keep medical expenses to a minimum until early retirement.