More and more
people are becoming enamored with the idea of early
retirement. There is a rising sentiment to enjoy the .
good life. while you. re still young enough to fully
enjoy it. Some feel that it would be much more difficult
to participate in certain activities such as skiing and
traveling abroad if they were approaching 70 as opposed
to 50. Others simply want ample time to participate in
activities that they find rewarding or enjoyable.
However, in order for people to make this dream a
reality they will need to find a way to accumulate the
necessary funds.
Depending on
how early a person chose to retire, he may end up
requiring 30 to 40 years of living expenses. In many
cases this could equate to more time spent in retirement
than was spent in an entire career. This is a daunting
challenge to say the least. With this in mind, let. s
take a look at some of the ways a person might be able
to achieve this goal.
- Start saving
early. It would be almost impossible for an individual
to accumulate the necessary savings if they did not
start early in their careers.
- Fully fund
your Roth IRA. Currently the maximum annual
contribution is capped at $3,000 for an individual. It
is important to consistently aim to hit this goal.
Roth IRA. s are one of the few retirement savings
alternatives that allow a person to withdraw funds
early without incurring a penalty. These funds could
be particularly important until the Social Security
benefits begin to kick in.
- Contribute
to 401K. s. It is important for people to fully fund
any portion of a 401K that is being matched by an
employer. It would be silly to pass up on free money.
This is also a great vehicle to place any money above
and beyond the amount placed in the Roth and the
matched amount.
- Take
advantage of IRS code 72t. This code enables
individuals in certain circumstances to withdraw funds
from 401K. s and traditional IRA. s before the age of
59 ½, without incurring penalties or taxes. It is
important to note that once the contributions begin
they must be continued for at least 5 years or until
the age of 59 ½.
- Be willing
to sacrifice. It is very difficult to have your cake
and eat it too. In other words, an individual may need
to choose between living the good life and retiring at
a normal age, or living a more modest lifestyle and
retiring early. People who try to do both, may end up
accomplishing neither.
Retiring early
requires a good amount of hard work and sacrifice.
However, many people find that it is well worth the
effort. If you have decided to pursue this goal then
following the above mentioned tips should prove
beneficial.
