Some tips for early retirement planning
In this day and age, the pressure of work-life balance has taken a toll on many Americans. Thus, the concept of early retirement has been gaining more traction since the last few years. Once considered the whims of the super-rich, early retirement has become an attainable goal for many Americans by following a disciplined approach towards finances. Here are the few things you can do to improve the early retirement planning process.
Ramp up your Savings
If you want to retire early, you would have to forgo the expenses you so dearly love. By increasing your savings, you can increase your retirement funds, thereby ensuring a comfortable retired life. A trade-off has to be made. If the rat race seems to bother you more than the discomforts of not partying every weekend, then it is a easy decision to make. Live below your means and save big, as this is the essential mantra for early retirement planning.
Avoid the Lifestyle honeytrap
When earning well, it’s very easy to fall into the trap of a luxurious life. To “enjoy a weekend” means splurging on things that can forever keep you working. The more you spend on these lifestyle “essentials”, the longer you need to work and the more entrenched you become in the mad hustle for more money.
Take advantage of Tax Savings
With countless options available to save on taxes, it’s a no-brainer to opt for tax saving schemes available in America. The shocking truth, though, is the lack of awareness regarding these options. While 401(k) and 403(b) plans form the bulk of tax savings, they can be useful to not just complement but also enhance your retirement funds if your employer matches your contribution. In addition, you can opt for the Health Savings Account that can double up as your health expenses manager, as well as a savings option for saving on taxes, where the withdrawals are free for medical expenses. In some cases, investments are made via your HSA account into other funds.