In the United States, the average retirement age is 62 per federalreserve.gov.
But what if you could retire by 55? Believe it or not, it’s possible.
Are you tired of working long hours for little pay and no retirement benefits?
If you’re ready to retire, but don’t think you can afford it, you’re in luck. It’s possible to retire by 55 by making a few simple changes to your budget and saving habits.
In this article, we’ll show you how to make the most of your money so you can enjoy your golden years without worrying about finances.
Here are five steps to help you achieve early retirement.
Set a retirement budget
Plan ahead: have a retirement savings plan and budget
Decide how much money you’ll need each month in retirement. This will depend on your lifestyle and expenses, so be realistic. Be realistic and add 20% to the figure to be on the safe side.
No one knows exactly how long they will live, but if you plan to retire at 55, you may need to budget for another 30 or 40+ years. Even if you think you will die sooner, you should still plan for the possibility that you will live longer than expected.
When creating a retirement budget, there are a few important factors to consider. The first is how much money you will need to live comfortably. In general, you will need about 70-80% of your pre-retirement income to maintain your current lifestyle.
Another important factor is what expenses will go down in retirement. For example, you won’t have to pay for commuting costs or daycare. On the other hand, you may have to pay for health care or housing costs.
Finally, it’s important to account for unexpected expenses. Retirement is a time of change and there are many unknowns. Unexpected costs can range from car repairs to dental work.
By taking all of these factors into account, you can create a realistic retirement budget that will help you enjoy your golden years!
There are several factors to consider when creating a retirement budget:
- Determine your retirement income sources
- Calculate your expected expenses
- Review your current spending habits
- Create a budget that reflects your desired lifestyle
- Account for unexpected costs
- Revisit your budget regularly and adjust as needed
Make sure to include things like:
Housing costs (rent/mortgage payments, repair costs, yard care, and so forth)
Transportation costs including car payments (Repair costs, gas, taxes, insurance)
Utilities (Electric, gas, property taxes)
Healthcare expenses (Insurance, medicine, unexpected needs like wheelchair ramp in house)
Travel and recreation (golfing, movies, eating out, and so forth).
Each person is different, so you have to create a budget for yourself.
Invest in a retirement fund
Invest money wisely: think long term
When it comes to our finances, most of us think short-term. We want what we want, and we want it now. But if you want to be able to retire comfortably, you need to start thinking long-term. One of the best ways to do that is by investing in a retirement fund. A retirement fund allows you to save money over time so that you can use it later in life.
Later we will go into what funds you should be maxing out now so you can retire early but here is a shortlist:
- HSA (Health Savings Account) Max this account now! Hopefully you can self direct the funds.
- Roth IRA’s
- Roth 401K
- Life Insurance (Some people dog on life insurance fee’s but I will explain how to use this vehicle to help you retire quickly)
FYI the way to retire by 55 is to have tax-free investments. The less income you show the lower your tax bill and healthcare costs before age 65 will be.
Downsize your lifestyle
Save money: live below your means
In order to save money, many people suggest that you “downsize your lifestyle.” This means living below your means and not spending more than you earn. Downsized living can be difficult, but it’s worth it when you’re able to save money each month. One way to downsize your lifestyle is to get rid of cable TV. This can save you up to $100 per month. You can also reduce your grocery spending by meal planning and cooking at home.
It’s no secret that the average American lifestyle is expensive. From mortgages and car payments to dining out and cable TV, there are a lot of expenses to keep track of. And if you’re not careful, they can quickly add up.
Downsizing doesn’t mean giving up all your luxuries; it just means being mindful of your spending and living below your means.
Health Insurance (Medicare Generally Doesn’t Start Till 65)
Health insurance is a form of insurance that covers the cost of an individual’s medical expenses. It is an important tool to have in order to protect yourself and your family in the event that you need medical care. There are many different types of health insurance policies available, so it is important to compare rates and benefits before selecting a policy.
Stay healthy: eat well and stay active
As you age, staying healthy becomes increasingly important. Here are a couple of tips to help you stay in good health as you get older. Most people in their 30s or 40s don’t realize how fast your health can go downhill as you age. Sitting behind a desk working for a BOSS accelerates this issue.
1. Stay active. Exercise is one of the best ways to stay healthy as you age. It helps keep your body strong and your mind sharp.
2. Eat a healthy diet. Eating healthy is important at any age, but it’s especially important as you get older.
Being healthy allows you to fully enjoy retirement. It’s not always easy to stay healthy, especially with the limited time we have in this crazy world before retirement. Do your best and you will reap the rewards when you retire.
How to retire by 55 won’t be easy
In conclusion, retiring by 55 is a realistic goal that can be accomplished if you start planning for it now. There are many things to consider when planning for retirement, but with careful planning and some simple steps, you can be on your way to a comfortable retirement. So, start planning today and you can be enjoying your retirement years sooner than you think!