early retirement

Buying a New Life: How Much Do I Need to Retire?

December 19th, 2013  |  Published in early retirement  |  Comments Off on Buying a New Life: How Much Do I Need to Retire?

If you’re not counting down the days until you can retire, you’re surely counting down the dollars. Most people spend the majority of their working lives stacking one dollar atop the next, hoping that their efforts will one day guarantee them a stable future in which they do not have to wake up before 10 a.m.. Yes, retirement is the distant goal of many a worker, but few people know exactly how much money they will need before they can finally punch out of work for the last time.

The reason there is so little information in the way of hard numbers is that there are too many variables for a rigid formula to apply to everyone. Everyone’s needs and lifestyle are different, and often the further you are from your actual retirement, the harder it can be to predict a concrete goal. Spending does typically decrease after retirement, so you should be able to live on approximately the same amount you currently do if not slightly less. You can click on this link to find out more.

However, the unknown is a constant hindrance to extrapolation. Factors such as health and financial commitments made on the road to retirement have a marked effect on the target amount. For instance, you may need much less income to finance your day to day activities after retirement, but a move to a nursing home or an unexpected maintenance expense on your home, property or hobbies could quickly drain your retirement stash and negate your years of careful planning. You could also live for days or decades after you retire, so a definite answer to your question is difficult if not impossible to come by.

Therefore, the amount you need for your retirement is less of a number and more of a formula. Since we have already established that your current salary is enough for you to live on, it should serve as a base for your calculations. Ideally, you should save at least the equivalent of a full year’s salary every three years to keep on track for retirement.

For example, a 30 year old worker earning an average of $50,000/yr with a target retirement age of 65 can save well over $600,000 just in principal using this strategy if he starts right now. This type of gradual process allows room for potential changes in pay rate and employer while still maintaining a workable strategy that will ensure you do not outlive your savings.

A growing concern is the availability of Social Security for distant retirees. While the system initially supplemented the pensions, savings and other income of retired senior citizens, the program is rapidly exhausting its funding and its future is highly uncertain.

While previous generations of retirees could factor Social Security income into their retirement strategy, younger workers will likely not be so lucky and have to fund their retirement without outside assistance, greatly increasing the amount necessary to retire.

Personal choice is another determining factor in the required sum of a viable retirement fund. Some choose to lead quiet, homebound lives after retiring from the working world while some dedicate their golden years to adventure and expensive leisure. Obviously, you will need to save more if you plan on traveling the world after you retire as opposed to spending your retirement years knitting.

Nailing down a definite goal for your retirement savings can be an intimidating prospect. The uncertain and constantly changing nature of life makes peering decades into the future an inexact science at best. However, there are some guidelines and best practices than can help you get at least some idea of how much you will need to retire comfortably.

Can Investing be the Key to an Early Retirement?

December 19th, 2013  |  Published in early retirement  |  Comments Off on Can Investing be the Key to an Early Retirement?

An early retirement is something that we all crave. Saving for an early retirement, however, is much harder than you’d originally imagine and with the cost of living rising, it is becoming harder than ever to secure an early retirement that will see you through the rest of your life. For this reason, many people have started to look for alternate ways of investing their money and transforming their savings.

The financial crash back in 2008 made people completely reconsider how they would save money for their retirement. Beforehand, when it was generally assumed that starting a savings account and contributing regularly was the best way, the landscape has now changed. With thousands losing all of their saving and thousands more losing at least part of them, people have left banks because they offer little to no interest. Now is the perfect time to move your savings elsewhere and reinvest to gain an early retirement.

Why Do You Need a Retirement Nest?

Before you start investing your money and coming up with alternative investment strategies, you need to fully understand the reasons why you’re creating a nest egg.

  1. To keep up with the rate of inflation.

  2. Retirement nests allow you to balance the uncertainty of the future by utilising your income to protect you against any sudden costs that may arise.

  3. You can use it to plan your estate and your will just in case the worst case scenario arises.

As a direct result of the financial crash and the speculative nature of pension pots, people like to diversify their assets to protect them and hopefully maximise their income so that they can retire early. Due to this, currency markets have become much more popular with investors as they look towards new opportunities.

Could Forex Markets Help You Retire Early?

Forex markets give you a greater degree of control over your finances than you’d imagine. By diversifying your asset portfolio and investing strategically, you have a great opportunity to minimise your losses and maximise any gains. Spreading risk and diversifying your asset portfolio is key to successful retirement planning and the more effectively you do it, the greater your chances of retiring early. So, exactly why has forex become so popular with people seeking an early retirement?

  • Hedging: You can split your assets between bonds and equities. When you convert assets into the local currency, this makes it easier to turn a profit.

  • Leverage: Most forex brokers allow you to trade on the margin. Depending on your account type, you only place a fraction of the trade but you gain the maximum possible profit (or losses).

  • Anywhere, Any Time: The size and scale of forex markets means that you can trade from anywhere in the world 24 hours a day, 5 days a week. As well as this, mobile trading apps and trading robots have made trading easier than ever.

To conclude, alternative investing strategies such as forex trading have become prominent after the 2008 financial crisis. Because bank accounts are relatively stagnant, alternate investment strategies have become essential for people seeking an early retirement.

Early Retirement and Social Security

May 4th, 2012  |  Published in early retirement, Social Security  |  3 Comments

I probably don’t have to worry about early retirement since I am way behind on my retirement savings but for those of you who are considering early retirement and planning on collecting Social Security there are several things to consider.

Millions of Americans are coming up on their long-awaited break from the workforce. With the first wave of the baby boomer generation reaching the age to begin to draw Social Security, many people are wondering if it is worth taking the hit and retiring early. This plays into both Social Security and withdrawing the retirement accounts, which usually hold a high penalty and taxes for early withdrawal.

What Decisions Do I Have To Make?

According to the U.S. Census, over the next five years more than 15 million people will begin to cross into the age bracket for early retirement; 62. Many of these people will consider retiring early and collect Social Security benefits. Some may consider waiting until the normal retirement age. Read the rest of this entry »

Book Review: Work Less, Live More

July 9th, 2010  |  Published in early retirement  |  Comments Off on Book Review: Work Less, Live More

Work Less, Live More: The Way to Semi-Retirement
The subtitle of this book is, “The Way to Semi-Retirement” although I read an earlier edition which was subtitled, “The New Way to Retire Early.” From reading the editorial reviews it appears the second edition contains more information for late bloomers and more about health care but is otherwise the same.

This book deals a lot with the psychological side or retiring early as well as the financial aspects of early retirement. The author has advice on living below your means, putting your investing on autopilot, how to take 4% forever, and stop worrying about taxes. This is mostly standard personal financial advice with a few small twists but it is good advice and helpful for those who don’t already know it.

The chapters that focus on the psychological aspect of retiring early will probably be more beneficial for those who are already knowledgeable about personal finance. Chapter titles include, figuring out why you want to retire early, do anything you want but do something, don’t blow it, and make your life matter. That gives you a pretty good idea of the subjects covered.

Personally I didn’t find this book all that helpful but that might be because I was already have the early retirement mindset and am knowledgeable about the personal finance topics covered. Judging from the reviews many people have found this book very helpful to their early retirement planning. If you are looking for a “how-to” type of early retirement book than this is probably not the book for you. However, if you are looking for a “why” and “what” type of early retirement book than this book is probably what you are looking for.