If you are one of those people in your early twenties who has the idea to retire at the age of fifty, travel the World and have a fabulous life, we commend you in every way. Firstly for having the dream at an early age and putting a plan in place to achieve the goal. Unless you win the lottery or happen to get lucky with an investment or business opportunity, you have to know how much you need and plan your savings accordingly.
The first and most important thing is to start your retirement savings plan as early as possible and to save as much as possible and paying the least amount of tax.
START AS EARLY AS POSSIBLE
Irrespective of the age you start your retiorement savings program, it is essential to have something to aim at. Use the retirement calculators provided on the “Retirement calculators” page to plan your savings. Here you can run a few scenarios. An example would be entering your current age, current annual rate of saving and the expected return to give you a $ amount at retirement age. You are able to use this retirement calculator to play with the numbers. For example, if you want to retire at 50 years of age with $2 000 000 then the calulator will tell you where you are falling short and how you need to supplement your current savings plan. Plan your retirement caclulator
PLAN YOUR RETIREMENT SAVINGS
There are many considerations
HOW LONG WILL YOU LIVE
Retirement at age 50 means you are going to need around 30 years of savings to cover your lifestyle if you live to the average age of 78.6 years old.
This is the average lifespan of people living in the USA.
If you are healthy or do not have any medical conditions which could shorten your life, your are likely to need need 40 or so years of savings to cover your exxpected life span. It is said that the generation who will live to over 120 years old have already been born. We need to consider advances in medicine that are designed to extent life as well. The last thing you want to do is find at age 75 that you are going to run out of money. At that stage in life it may be a lot more difficult to find work or start a business than one would imagine.
In life we need someone to Love, something to do and something to look forward to.
These words are true for any stage in life, so don’t stop dreaming.
TALK TO YOUR FAMILY & DOCTOR
If you are aware of any family medical conditions like high blood pressure, skin or other cancers, heart disease etc. It is very important tyo get yourself tested and try to mitigate the risk of these conditions having a marked affect on your lifespan. Sometimes, a simple change to ones diet made early enough in life can help extend your life.
Medical costs can have a severe impact on your retirement savings so be sure you have sufficient medical savings. Private medical treatments can be prohibitively expensive and certain treatments are not available to those relying of State run medical facilities. Weigh up the cost and potential cost of medical insurance with your doctor.
TAKE ADVANTAGE OF ANY TAX INCENTIVES FOR RETIREMENT SAVINGS
There are maximum amounts that can be saved tax free and everyone should start taking advantage of these maximums as soon as possibler in their working life. The opportunity to save tax free is lost each year you do not save the maximum amounts allowable. For example: If you save $10 000 a year of the max allowed $19 500/year in your 401K for the first 5 years of retirement savings you have lost out on the ability to save $9500/year for each of those 5 years tax free. You can never get that opportunity again. Think hard before you buy a new car or bigger house if you have not invested the maximum amount tax free.
THE FIRST 10 YEARS 50 – 60 YEARS OLD
An often overlooked item is the financing of the first 10 years of your retirement. If you retire at age 50 you will need to finance the first 10 years or face an early withdrawal penalty.
It is essential to make additional savings from your post tax income into a stock portfolio, simple savings account or brokerage accounts. These withdrawals are subject to tax on the returns from these accounts.
Have a strategy for these 10 years that will provide an income by doing consulting work, having a side hustle selling reconditioned furniture or anything else you may be interested in. At Retirement you shoulkd be doing what you Love withjout needing the money to survive, so bear thisin mind while you plan your exit.
Early retirement is a very challenging goal that requires planning and disicipline but it is possible. There are many who have not had a windfall like an inheritance, won the lottery or got lucky on the stock market and have saved and enjoyed a fantastic long, healthy retirement.
Keep going, it is possible!!
