How to Retire at 55: Your Guide to Early Retirement
Do you dream of retiring early, but doubt that you can actually make it happen? Check out our simple guide on how to retire at 55 – you might be surprised.
As Americans have a harder time saving, the average retirement age continues to rise.
In 2016, the average age of retirement was 63. Many expect that number to rise, however. In fact, nearly 25 percent of employees under age 30 expect to work well into their 70s. One-third of workers in their 40s felt the same.
If that paints a bleak picture for you, don’t worry. With some savvy financial planning, you can retire early.
Read on to learn how to retire at 55.
Here’s How to Retire at 55
If you’ve been ignoring your retirement fund, you’re not alone. Unfortunately, almost half of all American families have no retirement savings. That lack of planning ranked first for 46 percent of people surveyed about their top financial regrets.
You can save yourself from major regrets if you start saving now. Here’s our guide on how to retire at 55.
Pay Down Your Debt
The first rule of building savings is to pay down your outstanding debt. If you have student loans or credit card payments hanging over your head, it’s time to get serious about your payments.
If you’re feeling overwhelmed, try paying off your smaller debts first. You’ll see your efforts snowball as you tick each payment off your to-do list.
Cut Back on Luxuries
If you want to live the good life at age 55, you’ll need to cut back now. If you don’t already have one, establish a firm family budget. Slash non-essentials wherever you can.
Your future self will thank you for your frugality.
Save More of Your Income
Traditional wisdom says we should all save somewhere between 10 and 20 percent of each paycheck. If you want to retire early, you need to increase that number.
Think of it this way: if you retire at 55, you need enough money to sustain you for the next two, three, perhaps four decades. Since you’ll be living the good life, dealing with increased medical costs as you age, and accounting for inevitable inflation, your annual cost of living is likely to be much higher than it is currently.
Increase Your Wealth
This may seem like a no-brainer, but many would-be retirees underestimate how much income they could be bringing home each month.
If you want to retire early, you need to maximize your wealth whenever possible. That means accepting higher paying jobs, working side hustles or freelance gigs, and investing in low-risk, high-quality stocks.
Take Advantage of Work Benefits
If your employer offers retirement benefits, take advantage of them.
Contributing even the minimum to your 401k will help you down the road. If your employer is offering to match your contributions, you’re leaving money on the table every time you fail to contribute.
The most important way to retire early is to start saving immediately. It takes decades of diligent work to build up a healthy retirement fund. If you put it off, you won’t succeed.
Remember, you’ll have to make sacrifices now, but the payoff will be worth it.
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