As the years go by, retirement age keeps getting pushed back further and further. There are various reasons for this. For one, we are living longer, so we need to save for more years. For another, prices are rising faster than income, and saving for all those years is more difficult.
But does difficult mean impossible? Nope. But if you would rather retire at 55 than 67, you need to get to saving for retirement now. Below are some tips for saving for early retirement that can help you.
Life happens, and when it does, we tend to dip into savings. But once you start, it can be hard to stop. Sure, you take care of those necessities first, but then there are those little expenses that build up, and you find yourself asking if it would really be that bad to borrow a little more from your savings. Avoid this temptation by creating your cushion. This should be the equivalent of three months of your earnings and should be kept in an account separate from your savings.
What defines living well? In our culture, we are told it is things like modern finishes in your home, technology that is a couple years old or less, new clothing, fancy vehicles, and other things in that realm. But the problem with this luxurious lifestyle is that it eats away at your money. You have to ask yourself if living well means living in luxury or if it means retiring early and securely. Most of us spends thousands, even tens of thousands or more each year on items we don’t really need, but we think will make our lives a little bit better. Remember: you don’t become rich by spending money; you become rich by saving and investing it.
We all have a list of milestones we want to achieve, and we often have them listed in the order we want to achieve them in. For many adults, it looks something like this:
But putting saving at the bottom of the list is unwise. Waiting just six years, depending on the amount you save or invest each year and your interest rates over time, could result in you having half as much money when you retire. Six years—that’s it.