Given the present state of affairs of our economy, . Yes, it could’ve been an viable option, if we were in the 1980s. Those were the times when the economy witnessed a strong bull market, followed by a company’s hefty pensions (a lifetime's source of income for the retirees) and the hastened delivery of the social security benefits.
Sadly, the situation has turned for worse over the years. This is only forcing baby boomers to stretch their retirement more than usual with the hopes of making their big decision work in their favor.
The question that bothers one and all is, do we have to work until seventy or beyond that? The compulsion here doesn't hold good for all of us. The reasons are:
Therefore, there’s no concrete proof to convince that you and me can afford to work past the age of sixty or seventy.
If you want to extend your work life, then that’s a different story altogether. Why? For you work seems to be healthier than lying idle the whole day on your arm-chair, reading books. This is correct as continuing with the present work will keep you mentally sharp and reduce your dependency on part-time jobs. Moreover, you get to socialize more when you work and that adds to your social experience curve. As per the studies conducted, you’ll stay healthier since interacting with people at social dos will lead to minimal instances of illnesses and promote greater life expectancy.
At the end of it all, working beyond a certain age, especially when you should be holidaying at a distant place with your spouse, is truly a different ball game.
Unconventional though it may be for many people to retire at 50, but then its not impossible as such. However, if you want to follow suit, then you must be willing to work your way through some unorthodox strategies. All your efforts to implement them will never go waste as there are several benefits of retiring prematurely.
Following financial tips will enable you to retire early at 50 with substantial amount of retirement savings to enjoy:
So, . As a result of this austerity move, your monthly housing cost would probably come down to $1000. This would, in turn lower your burden of building a huge nest egg and thus, will help you to spend your golden days comfortably with an asset value of more or less $450k.
Hence, you need to seek out opportunities to make the most of and to increase your income regardless of the kind of work you do, while keeping the difference as savings. The rule of thumb followed in savings is 3.7 percent , but given your ambition of retiring early you’ll have to save as much as possible and spend the least whenever deemed fit. So, your mantra should be to and spend just the 25 percent of it.
Actually, barter market in the country is a multi-billion industry according to the International Reciprocal Trade Association. So, if you can write well, have expertise in working with the computers, can develop new products or repair things, then trade you may use your skills in return for services you are seeking. There are certain bartering exchanges as well, where you can formally sign-up (with a fee) in order to broaden your area of operation. Make sure you understand the tax laws governing such a kind of incomes.
Apart from the above, you need to plan and plan well to cover any sort of financial crisis that may come up from time to time. Always make it a point to steer clear of withdrawing money out of your retirement plans. This is because you can’t get money out of accounts like traditional Individual Retirement Account (IRA) or 401(k) without paying a penalty fees. The same goes with the principal amount in your Roth IRA. Similarly, your home’s equity can benefit you by helping you to tap into it and thus, getting you closer to early retirement.
The icing on the cake is that the Internal Revenue Service (IRS) would allow you to exclude capital gains tax of $250,000 out of your home’s selling price as an incentive, provided you’ve lived in that house for at least two out of the last five years. The same capital gains tax incentive will get doubled to $500,000 if you’re married. By having $250,000 excluded from the gain that you’ve made on your primary residence as long-term capital gains tax (presently not more than 15 percent) would eventually save around $37,500 in federal taxes alone. Add all these and you’ll have strategies that cut can down the total time needed to accumulate a lump sum amount suited for retirement.