Want to know how to retire early at 55? This is one of the most searched questions, in addition to how much do I need to retire early? As your trusted financial source, we've created a handy guide to help you prepare for your future and, hopefully, retire early.
What is Considered Early Retirement Age?
While many people want to know how to retire early at 55, others often ask what is considered early retirement age. If you need to self-fund your retirement, this means receiving social security benefits at 62, but your benefits could get reduced if you take your benefits before the full retirement age, which is 66 or 67. Want to know how to successfully retire early? Continue reading below!
Tips for Retiring Early
How much do I need to retire early? If you're starting your retirement savings at 30, you should have three times your current income saved for retirement when you reach 40. Once you hit retirement age, you should have 10 to 12 times your income, which should be a good amount to save to retire.
We have more tips! Let's take a look at how you can retire early.
Adjust Your Budget
Let's get a little tough. If you want to retire early, significant changes to your budget will need to happen. Remember, all of this hard work will pay off when you retire early. Some people live on half (or less) of their income while the rest goes into their savings, while others get a second part-time job where that money helps pay off bills sooner with the rest going into their savings. Do what's best for you.
Calculator Your Spending
If you like to plan things out and want to live on a small portion of your income, look at your monthly spending habits and note what will reduce and what could go up, then add what could get added later in the year. Take this number and multiply it by 12. For additional wiggle room, it's best to increase this number by 10% to 20%.
When planning your monthly expenses, also include health care and taxes. When you retire, you're leaving your current policy behind and will have to replace it. If you need further assistance, be sure to
Estimate the total Savings Needed to Retire
What you did above helps you keep your spending to the bare minimum. But what about your savings? If you're not good with numbers, you can follow the "rule of 25," which is having 25 times your planned spending saved before retiring. What does this look like? If you know you're going to spend $30,000 during the first year of retirement, you should have $750,000 invested before walking away from your full-time job. Having your money invested means it can continue to grow.
Keep in mind that your spending will increase each year due to inflation. This brings us to the second rule: the 4% rule, which advises you only take out 4% of your invested savings during the first year of your retirement. This number will change each year due to inflation.
Learn More With IntentGen!
Want additional retirement tips? Check out our resource page for additional information! Call us today if you have any questions. Thanks for making us your trusted destination for your retirement and financial planning needs.