Many of us would prefer to retire earlier, rather than later. But is that option out of reach for those of us with middle class incomes? Not necessarily! An early retirement might require a bit of sacrifice, and will definitely require some smart strategizing. The following strategies could make a big difference in your ability to retire sooner.
Live beneath your means. It goes without saying that spending less than you can will leave money left over. But we’re saying it anyway. It’s tempting to buy the most expensive house you can afford, the priciest car for which you can get qualified, and so on. But in most cases, it is not necessary.
Start saving early. Saving for retirement isn’t only about the money you can stash each year. It’s also about the power of compounding interest over time. So the earlier you start saving, the better.
Don’t make emotional decisions. It’s easy to get scared during turbulent times, and make decisions that backfire later. Before making any big moves that could lead to lost funds, discuss your plans with a financial professional.
Don’t sell yourself short. Investigate ways to advance in your career, so that you can max out your income (and therefore your retirement savings).
Catch up. Take advantage of catch-up contribution opportunities after you turn 50, which allow you to stash even more pre-tax dollars in your TSP.
Consider downsizing. Once you retire, you can live anywhere you want. Do you need that four-bedroom house in the suburbs, now that the kids are grown? Could you move to a state with a lower cost of living? Would a condo save you money on home upkeep and yard maintenance?
Avoid debt. Remember that for every purchase you charge on a credit card, you will eventually pay a much higher price tag due to interest. Do you still want that 50-dollar restaurant meal, if it will cost you 70 dollars over time? Start viewing your purchases this way, and never charge what you can’t pay off within the billing cycle.
Explore your tax savings options. If you’re paying more income taxes than you absolutely have to, you’re giving Uncle Sam money that could be saved for retirement instead. Meet with us to review your retirement savings strategy, to be sure you’re taking advantage of valuable tax savings opportunities.
Explore your investment options. Meet with us regularly to discuss your Thrift Savings Plan. You won’t know about exciting investment options unless we discuss them, and you don’t want to miss a chance to grow your savings.