Top 10 Early Retirement Planning Insights

Early Retirement Planning

1. Start Young- One of the secrets of early retirement planning is compounded interest, and to gain this advantage you must start saving for your retirement at a very young age if possible.

2. Be Realistic- Whether you decide on a Keogh retirement plan or another IRA type, make sure you are realistic about the future income and expenses. A common mistake is to underestimate the funds needed to be comfortable once you finally retire.

3. Pay Off Debt Before Retiring – Once you retire, your financial resources may be limited, and payments toward debts will lower the amount of money available for you to enjoy your golden years. Start paying off debt now, so that you are debt free when you finally decide to retire.

4. Diversify Your Portfolio- A diverse portfolio is essential with early retirement planning, because diversity lowers your risks of large losses. Retirement income will be needed in the future, and can not afford to be lost through investments.

5. Avoid Risky Investments- Retirement plans for self employed and for employees should only include investments which are considered safe and stable. It is better to have slow steady gains than to risk all of your capital and lose your retirement money.

6. Take Advantage of Any Employer Matching Funds- The best Roth IRA account balances are often those which have an employer match provision. Any money your employer pays into your retirement account is found money, and you should contribute to get the maximum employer match possible.

7. Plan For Medical Expenses- One factor often forgotten with early retirement planning is medical care. Even with insurance there will be deductibles and co pays and these expenses need to be provided for.

8. Max Out Your Allowable Contributions- Making the maximum 401k contribution per year will allow you to grow your nest egg much faster. The compound interest earned can add up to a large additional balance in your retirement account.

9. Live Frugally- Learning to live frugally can be a big component of early retirement planning. When you cut your expenses to save more this strategy will pay off in the long run.

10. Pay Yourself First With Automatic Contribution Deductions- Automatic deductions can benefit your retirement planning, because your contributions are deducted before you get paid, and will learn to live with less.