According to a 2014 Gallup poll, the average retirement age is now 62, up from 59 in 2010. Go Banking Rates talked to a number of financial experts — including our Chief Investment Strategist, Wes Moss, to learn what you need to do now to make early retirement a reality.
How to Jump-Start Your Retirement Savings
Moss says, “If you want to retire at age 50, you can’t start saving too soon.”
“Most people that retire at 50, in a traditional sense, are those who start accumulating assets and investing in their teens or 20s — excluding business owners who cash out for millions, tech entrepreneurs and lottery winners,” he said. “Age 20 to 50 will give you 30 years of compounding. At 7 percent per year, you’ll need to save about $11,000 per year for 30 years to hit $1 million.”
To generate money to save, Moss says that purchasing rental properties, getting a part-time job, paying off your mortgage and taking out a private health care policy to bridge you until Medicare. You also shouldn’t count on income from Social Security and pensions, he said, as it won’t kick in until your 60s, or later.
More Early Retirement Tips
When it comes to investing in your retirement accounts, experts says you need to figure out the best vehicles for growing your savings — and how you can make sure they get you the best dividends.
• Use Fixed Income Annuities
• Use Exchange Traded Funds
• Diversify Your Portfolio
• Stock Up on Low-Risk Investments
3 Important Tax Considerations for Early Retirement
If you’re looking to retire early, there are a number of factors you need to consider — including how you’ll be affected by taxes. Here’s why:
• Watch Out for Early Withdrawal Penalties
• Tax Rates Could Rise
• Tax on Social Security Income
Read the original article as it appears on Go Banking Rates