How To Come Up With The Perfect Early Retirement Plan

An early retirement plan is a necessity if you want to retire before you hit 65. For most people, this early retirement level may be around the age of 50, which would allow for approximately 45 years of spending after that. Some numbers would be adjusted based on the age you were to retire and how long you lived after that, but those are some base numbers we can work with. The guide below will provide you with information on how you can best setup your life to retire early.

How Much Money Will You Need?

The biggest part of your early retirement plan should involve saving money. You have to provide enough funds for yourself to be able to live on for 45 years or longer. Failure to do so could leave you in a serious bind once you hit the latter years of your retirement. If you start investing by the time you reach 30, you should at least have a chance at saving the amount of money you need. That just depends on where you invest and how much you put into your investments.

You can consider stocks, IRAs, 401Ks and much more. Just note that some of these have penalties if you cash out before s certain age. You will need income that can be withdrawn as early as you need it to.

In terms of figuring out how much money, you need to save for your early retirement plan, which will all be based on what your average retirement spending will be. For the most part, you can expect that you will spend 75% of what you spend a month right now once you hit retirement. There are factors that may cause this to fluctuate, but that is a decent foundation for you to calculate your savings needs. If you spend $2000 a month now, you will likely need $1500 a month when you retire, at least for the first few years. That equals out to $18,000 a year, which is $810,000 that you would need to retire at age 50. Assuming that your spending would go up as the years pass, that number may be closer to a million dollars when everything is said and done.

Those numbers may seem impossible to hit, but you must remember that your current investments could still be earning money in retirement, depending on what they are. You also should get some kind of fixed income from social Security or similar government money, which will add available funds for you. You will need to calculate your savings needs for your early retirement plan based on these adjustments, as they will be specific to you.

Where Should You Retire?

Once you have your finances in order, you should take some time to consider where you want to go in your early retirement plan. While you can stay in the United States, you may find life in another country to be more relaxing and affordable in your latter years.

Mexico, for instance, is a great place to go for retirement because the climate is pleasant, the people are friendly, the cost of living is low, and the proximity to the US is small. This could be the perfect place for you to go.

How much you would spend a month in Mexico will be much different from what you would spend in the United States. Thus, you may need to take that into consideration during your savings calculations. Depending on your lifestyle and needs, you may only require $500 to $1,000 a month to live in Mexico. You should think about things like this when you start your early retirement plan investments because you may be able to retire much earlier than you think.

You must come up with a very solid early retirement plan if you want to retire before you hit 65. It is completely possible for you to do this, but you must make sure you have the funding to last for the rest of your life. If you invest well early on, you should not have a problem going forth with retirement well before most people do. The rest of life will be yours to enjoy.

Return to the Retirement Planning Page

Click here to return from Early Retirement Plan to The Best Places To Retire Overseas

Leave a Reply