Choosing the Best Retirement Plan for Early Retirement Planning

If you are planning for an early retirement, retiring earlier than the traditional age of 62 or 65, having a good retirement savings plan goes a long way to help you to meet that goal by providing the financial security that is needed. It is unfortunate that most people usually do not think about planning for retirement needs until they are close to retirement age and find themselves working well past the age of 62 or 65 just to make end meet. Some foresight and frugal early retirement planning would allow many more people to a financially secured retirement.

Most people think of early retirement age to be 50 to 55 years of age, while most people are still relatively healthy and have some life experiences under their belts. Planning for early retirement is not easy, especially when you are young and just starting to earn a living … when money is usually tight. You will need to make scarifies and will need to develop budgeting skills. And most important of all, you need a retirement savings plan.

Set Your Goal – How Much Do You Need to Retire?

The first thing to do in early retirement planning is to set a goal and the question to ask yourself is: “How much do I need to retire to live the lifestyle I want?” This is fairly easy: calculate the annual cost of living the lifestyle you expect in your retirement years and multiply that by the number of years you are expected to live. The total amount should take into account for inflation, and should include an emergency fund for unexpected expenses such as medical emergencies, and provide something extra in case you live longer than projected.

If this seems daunting, don’t despair. You can always get help on the Internet with free retirement planning tools that will make the calculations easier. If you can afford it, you can pay for retirement planning services that not only help you set your goal but can also draw up the best retirement savings plan for your needs and to meet your goal.

Reaching Your Goal with the Right Retirement Savings Plan

To reach your goal you need a retirement savings plan than is right for your current situation and your future needs. The goal of any retirement savings plan is to save and invest enough money during your working years that will generate enough income to support your lifestyle during your retirement years.

Today, there are many different types of retirement plans. Some of the most frequently used and most popular plans include 401(k), Keogh plan, Traditional Individual Retirement Account (IRA), and Roth IRA. These retirement savings plan offer some tax advantages.

There are some more traditional investment vehicles that you should not be overlooked, such as mutual funds, individual stocks, or bonds to increase your net worth. While not strictly financial retirement planning, these investment options provide additional option for getting decent return on your money. Other types of investments you can consider are real estate, gold, antique, and art.

Don’t put all your eggs in one basket; by the same token, don’t put too few eggs in too many baskets. Do your research before you invest, decide on no more than a few types of investments, and stick with them, but review and readjust your portfolio at least once a year. You need to learn as much as you can about investing and the various investment vehicles. There are many factors to consider when deciding on a retirement plan that is best for your particular situation.

Even if you are paying a financial adviser to mange your money, be financially literate. Be knowledgeable enough to understand money and investing lingo used by the financial adviser and know what you don’t know about certain investments so you know when to ask the right questions. Educate yourself by reading financial books, the business section of the newspapers, watch the financial news, or ask questions of friends who are successful in their investing or business.

If you don’t think you make enough money to start an early retirement plan, take a honest look into your spending habits and see where you can cut back, and put the money saved into your retirement investment plan.

But the most important thing to remember with your early retirement plan is to start investing early – as early as practical. The earlier you save, the longer the time frame your money will have to grow to a comfortable retirement nest egg.

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