How to retire in 10 years or less
SEE ALSO :Elderly cry foul over invalid NHIF cardsCutting expenses benefits your early retirement plan in several ways: It frees up more money to pay down debt and set aside for savings, conditions you to live on less money and it reduces the amount of money you require to live on, thus lowering the amount you need to save. Some of the ways you can cut costs, is by reducing spending on dining out, subscriptions you don’t use, expensive entertainment such as your TV bill and reducing your utility bills etc. 3. Invest heavily How you invest will determine your financial security now and in the future. The investments you make influence the level of comfort of your retirement. For early retirement, you ideally require to have invested in income generating assets such as real estate or a business venture. Real estate is generally quite reliable as it keeps appreciating in value. Diversify your investment portfolio, having investments in a number of different areas so as to ensure financial security. 4. Manage your debt Debt management is important to ensure comfortable retirement. Prioritise your debt every month in order to reduce it. Talk to the financial institutions that you owe and work on repayment plans with them. The ideal situation would be to retire debt-free, but this is not always possible. Short-term and high interest debts should be paid off in full and then long term debts such as mortgage can be managed through your post-retirement income.
SEE ALSO :Crocheting myself to a ‘knit’ fortuneThere is no magic figure for how much you should have saved prior to retirement. Ideally one should be saving at least 10 per cent of annual income towards retirement and throughout their working life. If you wish to retire at age 45, this savings amount should be higher, and should be prudently invested to maximise on the advantages of compound interest. A rule of thumb projects that the average retiree will need to save 10 times (his or her salary at retirement age in order to be reasonably confident of having enough funds. 8. Invest your time Early retirement planning is the same as conventional retirement planning with one big exception – time. The reality of early retirement is the earlier you stop working, the more money you will require to support yourself through retirement. This means you need to build your assets faster, and that usually means more time goes into that. A lot more of your efforts in general need to be re-directed towards accumulating for retirement, in order to insure your future. 9. Be realistic You might want to retire at 35, but with that you need to consider that if you live to, say, 90, you will have to have enough to live on for 55 years. You need to be realistic about your current financial situation, and about your future financial needs. Retiring early looks attractive, but it might mean working a few more years than you wanted in order to accumulate enough to live on while not working. If you have children, you have to ensure that you have secured their future, having taken care of their educational needs, which means you have saved adequately even for their college years.