early retirement http://www.wisebread.com/taxonomy/term/8492/all en-US 5 Questions to Ask Before You Start Claiming Your Social Security Benefits http://www.wisebread.com/5-questions-to-ask-before-you-start-claiming-your-social-security-benefits <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-questions-to-ask-before-you-start-claiming-your-social-security-benefits" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-511524588 (1).jpg" alt="Couple asking questions before claiming social security benefits" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>According to a 2016 poll conducted by Gallup, 59 percent of retirees rely on Social Security payments as a major source of income. Odds are that you, too, will need Social Security benefits to cover at least <em>some </em>of your living expenses after you retire. Because of this, you'll want these benefits to be as large as possible when retirement actually arrives.</p> <p>Here are five key questions to ask before you start taking your Social Security benefits.</p> <h2>1. Are you willing to take a smaller monthly benefit for the rest of your life?</h2> <p>Taking Social Security benefits before your full retirement age will cost you in the form of a lower monthly payout. This payout will remain at this lower level for the rest of your life.</p> <p>You can determine how much of a hit you'll take claiming benefits early by visiting the Social Security Administration's <a href="https://www.ssa.gov/planners/retire/retirechart.html" target="_blank">retirement planner site</a>. As the site shows, if you start taking your Social Security payments before you hit your full retirement age, your monthly benefit will be lower.</p> <p>How much lower? If your full retirement age is 67 and you start taking your benefits at 62, your monthly Social Security payment will be reduced by about 30 percent. If you start taking them at 64, they'll be lower by about 20 percent. Even if you start taking them one year earlier at 66, they'll still be lower &mdash; by about 6.7 percent a month. And remember, this is for the rest of your life.</p> <p>As you can see, claiming benefits early can significantly reduce the amount of money you receive each month. Let's say you are slated to receive $1,000 a month in Social Security benefits and your full retirement age is 67. If you started taking your benefits at age 62 &mdash; the earliest you can take them &mdash; your monthly benefit would fall to $700.</p> <h2>2. Can you continue working?</h2> <p>While retiring early reduces your monthly Social Security benefits, working past your full retirement age actually increases them.</p> <p>The Social Security Administration says that if you delay receiving your Social Security benefits until you hit 70, your monthly payment will be 32 percent higher than if you had retired at full retirement age.</p> <p>Say your full retirement age is 66, and you'd receive $1,000 from Social Security every month starting at that age. If you wait to start claiming your benefits until you turn 70, your monthly payment would rise significantly to $1,320. You'd just have to determine whether you could hold off on receiving those payments until your 70th birthday.</p> <h2>3. How much have you saved for retirement?</h2> <p>Most people can't survive on Social Security benefits alone during their retirement years. Instead, they rely on a mix of savings from different sources &mdash; everything from 401(k) plans, to IRAs, to annuities.</p> <p>How much you've saved for retirement will play a key role in how early you should take your Social Security benefits. If you've saved a significant amount of money for retirement, you might not need as large a monthly Social Security payment to meet your retirement goals. But if you haven't saved much, you might need that larger benefit payment. At the same time, working for a few extra years might help you boost your retirement nest egg, at least by a bit.</p> <h2>4. How healthy are you?</h2> <p>While there are financial upsides to waiting to claim your Social Security benefits, there are also times when this doesn't make sense. Often, this depends on your health.</p> <p>If you're not healthy, you might need to retire early for your physical wellbeing. And while it's impossible to predict how long you'll live after retiring, if you're suffering from health problems, your post-retirement life might not last as long. Retiring as early as possible, and claiming those Social Security benefits earlier, might then be the best choice. (See also: <a href="http://www.wisebread.com/3-reasons-to-claim-social-security-before-your-retirement-age?ref=seealso" target="_blank">3 Reasons to Claim Social Security Before Your Retirement Age</a>)</p> <h2>5. What kind of retirement do you want?</h2> <p>How do you plan to spend your retirement years? Are you looking forward to quiet days spent with your grandchildren, reading books, and pursuing a hobby? Or do you want to travel the world?</p> <p>If you're looking for a lower-key, less-costly retirement, taking your benefits early &mdash; and receiving smaller Social Security payments &mdash; might make sense. But if you want a busier, more extravagant retirement, holding off until full retirement age, or later, might be the smarter choice.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/5-questions-to-ask-before-you-start-claiming-your-social-security-benefits">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-reasons-to-claim-social-security-before-your-retirement-age">3 Reasons to Claim Social Security Before Your Retirement Age</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-sobering-facts-about-social-security-you-shouldnt-panic-over">5 Sobering Facts About Social Security You Shouldn&#039;t Panic Over</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/13-crucial-social-security-terms-everyone-needs-to-know">13 Crucial Social Security Terms Everyone Needs to Know</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement benefits early retirement full retirement age health Teaser: income social security Mon, 08 May 2017 09:00:08 +0000 Dan Rafter 1940328 at http://www.wisebread.com How Are People Retiring in Their 30s?! http://www.wisebread.com/how-are-people-retiring-in-their-30s <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-are-people-retiring-in-their-30s" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-508191870.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When you think about retirement, it's generally a time later in life after you've put many working years into a career. But today, some people are retiring in their 40s, 30s, and even in their 20s! What is the secret to retiring so early?</p> <p>I reached out to several bloggers who either retired or reached financial independence by the time they reached their 30s to learn just how they did it.</p> <p>Even if you are not aiming to retire at a very young age, these strategies can still help you accelerate your retirement.</p> <h2>Secret 1: Pay down debt ASAP</h2> <p>The first step toward early retirement is to get rid of debt as soon as possible. Making payments on debt limits your ability to build your investments and grow enough assets to retire. This is how Michelle Schroeder-Gardner of Making Sense of Cents got started on the path to financial independence in her early 20s. &quot;In the beginning,&quot; she said, &quot;I worked many, many hours a week so that I could pay off my debt in seven months, but it was well worth it.&quot;</p> <p>See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=seealso2" target="_blank">The Fastest Way to Pay Off $10,000 in Credit Card Debt</a></p> <h2>Secret 2: Take advantage of compound interest</h2> <p>The key to reaching early retirement is to save a large portion of your income &mdash; for example, 50 percent or more &mdash; and let that money compound over time. How can you put away that much on a modest income? You need to live very frugally so you can apply a large percentage of your income toward investments.</p> <p>Jeremy Jacobson, who runs Go Curry Cracker with his wife Winnie, reached financial independence in his 30s. He explained, &quot;We just used our income to buy our freedom rather than things and experiences that we would have quickly forgotten. Ironically, thanks to compound interest we can now have things, experiences, and freedom.&quot;</p> <h2>Secret 3: Multiple sources of income</h2> <p>Many of these bloggers who retired early had a traditional career for a time, and gradually built up &quot;side hustles&quot; to generate multiple streams of income. The extra cash helps get debt paid off faster and starts building your investment accounts sooner. Writing, owning income properties, selling items on eBay or Amazon, and consulting are some ideas to bring in &quot;extra&quot; money.</p> <p>One of these side projects that you enjoy could grow into enough income to one day replace your primary job. (See also: <a href="http://www.wisebread.com/15-ways-to-make-money-outside-your-day-job?ref=seealso" target="_blank">15 Ways to Make Money Outside Your Day Job</a>)</p> <h2>Secret 4: Commit to living differently</h2> <p>One thing I noticed is that these people are quite different from their peers. They are not concerned about fitting in and even celebrate living much differently than others their age.</p> <p>Travis Hornsby, blogger at Millennial Moola, was able to retire in his mid 20s. How did he manage it? &quot;I lived in a semifinished basement for several months because it included utilities and allowed me to supercharge my savings rate,&quot; he explained.</p> <p>Justin McCurry at Root of Good retired in 2013 at age 33 by redefining what qualified as a sacrifice. &quot;Unlike our peers, we never upgraded our starter home to a McMansion, nor did we trade in our Honda sedans for luxury cars,&quot; he said. &quot;Is that a sacrifice?&quot;</p> <p>Kristy Shen, one half of Millennial Revolution and retiree by age 31, resisted the pressure to buy a large home and settle into a traditional lifestyle. &quot;We stuck to our guns because we knew the math didn't make sense,&quot; she said.</p> <h2>Secret 5: Know when to stop</h2> <p>Many of those who retire at an early age plan to maintain a low spending rate after they retire, allowing them to leave the workforce early. But how much is enough? There are many opinions about this, but many subscribe to the 4 percent safe withdrawal rate as a rule of thumb. Simulations have shown that under a range of economic scenarios, you can withdraw up to 4 percent per year from your investment portfolio with a very low probability of running out of money during retirement.</p> <p>If your desire is to retire as soon as possible, it is important to have a specific goal for how much you need to accumulate so you don't end up spending extra years in the cubicle. For example, if you can live on withdrawing $40,000 per year from your account, then $1 million is the minimum amount you would need to fully retire under the 4 percent safe withdrawal rate. If you will have income after you retire, then you will need to withdraw less, so the balance you need to accumulate is less &mdash; and you can retire earlier.</p> <h2>Secret 6: Income after &quot;retirement&quot;</h2> <p>Many of these people who &quot;retire&quot; very early are actually still working at least part-time. Financial independence may be a better description than retirement for this lifestyle. Financial independence means that although you are still working, you don't need to do it purely for the money anymore.</p> <p>Michelle of Making Sense of Cents started her blog in graduate school a few years ago to help pay off student loans faster. As a dramatic example of income after reaching financial independence, she now makes nearly $1 million per year from her blog!</p> <h2>Secret 7: Invest for growth</h2> <p>Saving the money is the first step, but you have to invest it so it will grow. Parking your savings in a bank account at less than 1 percent interest is not going to get you to retirement very fast.</p> <p>Kristy of Millennial Revolution regrets her initial hesitation to dive into investments. &quot;I think we spent a lot more time waffling on whether we should do the investing-route or the housing-route than we should have, and that caused some missed opportunities along the way,&quot; she said. &quot;As a result, we stayed out of the market when the S&amp;P 500 bounced off the floor in early 2009 because we were still deciding whether to buy a house. As a result, we missed a 40 percent rally from 2009&ndash;2010 just sitting in cash! Fortunately by the time we decided in early 2012, there turned out to be plenty more gains to go in this bull market.&quot;</p> <h2>Secret 8: Don't sink money into a house</h2> <p>This one comes as a bit of a surprise to me since I have gone the route of investing in a home. But several folks who have reached early retirement recommend avoiding homeownership in order to reach financial independence sooner.</p> <p>Kristy and her husband Bryce felt scrutiny at their decision to forgo homeownership and continue to rent. &quot;Going against the grain is tough, but it's even tougher to do for such a long period of time while everyone around you is pointing and saying 'What an idiot. They're renting and throwing money away.'&quot; she explained.</p> <p>The advice not to buy a house makes sense if your goal really is to minimize costs. Owning a home not only commits you to a mortgage payment, but also to additional expenses such as insurance, taxes, repairs, and maintenance. Plus, if you own a home, you are more likely to spend money on furniture, landscaping, and home improvement projects. In some cases, you may be better off minimizing your expenses by renting instead of buying a place to live during your run up to early retirement. (See also: <a href="http://www.wisebread.com/rent-your-home-or-buy-heres-how-to-decide?ref=seealso" target="_blank">Rent Your Home or Buy? How to Decide</a>)</p> <h2>Secret 9: Enjoy now</h2> <p>In my experience, most people in their 20s are not focused much on retirement at all. But if you want to retire in your 30s, you will need to start working toward that goal very early in life. The earlier you want to retire, the more aggressively you will need to save money. But it is possible to focus too much on making and saving money. As you look forward to some great experiences after retirement, you don't want to miss out on unique opportunities to enjoy life along the way.</p> <p>Joe Udo of Retire by 40 emphasizes this point: &quot;If you're working toward early retirement,&quot; he said, &quot;don't forget about the present. Being miserable every day will screw up your mental health.&quot;</p> <h2>How early should you retire?</h2> <p>Very early retirement is not for everyone. Retiring early clearly requires some significant sacrifices and lifestyle adjustments. You'll have to decide if this cost is worth the reward of reaching financial freedom years (or possibly even decades) earlier.</p> <p>If you'd like to learn more and read about the journey of the bloggers mentioned in this article, check the table below.</p> <table> <tbody> <tr> <td> <p>Blogger</p> </td> <td> <p>Blog</p> <p>(link to their best early retirement advice post)</p> </td> <td> <p>Age at Retirement / Financial Independence</p> </td> </tr> <tr> <td> <p>Justin</p> </td> <td> <p><a href="http://rootofgood.com/zero-to-millionaire-ten-years/" target="_blank">Root of Good</a></p> </td> <td> <p>33</p> </td> </tr> <tr> <td> <p>Joe</p> </td> <td> <p><a href="http://retireby40.org/3-easy-steps-retire-40/" target="_blank">Retire by 40</a></p> </td> <td> <p>38</p> </td> </tr> <tr> <td> <p>Jeremy &amp; Winnie</p> </td> <td> <p><a href="http://www.gocurrycracker.com/how-we-saved-multi-millions/" target="_blank">Go Curry Cracker </a></p> </td> <td> <p>38, 33</p> </td> </tr> <tr> <td> <p>Michelle</p> </td> <td> <p><a href="http://www.makingsenseofcents.com/2016/01/early-retirement-myths-busted.html" target="_blank">Making Sense of Cents</a></p> </td> <td> <p>20s</p> </td> </tr> <tr> <td> <p>Kristy &amp; Bryce</p> </td> <td> <p><a href="http://www.millennial-revolution.com/freedom/how-i-built-a-seven-figure-portfolio-and-retired-at-31/" target="_blank">Millennial Revolution</a></p> </td> <td> <p>31, 33</p> </td> </tr> <tr> <td> <p>Travis</p> </td> <td> <p><a href="https://millennialmoola.com/2015/06/22/how-to-retire-in-your-20s/" target="_blank">Millennial Moola</a></p> </td> <td> <p>25</p> </td> </tr> </tbody> </table> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dr-penny-pincher">Dr Penny Pincher</a> of <a href="http://www.wisebread.com/how-are-people-retiring-in-their-30s">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0">6 Ways You Can Cut Costs Right Before You Retire</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-save-for-retirement-when-you-are-unemployed">How to Save for Retirement When You Are Unemployed</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-occasions-when-you-should-definitely-hire-a-financial-advisor">7 Occasions When You Should Definitely Hire a Financial Advisor</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-steps-to-starting-a-retirement-plan-in-your-30s">8 Steps to Starting a Retirement Plan in Your 30s</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-questions-financial-advisers-hear-most-often">8 Questions Financial Advisers Hear Most Often</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement 20s 30s compound interest debt early retirement expenses income streams lifestyle retiring young saving money Mon, 27 Mar 2017 09:00:11 +0000 Dr Penny Pincher 1913293 at http://www.wisebread.com 5 Reasons Stealth Wealth Is the Best Wealth http://www.wisebread.com/5-reasons-stealth-wealth-is-the-best-wealth <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-reasons-stealth-wealth-is-the-best-wealth" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-518885222.jpg" alt="Woman learning stealth wealth is the best wealth" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Some people who have a lot of money like to show it off. They buy large houses, expensive cars, and all the toys you can imagine. But others keep their affluence on the down low. They don't look any different from anyone else, but they have some serious cash stashed away.</p> <p>These folks have what is known as <a href="http://www.theretirementmanifesto.com/stealth-wealth/" target="_blank">stealth wealth</a>. They are worth way more than they appear to be, and they often manage to retire early or follow their dreams in some other way that surprises the people around them &mdash; people who never realized they had that kind of money.</p> <p>Sure, showing off your money is fun. But stealth wealth has its advantages, too.</p> <h2>1. It's real</h2> <p>The biggest advantage of stealth wealth is that it's real. So many people who live extravagant lifestyles are actually broke, living paycheck to paycheck, without savings for retirement or anything else. They are spending all their money maintaining their lifestyle without accumulating much of anything for later. Sure, their things are nice, but that's all they have.</p> <p>Others are in debt. They don't actually have the wealth to maintain their lifestyle, so they are burdened by loans and all of the stress that comes with spending a lot more money than you make. (See also: <a href="http://www.wisebread.com/5-when-youre-rich-dream-buys-that-arent-that-great?ref=seealso" target="_blank">5 &quot;When You're Rich&quot; Dream Buys That Aren't That Great</a>)</p> <h2>2. It lets you fly under the radar</h2> <p>Sometimes it's nice to fly under the radar. If you don't look wealthy, people won't ask you for loans. They won't ask you to support their wild new business scheme. They won't bug you for investment tips. And sometimes, that's what you want.</p> <p>Most people with stealth wealth have hobbies and interests that go beyond their money, and they just aren't that interested in talking about finance. Sure, they've invested well and made wise choices, but there's not that much more to say about it. So keeping their affluence hidden means fewer question-and-answer sessions about money.</p> <p>Flying under the radar also means you don't have to keep up with the Joneses. If people don't realize you're wealthy, they won't expect you to buy a bigger house, drive a nicer car, or shop at expensive stores. The pressure is off, so you are free to make whatever financial decisions are best for you.</p> <h2>3. It allows you to aim beyond accumulating stuff</h2> <p>Stealth wealth offers a way to live life focused on <a href="http://www.wisebread.com/4-reasons-you-should-splurge-on-experiences-not-things?ref=internal" target="_blank">experiences, rather than material goods</a>, a strategy that's been proven to make people happier. If you want to give a lot to charity, you can do that. If you want to take a couple of seriously luxurious vacations every year, you can do that, too. Or, you can just focus on micro-experiences, like dinners out with friends, more often.</p> <p>That's the freedom that comes from not being tied to expensive payments on a home, a car, or a designer wardrobe. (See also: <a href="http://www.wisebread.com/10-habits-of-financially-happy-people?ref=seealso" target="_blank">10 Habits of Financially Happy People</a>)</p> <h2>4. It's empowering</h2> <p>Sometimes, people with showy wealth begin to believe that their happiness is tied to ever greater consumption. They feel like they have to have lots of nice things, and the money to get more, or they will be miserable. It's a spiral of discontent. The more they buy, the more they feel they need to buy. They become slaves to their ostentatious lifestyle.</p> <p>Folks with stealth wealth don't usually fall into this trap. Instead, they are using their money to achieve a goal. Whether that's early retirement or traveling the world, they aren't distracted by the pursuit of shiny objects. Instead, they know what will make them happy and have chosen to order their lives to attain that. Money is a tool toward happiness, not happiness itself.</p> <h2>5. It offers freedom from work</h2> <p>Many folks with stealth wealth are working toward early retirement. They know that they will be happier not being tied to a desk or an office in a day job. They are accumulating wealth so they can enjoy freedom from the working world.</p> <p>Chasing ostentatious things, on the other hand, can tie you to a job you don't really want. In order to maintain payments on a mansion and a luxury car, you may have to keep working to pay those bills. While that's a perfectly acceptable way to live, it doesn't offer the same freedom that stealth wealth can give.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/sarah-winfrey">Sarah Winfrey</a> of <a href="http://www.wisebread.com/5-reasons-stealth-wealth-is-the-best-wealth">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-life-is-wonderful-when-youre-debt-free">6 Ways Life is Wonderful When You&#039;re Debt-Free</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-keep-peer-pressure-from-destroying-your-finances">How to Keep Peer Pressure From Destroying Your Finances</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/its-time-to-drop-these-6-rules-of-money-etiquette">It&#039;s Time to Drop These 6 Rules of Money Etiquette</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-10-commandments-of-reaching-financial-freedom">The 10 Commandments of Reaching Financial Freedom</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-resistance-bands">The 5 Best Resistance Bands</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Health and Beauty Lifestyle early retirement financial freedom keeping up with the joneses living with your means saving money stealth wealth Fri, 24 Mar 2017 09:30:40 +0000 Sarah Winfrey 1911599 at http://www.wisebread.com The Surprising Truth of Investing: Mediocre Advice Is Best http://www.wisebread.com/the-surprising-truth-of-investing-mediocre-advice-is-best <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-surprising-truth-of-investing-mediocre-advice-is-best" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-538027758.jpg" alt="Man learning mediocre investing advice is best" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>My investing success made it possible for me to quit working a regular job 10 years ago, at age 48. Even so, I have written very little about investing compared to what I've written about other personal finance topics. There's a reason for that: I'm a mediocre investor.</p> <p>Over the course of my career as a software engineer, I saved and invested, earning a mediocre investment return. Since becoming a full-time writer, I've continued to earn investment returns &mdash; which although still mediocre, have been enough to supplement my income from writing.</p> <p>As a mediocre investor, I have hesitated to hold myself out as an investment adviser, even if my results have met my own needs in a very satisfactory way. I figured people would quite legitimately compare me to superior investment advisers, and it was a comparison that I didn't think would put me in the best light. And yet, I'm going to overcome my hesitation, because looking for superior investment advisers is probably a mistake.</p> <p>There are two big reasons why mediocre investment advice is the better choice: It's adequate, and it's cheap.</p> <h2>Mediocre Investing Advice Is Adequate</h2> <p>The purpose of your investment portfolio is to support your goals in life, and a mediocre return will do the trick. A mediocre return &mdash; just a few percentage points over inflation &mdash; will turn a modest flow of savings into a portfolio large enough to let you buy a house, send your kids to college, and fund a retirement (even an early retirement).</p> <p>Trying to get a better-than-mediocre return requires taking financial risks that put all your life goals at risk.</p> <p>If you have plenty of money available for investing, you can do both. You can cover your basic life goals with a portfolio invested for mediocre returns, and then you can direct your surplus investible funds into a portfolio that shoots for superior returns.</p> <p>It can be fun if you enjoy that sort of thing. I did some of that. Looking back, I'd probably have been better off just going for mediocre returns on the whole thing.</p> <h2>Mediocre Investing Advice Is Cheap</h2> <p>Superior investing advice tends to be expensive. It's expensive because it's worth it &mdash; but it's really only worth that much to the truly wealthy.</p> <p>Think about it. Let's say really good advice can boost your average annual return by five percentage points. On a $100,000 portfolio, that's an extra $5,000 a year. On a $1 billion portfolio, it's an extra $50 million a year. If someone can really earn that kind of extra return, they won't be working for you. They'll be working for the 1%.</p> <p>And it's not only getting superior advice that's expensive. Just following it is expensive. Following any financial advice &mdash; good or bad &mdash; costs money, but not only is getting mediocre advice cheap, following it tends to be cheap as well. And that cost savings turns out to support your investment returns better than even pretty good advice does.</p> <h2>Go With Mediocre</h2> <p>Just looking for superior financial advice is fraught. Most people who say they're providing superior investment advice are wrong. Some are simply deluded, others are flat-out lying. Either way, you really don't want to follow their financial advice &mdash; following bad financial advice can easily cost you your life savings.</p> <p>Fortunately, it's easy to tell the difference: Bad financial advice costs money, while mediocre financial advice tends to be free (or nearly so).</p> <p>Where can you get mediocre financial advice? Lots of places. You might start with two books I reviewed here on Wise Bread years ago that provide just the sort of mediocre financial advice I'm talking about:</p> <ul> <li><a href="http://www.wisebread.com/book-review-the-little-book-of-common-sense-investing" target="_blank">The Little Book of Common Sense Investing</a> by John C. Bogle: A perfect capsule of mediocre investment advice. It's also really short, because you can say about all there is to say about mediocre investing in a really short book.<br /> &nbsp;</li> <li><a href="http://www.wisebread.com/book-review-the-only-investment-guide-youll-ever-need?ref=internal" target="_blank">The Only Investment Guide You'll Ever Need</a> by Andrew Tobias: A slightly longer book that also covers basic personal finance stuff &mdash; so, not just investing your money, but also earning, spending, and insuring it.</li> </ul> <h2>How to Know It's Mediocre</h2> <p>It's easy to tell if the advice you're getting is the sort of mediocre advice you want. There are two characteristics to look for:</p> <ol> <li>It's free &mdash; or, available for no more than the cost of a book.</li> <li>It doesn't claim to be better than mediocre.</li> </ol> <p>If somebody charges money for their advice &mdash; or, more importantly, charges a commission, or a percentage of your assets for their advice &mdash; then it's probably not mediocre financial advice. (Charging a small fraction of 1% to cover the costs of running an investment fund is fine. It's charging extra on top of that for advice that's the danger sign.)</p> <p>If somebody claims that their advice is superior investment advice, or in any way better than mediocre financial advice, then it probably isn't mediocre financial advice.</p> <p>If you spot any of those warnings signs, I suggest that you avoid those advisers. It doesn't really matter whether they are people who genuinely think they're providing superior financial advice, or people who are just playing on your hopes for superior financial advice. If you follow their investment advice, I can confidently predict that your long-term investment returns &mdash; after expenses &mdash; will be crappy. And crappy returns mean a lower standard of living, less security, no chance to retire early, and maybe no retirement at all.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/the-surprising-truth-of-investing-mediocre-advice-is-best">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/a-field-guide-to-lousy-investment-advisers">How to Spot Lousy Investment Advisers</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-3-rules-every-mediocre-investor-must-know">The 3 Rules Every Mediocre Investor Must Know</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-investing-tips-you-wish-you-could-tell-your-younger-self">11 Investing Tips You Wish You Could Tell Your Younger Self</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-dollar-cost-averaging-the-right-strategy-for-you">Is Dollar Cost Averaging the Right Strategy for You?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment advice early retirement financial advisers mediocre returns success Mon, 20 Feb 2017 10:30:26 +0000 Philip Brewer 1892846 at http://www.wisebread.com 4 Reasons People Don't Retire Early — and How You Can http://www.wisebread.com/4-reasons-people-dont-retire-early-and-how-you-can <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-reasons-people-dont-retire-early-and-how-you-can" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-503452702.jpg" alt="Woman learning reasons people don&#039;t retire early" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Retirement is undeniably a time of drastic change in most people's lives. Typically, people have spent at least four decades in the workplace by the time they accept their gold watch. The average retirement age is 62 to 65, depending on where you live, according to a survey by SmartAsset.</p> <p>While work can provide routine and stability, as the years go by it can also grow to feel burdensome and stale. When to retire is a very personal question, linked to lifestyle and finances. Here are a few of the common reasons people feel they're not ready for retirement. (See also: <a href="http://www.wisebread.com/4-reasons-early-retirement-might-be-financially-risky?ref=seealso" target="_blank">4 Reasons Early Retirement Might be Financially Risky</a>)</p> <h2>Worried About Having Enough Money</h2> <p>It's probably not a surprise that monetary reasons are number one on this list. Having a regular paycheck affords a lot of comfort that can be hard to walk away from.</p> <p>One of the most common reasons most individuals won't consider an early retirement is fear that their savings will be insufficient to provide the lifestyle they've been used to in their working years.</p> <p>However, if you're serious about wanting to retire now, there are ways you can make your savings go further, such as <a href="http://www.wisebread.com/5-american-cities-where-you-can-retire-on-just-social-security?ref=internal" target="_blank">retiring in a cheaper state</a>, or even a foreign country where the cost of living is lower. Also, using the <a href="http://www.wisebread.com/how-to-save-an-extra-109486-a-year?ref=internal" target="_blank">right credit card can save you thousands</a> of dollars a year.</p> <p>Alternatively, the <a href="http://www.wisebread.com/can-you-really-make-a-living-in-the-gig-economy?ref=internal" target="_blank">gig economy</a> affords a lot of ways for people who are officially retired to earn disposable income. For instance, you could <a href="http://www.wisebread.com/this-is-how-you-rent-your-place-on-airbnb-and-succeed?ref=internal" target="_blank">rent out a room on a site like Airbnb</a> to help pad your savings. Just make sure you check out local laws in your area for any restrictions on short-term rentals.</p> <h2>Hesitant to Lose Identity Tied to Work</h2> <p>In the Western world, one of the first questions we ask when meeting someone new is, &quot;What do you do?&quot; The meaning, of course, is what do you do for work. This question is a way of situating someone socioeconomically, understanding their background and education, and gaining a window into their lives.</p> <p>Of course, identity goes beyond what you do for work, and this is an important shift to be conscious of when considering retirement. Many individuals may feel that they are giving up a part of themselves when they decide to stop working.</p> <p>However, there are many other meaningful activities outside of work that have an equally important bearing on identity. These may include hobbies such as artwork, exercise, reading, writing, or travel.</p> <p>While a loss of identity is a common fear for people facing retirement, in reality, retirement can give you the time to explore other creative outlets that you wouldn't have been able to partake in with a busy work schedule.</p> <p>Instead of viewing the end of work as losing part of your identity, try to shift to viewing this as a time to explore different components of who you are. This will make early retirement meaningful, not boring.</p> <h2>Anxious Due to No Concrete Retirement Plan</h2> <p>According to a 2015 survey by the Deloitte Center for Financial Services, only 49% of consumers have a formal retirement plan. The problem of not having a plan for retirement is that it leaves fears and emotions to govern your decisions, as opposed to concrete numbers. Plus, by putting a plan in place, you can see very clearly what steps you need to follow to reach a certain goal, like retiring in five years, for example. (See also: <a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make?ref=seealso" target="_blank">7 Retirement Planning Steps for Late Starters</a>)</p> <h2>Afraid of Being Bored and Restless</h2> <p>Some people simply put off retirement because they are worried about being bored with all the extra time on their hands once they're not going to the office every day.</p> <p>However, retirement doesn't mean that you have to stop working entirely. Some individuals use this time to move from a decades-long career they've grown tired of to more fulfilling employment, or even their own business.</p> <p>If your new pursuit is something that gives you the chance to vary your work schedule, that can be very stimulating, too. Additionally, some universities offer free classes to those over 65 years of age.</p> <p>You can also take up countless hobbies like yoga, dance, snorkeling, scuba diving, golfing, hiking, or biking. To stimulate the mind, you can throw yourself into an artistic endeavor or learn a new language, the ideal activity for those who choose to retire overseas.</p> <p>Retirement is not just the end of one chapter, but also the beginning of a new one. Often, the biggest roadblocks to retiring are fear-based. It can help to re-evaluate the situation by looking at the facts, instead of just relying on emotions.</p> <p>Of course, the decision to retire is a personal one, and the right age to retire is different for everyone.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/amanda-gokee">Amanda Gokee</a> of <a href="http://www.wisebread.com/4-reasons-people-dont-retire-early-and-how-you-can">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make">7 Retirement Planning Steps Late Starters Must Make</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-keys-to-an-early-retirement">4 Keys to an Early Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-retirement-planning-changes-when-youre-single">7 Ways Retirement Planning Changes When You&#039;re Single</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-signs-you-arent-saving-enough-for-retirement">10 Signs You Aren&#039;t Saving Enough for Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-times-its-okay-to-delay-retirement-savings">5 Times It&#039;s Okay to Delay Retirement Savings</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401k early retirement IRA retirement planning saving Tue, 07 Feb 2017 10:30:37 +0000 Amanda Gokee 1885695 at http://www.wisebread.com 4 Keys to an Early Retirement http://www.wisebread.com/4-keys-to-an-early-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-keys-to-an-early-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-623601680.jpg" alt="here&#039;s how to retire sooner" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Does it seem like retirement can't come soon enough? Are you tired of feeling like you're wasting time at a job you no longer enjoy, daydreaming about the day you won't have to come in anymore?</p> <p>The good news is there are several steps that you can take if retiring early is your goal. Retiring early will mean setting clear priorities and goals that you can meet, but it doesn't have to be out of reach. Consider these four tips to get there faster. (See also: <a href="http://www.wisebread.com/14-ways-to-retire-early?ref=seealso" target="_blank">9 Things People Who Retire Early Do</a>)</p> <h2>1. Slash Costs Now</h2> <p>It's easy to go on autopilot with monthly costs, but they can add up fast, especially if you're spending more than you should. By switching providers for home or car insurance, Internet, phone, and cable TV, you could save thousands a year. In fact, do you even need cable TV? What about that gym membership &mdash; are you using it enough to justify the cost?</p> <p>Could you trim expenses even further by downsizing your home or getting by with one car? Leave no monthly cost unexamined.</p> <p>While you're at it, look at the fees you're paying on your investments. Because of compounding, <a href="http://www.wisebread.com/4-sneaky-investment-fees-to-watch-for?ref=internal" target="_blank">investment fees</a> that seem small can eat a big chunk out of your retirement savings over time.</p> <p>All of these cost savings won't be enough on their own to ensure your early retirement, but over the course of a few years they can add up and enable you to retire comfortably earlier than you may have thought. (See also: <a href="http://www.wisebread.com/14-ways-to-retire-early?ref=seealso" target="_blank">14 Things to Do to Retire Early</a>)</p> <h2>2. Look for Tax Advantages</h2> <p>When planning for retirement, it's important to consider the taxes you will have to pay once you stop working. While you can contribute now to 401K or regular IRA accounts using pretax income, you'll have to pay taxes on the distributions once you start to draw down the accounts.</p> <p>On the other hand, you contribute to a <a href="http://www.wisebread.com/7-surprising-facts-about-roth-iras" target="_blank">Roth IRA</a> with money that's already been taxed, but then it grows tax-free and you'll pay no taxes when you withdraw the money. Often it's good to have a combination of both types of retirement accounts. A financial adviser can help you decide. But keep in mind that withdrawing from either of these accounts before you hit age 59-1/2 usually incurs a tax penalty.</p> <p>Taxes on Social Security are another expense to keep in mind for when you hit official retirement age. Social Security benefits may be taxed at the federal level, depending on what your total income is. But the IRS won't tax more than 85% of your benefits. Thirteen states tax Social Security benefits, while other states have <a href="http://www.wisebread.com/7-states-with-the-lowest-taxes-for-retirees?ref=seealso" target="_blank">low or no taxes for retirees</a>.</p> <h2>3. Retire Abroad Full Time</h2> <p>Retiring early means figuring out a way to live on what you save during a shortened working career. You can lower your needs drastically by changing your country code.</p> <p>If you've been working and saving in U.S. dollars, you can make that money go much further in a <a href="http://www.wisebread.com/x-exciting-world-cities-you-can-afford-to-retire-in" target="_blank">country where the cost of living is lower</a> than in the United States. Many destinations in Central and South America, as well as many parts of Asia and even Europe, are much less expensive for Americans to retire to &mdash; and if you're looking for a warmer climate, you can find that too.</p> <p>Of course, there are some logistics that you should take into consideration when retiring abroad.</p> <h3>Taxes</h3> <p>The U.S. taxes citizens or resident aliens living abroad on worldwide income, including Social Security, other retirement income and any earnings you may get from working in your new country. However, you may be eligible for the <a href="https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion" target="_blank">Foreign Earned Income Exclusion</a>, which allows you to exclude foreign earnings &mdash; up to a certain amount &mdash; from your taxable income. The exclusion is adjusted annually for inflation. For 2017 it is $102,100.</p> <p>You may also be subject to income taxes in the country where you retire, though many countries have treaties with the U.S. that make sure you are not double taxed. You'll need to research local tax laws to make sure you're in compliance.</p> <h3>Logistics</h3> <p>There are a lot of logistics involved in moving to a foreign country. You'll need to research the appropriate visa for the country you'll be living in. Many desirable locations for Americans have special visas for retirees. Generally, you'll need to show you have a certain amount of retirement income and you will not be allowed to work for a local employer on these visas.</p> <p>Think too about whether you want to sell your home in the U.S. You may want to get rid of furniture and other belongings as well, though retirement havens such as Panama and Nicaragua allow you to import a certain amount of household goods duty-free.</p> <p>Banking is another consideration. Many expats continue to hold a U.S. bank account and to transfer money between it and an account in the country where they live. If you've got a U.S. account it's also a good idea to have a U.S. travel credit card that charges <a href="http://www.wisebread.com/smarter-security-and-no-foreign-transaction-fees-the-best-credit-cards-to-use-while-on-vacation?ref=internal" target="_blank">no foreign transaction fees</a>. A U.S. card can help you purchase from U.S. websites more easily and comes in handy during trips back home.</p> <h3>Health</h3> <p>In some countries, quality health care is so cheap that expats choose to pay out of pocket for treatment and medications. In other cases, you will need to research local health insurance options or make sure your U.S. insurance covers care abroad. Medicare is not available for health care outside of the U.S.</p> <p>Other expats can be a great resource as you try to find doctors that speak English and have a good reputation.</p> <p>The U.S. State Department has more <a href="https://travel.state.gov/content/passports/en/abroad/events-and-records/retirement-abroad.html" target="_blank">resources for planning to retire abroad</a>.</p> <h2>4. Move Abroad Part Time</h2> <p>You can also considerably lower your retirement expenses just by spending a portion of the year abroad, without the commitment of leaving the U.S. entirely.</p> <p>Different people choose to set up this arrangement differently. Some will return to the same place every year, while others may prefer to try out somewhere new.</p> <h3>Taxes</h3> <p>As with moving abroad full time, you will still be responsible for paying U.S. income taxes on worldwide income, and you may be subject to local taxes as well. Many tax breaks in the U.S. and abroad are dependent on how many days per year you spend in the foreign country, so you'll need to research those requirements.</p> <h3>Logistics</h3> <p>The most important consideration when you'll be spending your time in multiple locations is your accommodations. Will you rent your home while you're away? Will you hire a property manager to make sure that everything is running smoothly in your absence?</p> <p>Consider home or apartment exchanges if you are going to be overseas for a shorter period of time.</p> <h3>Health</h3> <p>For health insurance, you may want to consider purchasing travel insurance for the part of the year that you'll be out of the country to supplement your plan back home.</p> <p>Early retirement doesn't have to be an unattainable goal. Focus on setting your priorities and using creative thinking to be able to retire when you want.</p> <p>See also: <a href="http://www.wisebread.com/12-money-moves-to-make-the-moment-you-decide-to-retire?ref=seealso" target="_blank">12 Money Moves to Make the Moment You Decide to Retire</a></p> <h2 style="text-align: center;">Like this article? Pin it!&nbsp;</h2> <p>&nbsp;</p> <p style="text-align: center;"><a href="//www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F4-keys-to-an-early-retirement&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F4%20Keys%20to%20an%20Early%20Retirement.jpg&amp;description=4%20Keys%20to%20an%20Early%20Retirement" data-pin-do="buttonPin" data-pin-config="above" data-pin-color="red" data-pin-height="28"><img src="//assets.pinterest.com/images/pidgets/pinit_fg_en_rect_red_28.png" alt="" /></a> </p> <!-- Please call pinit.js only once per page --><!-- Please call pinit.js only once per page --><script type="text/javascript" async defer src="//assets.pinterest.com/js/pinit.js"></script></p> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/4%20Keys%20to%20an%20Early%20Retirement.jpg" alt="4 Keys to an Early Retirement" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/nick-wharton">Nick Wharton</a> of <a href="http://www.wisebread.com/4-keys-to-an-early-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-people-dont-retire-early-and-how-you-can">4 Reasons People Don&#039;t Retire Early — and How You Can</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make">7 Retirement Planning Steps Late Starters Must Make</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-incredible-places-to-retire-abroad-that-anyone-can-afford">5 Incredible Places to Retire Abroad That Anyone Can Afford</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-much-do-i-need-to-retire-how-much-can-i-spend">How much do I need to retire? How much can I spend?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/x-exciting-world-cities-you-can-afford-to-retire-in">4 Exciting World Cities You Can Afford to Retire In</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Career and Income Retirement 401k early retirement expat living abroad retirement planning travel Fri, 03 Feb 2017 10:00:09 +0000 Nick Wharton 1884232 at http://www.wisebread.com Best Money Tips: Make These 7 Moves to Retire Early http://www.wisebread.com/best-money-tips-make-these-7-moves-to-retire-early <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-make-these-7-moves-to-retire-early" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_early_retirement_76985889.jpg" alt="Couple making moves to retire early" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Welcome to Wise Bread's <a href="http://www.wisebread.com/topic/best-money-tips">Best Money Tips</a> Roundup! Today we found articles on smart moves for early retirement, how to have a tailgating party indoors, and ways to save money on a family vacation.</p> <h2>Top 5 Articles</h2> <p><a href="http://www.savethebills.com/7-smart-moves-reaching-early-retirement-goals/">7 Smart Moves For Reaching Your Early Retirement Goals</a> &mdash; Aim to save 10% of your income to put into an emergency fund. When that's fully-funded, save 10% of your income for a retirement account. [Save The Bills]</p> <p><a href="http://www.popsugar.com/smart-living/How-Tailgate-Indoors-42427885">How to Have a Backyard Tailgating Party Without a Backyard</a> &mdash; No grill? No problem! Cook on a grill plan to get the same tailgating flavors. [PopSugar Smart Living]</p> <p><a href="http://www.frugalvillage.com/2016/10/20/follow-these-5-tips-to-save-money-on-a-family-vacation/">Follow These 5 Tips to Save Money on a Family Vacation</a> &mdash; Planning your itinerary in advance will allow you to take advantage of Groupon and LivingSocial deals for the activities you want to do. [Frugal Village]</p> <p><a href="http://momsneedtoknow.com/8-reasons-why-that-pinterest-recipe-failed/">8 Reasons Why That Pinterest Recipe Failed</a> &mdash; When a recipe says to use parchment paper&hellip;use it! Parchment paper prevents sticking and ensures even cooking. [Moms Need to Know]</p> <p><a href="http://www.getrichslowly.org/blog/2016/10/20/save-money-on-thanksgiving/">How to Save Money on Thanksgiving Day</a> &mdash; Look for discounted turkey deals. Some stores may even offer a free turkey if you spend over a certain amount on groceries in a single trip. [Get Rich Slowly]</p> <h2>Other Essential Reading</h2> <p><a href="http://www.lazymanandmoney.com/10-ways-frugal-living-prepares-emergency/">10 Ways Frugal Living Prepares You for an Emergency</a> &mdash; When you live frugally, you improvise and find ways to reuse or repurpose the things you already have. This is an important skill to have during an emergency when your resources are limited. [Lazy Man and Money]</p> <p><a href="https://christianpf.com/how-to-raise-non-materialistic-children/">7 Thoughtful Ways To Raise Non-Materialistic Children</a> &mdash; Christmas (and other holidays) is not an excuse to overindulge your children. Rein in the gifts and find ways to celebrate the true spirit of the season without overspending. [Seed Time]</p> <p><a href="http://couplemoney.com/real-estate/makeover-your-bathroom-for-cheap/">5 Tips to Makeover Your Bathroom without Breaking the Bank</a> &mdash; Don't replace dingy or outdated bathroom cabinets if the frame is still good. You can replace just the doors and reface the visible surfaces to update the look. [Couple Money]</p> <p><a href="http://moneypantry.com/swap-barter-websites/">35 Bartering &amp; Swapping Sites: Best Places to Trade Your Stuff Online</a> &mdash; You can trade pretty much anything online, from cars and houses to a wide range of services. [Money Pantry]</p> <p><a href="http://everythingfinanceblog.com/18467/save-on-your-taxes.html">7 Ideas You Can Use to Save on Your Taxes</a> &mdash; Invest in education. The money you put toward tuition or saving for your children&rsquo;s college education is usually tax deductible. [Everything Finance]</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/amy-lu">Amy Lu</a> of <a href="http://www.wisebread.com/best-money-tips-make-these-7-moves-to-retire-early">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-7"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-are-people-retiring-in-their-30s">How Are People Retiring in Their 30s?!</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-woman-retired-at-60-and-traveled-the-world">How One Woman Retired at 60 and Traveled the World</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-much-do-i-need-to-retire-how-much-can-i-spend">How much do I need to retire? How much can I spend?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-keys-to-an-early-retirement">4 Keys to an Early Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-people-dont-retire-early-and-how-you-can">4 Reasons People Don&#039;t Retire Early — and How You Can</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement best money tips early retirement Fri, 21 Oct 2016 09:30:27 +0000 Amy Lu 1817174 at http://www.wisebread.com 5 Ways to Handle a Forced Early Retirement http://www.wisebread.com/5-ways-to-handle-a-forced-early-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-ways-to-handle-a-forced-early-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_taking_notes_73540307.jpg" alt="Woman finding ways to handle early retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You had a plan: You would work until 67, contributing the maximum amount of each paycheck into your company's 401K plan. You would then <a href="http://www.wisebread.com/how-to-plan-for-retirement-when-you-re-ready-to-retire">enjoy a retirement</a> of traveling the world and spending time with your grandchildren.</p> <p>But then your company changed your plans. They let you go you at age 55 or 60. Finding a new job at this age isn't easy. According to an AARP study released in 2015, 45% of job hunters aged 55 or older were members of the long-term unemployed, those who were out of work for 27 weeks or longer. And when these older job seekers did find new jobs, they tended to earn less money. The same AARP survey found that almost 48% of people 55 or older were earning less on their new jobs than they did at their old ones.</p> <p>Those are intimidating numbers. But they don't mean that a forced early exit from the workforce will dash your retirement dreams. Here are five steps that you can take after you've been laid off or fired to make your earlier-than-planned retirement a successful one.</p> <h2>1. Assess Your Financial Reality</h2> <p>It's easy to panic when you've lost a job. But your financial situation might not be as dire as you think. To find out, it's time to perform a quick financial assessment.</p> <p>First, list your monthly expenses. These might be lower if you are no longer paying a mortgage each month. Then list the income you have coming into your household. Maybe your spouse's income means that you can still save enough money each month for a happy retirement. Maybe you'll need an extra income boost from somewhere to still hit those goals.</p> <p>Depending on how close you are to your official retirement age, you might decide to start receiving your monthly Social Security payments. You'll get less each month if you haven't reached full retirement age, but if you can't hold off on the extra monthly income, receiving your benefits a few years early might be a sound move.</p> <p>If you were laid off or fired, you probably qualify, too, for unemployment insurance. Make sure to take advantage of this. That extra monthly income could help you stay on track for your retirement goals.</p> <h2>2. Get Realistic About Your Retirement Goals</h2> <p>You might have to scale back your retirement goals should you be forced to exit the workplace earlier than planned. Maybe you planned to take a long trip every year. If you're forced out of work five years early, you might have to scale that back to just three big trips spread out over your entire retirement.</p> <p>This doesn't mean that your retirement is ruined. But you might have to refocus. Maybe instead of joining that high-priced country club, you'll be taking your golf clubs to public courses throughout your city.</p> <h2>3. Make Sure You Have a Plan for Insurance</h2> <p>You'll need health insurance even after you lose your job. You might qualify for Medicare or Medicaid, though you might not qualify for these government programs depending on your age and income levels.</p> <p>If you need insurance not offered through the government, you can search for a low-cost plan through the insurance exchange created under the Affordable Care Act.</p> <p>Letting your health insurance lapse can be a costly mistake.</p> <h2>4. Find Part-Time Work to Fill in the Income Gaps</h2> <p>If you need some extra income each month, consider taking a part-time job. This work, even if it doesn't come with the benefits of a traditional full-time job, could provide you with the extra bit of cash that will keep your retirement dreams alive.</p> <p>Depending on your field, you might find a part-time job as a consultant. But even if you can't, you can still find enjoyment, and some extra financial security, by taking on a position in a new field.</p> <h2>5. Meet With a Professional</h2> <p>Retirement planning is complicated when everything goes according to plan. When those plans are suddenly changed? It's even more of a challenge to make sure that you have enough dollars saved for your after-work years.</p> <p>That's why it's important to meet with a financial adviser who can help you determine what financial steps you need to take now. Depending on your income and community, you might even qualify for free financial advice.</p> <p>A financial planner can help you create a new budget and a new financial plan that fits with your new money reality.</p> <p><em>Have you faced early retirement? What steps have you taken?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/5-ways-to-handle-a-forced-early-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-8"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-keys-to-an-early-retirement">4 Keys to an Early Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-people-dont-retire-early-and-how-you-can">4 Reasons People Don&#039;t Retire Early — and How You Can</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-your-taxes-will-change-when-you-retire">Here&#039;s How Your Taxes Will Change When You Retire</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-moves-that-guarantee-a-great-retirement">4 Moves That Guarantee a Great Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-save-for-retirement-when-you-are-unemployed">How to Save for Retirement When You Are Unemployed</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401k early retirement extra income forced retirement insurance job loss medicaid medicare part-time jobs unemployed Tue, 07 Jun 2016 09:30:33 +0000 Dan Rafter 1725699 at http://www.wisebread.com Best Money Tips: How to Retire By 55 http://www.wisebread.com/best-money-tips-how-to-retire-by-55 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-how-to-retire-by-55" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_happy_hammock_000068947321.jpg" alt="Woman learning how to retire by 55" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Welcome to Wise Bread's <a href="http://www.wisebread.com/topic/best-money-tips">Best Money Tips</a> Roundup! Today we found a strategy for early retirement, questions that will help you declutter, and the details on Hulu&rsquo;s new cable TV service.</p> <h2>Top 5 Articles</h2> <p><a href="http://www.bluntmoney.com/how-to-be-able-to-retire-at-55/">How to Be Able to Retire at 55</a> &mdash; Early retirement is a dream for many of us&hellip; but you can make it a reality balancing your sources of income and expenditure. [Blunt Money]</p> <p><a href="http://parentingsquad.com/6-amazing-books-on-motherhood-you-should-read-immediately">8 Questions to Ask Yourself to Help You Declutter</a> &mdash; Do you have a concrete plan to use this item? If not, toss it. [PopSugar Smart Living]</p> <p><a href="http://www.csmonitor.com/Business/Saving-Money/2016/0513/Cord-cutters-rejoice!-Hulu-is-planning-an-online-cable-style-TV-service">Cord-cutters rejoice! Hulu is planning an online cable-style TV service</a> &mdash; Hulu recently announced that they will offer an online streaming package that would include broadcast and cable channels. [The Monitor]</p> <p><a href="http://www.experian.com/blogs/news/about/build-emergency-fund/">Surefire Ways to Boost Your Emergency Fund</a> &mdash; Life is full of surprises &mdash; some good, some bad, and some very expensive! Join Experian's #CreditChat tomorrow at 3 p.m. ET to learn how to boost your emergency fund for life's very expensive surprises. [Experian]</p> <p><a href="http://flippingincome.com/items-you-can-resell-from-dollar-stores/">5 Items You Can Resell From Dollar Stores</a> &mdash; Who knew you could make a profit from these dollar store items? [Flipping Income]</p> <h2>Other Essential Reading</h2> <p><a href="http://www.northerncheapskate.com/12-cheap-quick-and-easy-stress-relievers/">12 Cheap, Quick, and Easy Stress Relievers</a> &mdash; Crank up the music and dance like you mean it! It'll only take a few minutes for you to start feeling better. [Northern Cheapskate]</p> <p><a href="http://flippingincome.com/items-you-can-resell-from-dollar-stores/">4 ideas for spring landscaping on a budget</a> &mdash; Check out check out yard sales, thrift shops, and dollar stores for things like containers, décor, and gloves. [Bargaineering]</p> <p><a href="http://www.everybodylovesyourmoney.com/2016/05/16/12-ways-for-teenagers-to-earn-money-this-summer.html">12 Ways for Teenagers to Earn Money This Summer</a> &mdash; Many companies hire teens for seasonal part-time jobs. Check out your local bowling alley, movie theater, and mall for openings. [Everybody Loves Your Money]</p> <p><a href="http://www.bluntmoney.com/how-to-be-able-to-retire-at-55/">How to Compare Two Job Offers</a> &mdash; When choosing between two (or more!) job offers, you need to consider compensation and benefits, of course, as well as the commute and company culture. [Mint Life]</p> <p><a href="http://parentingsquad.com/6-amazing-books-on-motherhood-you-should-read-immediately">6 Amazing Books on Motherhood You Should Read Immediately</a> &mdash; These books offer serious food for thought for mothers everywhere. [Parenting Squad]</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/amy-lu">Amy Lu</a> of <a href="http://www.wisebread.com/best-money-tips-how-to-retire-by-55">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-7"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-are-people-retiring-in-their-30s">How Are People Retiring in Their 30s?!</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-woman-retired-at-60-and-traveled-the-world">How One Woman Retired at 60 and Traveled the World</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-much-do-i-need-to-retire-how-much-can-i-spend">How much do I need to retire? How much can I spend?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-keys-to-an-early-retirement">4 Keys to an Early Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-people-dont-retire-early-and-how-you-can">4 Reasons People Don&#039;t Retire Early — and How You Can</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement best money tips early retirement Tue, 17 May 2016 09:30:23 +0000 Amy Lu 1711443 at http://www.wisebread.com 6 Ways Life is Wonderful When You're Debt-Free http://www.wisebread.com/6-ways-life-is-wonderful-when-youre-debt-free <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-ways-life-is-wonderful-when-youre-debt-free" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_carefree_smile_000074865831.jpg" alt="Woman learning ways life is wonderful when debt-free" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Some people think debt is the norm rather than the exception. To each his own. Just know that this type of mindset can become dangerous, especially if you develop the habit of financing anything and everything.</p> <p>Credit cards and other loans can put what you want within financial reach, but a life without debt can be rewarding. Here are six ways life is frickin' awesome when you're not burdened by a negative net worth.</p> <h2>1. You Have the Freedom to Work Less</h2> <p>The more debt you have, the more you have to work to keep up with monthly payments. Whether it's a house payment, a car payment, or credit cards, debt holds your freedom hostage and keeps you stuck in a career or job you don't like. Think of how great life could be if you had fewer bills. Rather than working a 40- or 50-hour week, you might get by working only 20 or 30 hours a week. With fewer financial pressures, you can quit a high-stress job and find satisfying work, although you might earn less.</p> <h2>2. You Can Retire While You're Still Young</h2> <p>Even if you know the importance of early retirement planning, debt can limit how much you stash for the future. Eliminating needless debt and reducing monthly expenses frees up disposable cash, allowing you to grow your retirement account faster. A sizable account might be the difference between working into your 60s and retiring young while you're still healthy and energetic. And that's not even considering how good the &quot;everybody envies me&quot; factor is gonna feel.</p> <h2>3. You Can Finally Have a &quot;Real&quot; Savings Account</h2> <p>Not only can debt-free living boost your retirement account, there's also an opportunity to grow your personal fund. Imagine what you could do with a &quot;real&quot; savings account. I'm not talking about $500 or $1,000, but rather tens of thousands of dollars. This is money that can be used for an emergency, home improvements, investments, or a good time. You can take a much-needed (and deserved; do you, boo!) vacation or deal with home repairs without relying on a credit card.</p> <p>If you're struggling to build your personal account, be honest and consider whether your lack of savings has anything to do with debt payments eating up your extra cash. If you could eliminate $1,000 a month in debt payments (between credit cards, student loans, and automobile loans), you could save $12,000 in just one year.</p> <h2>4. You Will Become a Smarter Spender</h2> <p>I've learned something from my own experience with debt: It is easier to accumulate new debt when I already have debt. Whenever I have a zero balance on my credit card, I'm more cautious and conscious of how I spend my money and use the card. I'll second-guess or rethink the smallest purchases. It doesn't matter if it's only $5 or $10, I'll wait until I have cash to avoid using the card. But the moment I give in and use the card, I stop second-guessing myself and I continue using the card.</p> <p>I've had debt discussions with others and found that some people feel the same. Maybe it's just our experiences, or maybe there's a connection between existing debt and new debt. Either way, <a href="http://www.wisebread.com/the-fastest-method-to-eliminate-credit-card-debt">getting rid of debt</a> can make you more aware of your spending habits. Debt elimination can be a long process. Reflecting on the effort it took to become debt free (and the benefits) is motivation to remain debt free.</p> <h2>5. You Will Experience Less Financial Anxiety</h2> <p>Debt keeps you enslaved to a bank. And sometimes, the amount you owe can heighten your anxiety level. This might be the case if payments stretch your budget beyond a comfortable limit. If you get into hot water, you could lie awake worrying about late payments, a damaged credit score, or collection calls. On the other hand, when you live within your means and don't rely on financing, you enjoy an inner calm and better financial security. When you own your stuff outright, you don't have to worry about anybody taking your items, unless, of course, you fail to pay taxes on your home or car. Then, well, you better hide.</p> <h2>6. You Don't Have to Pay to Borrow</h2> <p>One of the best things about avoiding debt is that you avoid interest. Interest is the cost of borrowing, and most banks charge some form of interest when you take out a loan or use a credit card. The longer you carry the balance, the more interest you pay, which can add up to hundreds or thousands of dollars depending on the amount financed.</p> <p>Borrowers with superb credit may qualify for <a href="http://www.wisebread.com/5-best-credit-cards-with-0-apr-for-purchases">0% financing</a> for furniture, credit cards, or automobiles. But these promotions are short-lived and only beneficial if you pay off the balance during the introductory rate period. If not, interest kicks in. In the case of financing furniture, if you miss a payment or don't pay off the balance during the promotion period, you could end up paying retroactive interest. All this equates to extra money you're spending for which you have nothing to show. A fool's game, for sure. (See also: <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?ref=seealso">When to Use a 0% Balance Transfer to Pay Off Credit Card Debt</a>)</p> <p><em>What would you do if you were debt free? Travel? Retire? Throw the party to end all parties? Let's talk about it in the comments below.</em></p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <p>&nbsp;</p> <div align="center"><a href="//www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-ways-life-is-wonderful-when-youre-debt-free&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%20Ways%20Life%20is%20Wonderful%20When%20Youre%20Debt-Free.jpg&amp;description=6%20Ways%20Life%20is%20Wonderful%20When%20Youre%20Debt-Free" data-pin-do="buttonPin" data-pin-config="above" data-pin-color="red" data-pin-height="28"><img src="//assets.pinterest.com/images/pidgets/pinit_fg_en_rect_red_28.png" alt="" /></a> </p> <!-- Please call pinit.js only once per page --><!-- Please call pinit.js only once per page --><script type="text/javascript" async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <div align="center">&nbsp;</div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/6%20Ways%20Life%20is%20Wonderful%20When%20Youre%20Debt-Free.jpg" alt="6 Ways Life is Wonderful When Youre Debt-Free" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/6-ways-life-is-wonderful-when-youre-debt-free">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-9"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-reasons-stealth-wealth-is-the-best-wealth">5 Reasons Stealth Wealth Is the Best Wealth</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/goal-setting-getting-out-of-debt-once-and-for-all">Goal Setting: Getting Out of Debt Once and For All</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/beyond-debt-free-getting-by-in-the-new-economy">Beyond Debt-Free: Getting By in the New Economy</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-7-best-credit-card-debt-elimination-strategies">The 7 Best Credit Card Debt Elimination Strategies</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/when-to-use-savings-to-pay-off-debt">When to Use Savings to Pay Off Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management Lifestyle borrowing debt free early retirement financial freedom net worth savings Tue, 19 Apr 2016 10:30:10 +0000 Mikey Rox 1691580 at http://www.wisebread.com 4 Reasons Early Retirement Might Be Financially Risky http://www.wisebread.com/4-reasons-early-retirement-might-be-financially-risky <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-reasons-early-retirement-might-be-financially-risky" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000017275515.jpg" alt="Learning why early retirement might be a financial risk" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>&quot;The money's no better in retirement &mdash; but the hours are!&quot; So goes a popular saying.</p> <p>Maybe that's why many dream of retiring early. A March 2015 study of Americans with investible assets of $1 million or more found that that most of them planned to <a href="http://money.usnews.com/money/retirement/articles/2015/04/07/tales-of-early-retirement-the-path-3-people-took">retire by age 56</a>, and a whopping 20% of them by age 40.</p> <p>However, early retirement &mdash; even for those with a $1 million nest egg &mdash; might be financially risky. Here are four reasons why.</p> <h2>1. Reduced Social Security Benefits</h2> <p>Nine out of 10 Americans age 65 or older <a href="http://www.ssa.gov/news/press/basicfact.html">receive Social Security benefits</a>. For those that receive Social Security, they count on those payments to cover about 38% of their income during retirement.</p> <p>While you can start receiving your Social Security benefits as early as age 62, you should wait a couple more years. For those born in 1960 or later, you would <a href="http://www.ssa.gov/oact/ProgData/ar_drc.html">receive only 70%</a> of your full retirement benefit by retiring at age 62.</p> <p>To receive your full retirement benefit, you need to retire by your full retirement age (age 67 for those born 1960 or later) as determined by the Social Security Administration. However, by waiting until age 70 to retire, depending on your year of birth, you can receive up to 132.5% of your full retirement benefits. (See also: <a href="http://www.wisebread.com/4-exciting-affordable-american-cities-to-retire-in?ref=seealso">4 Exciting, Affordable American Cities to Retire In</a>)</p> <h2>2. Early 401(k) Withdrawal Penalties</h2> <p>By socking away as much as possible and taking advantage of employer matches, you can build such a strong 401(k) plan, you'll be tempted to retire in your late 50s.</p> <p>Hold that thought.</p> <p>In 2014, 401(k) plans were <a href="https://www.ici.org/policy/retirement/plan/401k/faqs_401k">18% of the $24 trillion</a> in U.S. retirement assets. From 2004 to 2010, penalized 401(k) withdrawals increased from <a href="http://business.time.com/2013/01/23/cash-leaking-out-of-401k-plans-at-alarming-rate/">$36 billion to about $60 billion</a>. If this trend continues, then retirees may not receive the full share of their 401(k) plans.</p> <p>Taking early distributions from your 401(k) before you reach age 59&frac12; is a bad idea for several reasons:</p> <ul> <li>On top of applicable income taxes, you're liable for a 10% additional tax on those early distributions.<br /> &nbsp;</li> <li>To avoid that 10% tax penalty, you would have to take retirement payments under a <a href="http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-Substantially-Equal-Periodic-Payments">substantially equal periodic payments</a> program, which are not only very complicated to set up, but can also cause cash crunches.<br /> &nbsp;</li> <li>All of your outstanding loans from your 401(k) plan become taxable income and are also subject to the additional 10% early distribution tax.<br /> &nbsp;</li> <li>Outstanding 401(k) loan balances can't be rolled into any eligible retirement plan.</li> </ul> <p>This is just one of the many <a href="http://www.wisebread.com/5-dumb-401k-mistakes-smart-people-make">dumb 401(k) mistakes</a> smart people make.</p> <h2>3. Subpar Nest Egg</h2> <p>By deciding to retire early, you can say goodbye to a bigger nest egg.</p> <p>Assuming you were contributing $400 every month to your 401(k) with a 5% rate of return compounded annually, here are some examples of how much you would forego by retiring early:</p> <ul> <li>One year earlier: $4,929.03</li> <li>Three years earlier: $15,538.77</li> <li>Five years earlier: $27,236.01</li> <li>Seven years earlier: $40,132.21</li> <li>10 years earlier: $61,996.82</li> </ul> <p>The bigger your monthly contribution and the higher your plan's rate of return, the larger your nest egg&hellip; could have been! And let's not forget that these calculations don't include additional contributions:</p> <ul> <li>Employer matches (average American foregoes $1,336 per year or extra 2.4% in retirement savings);<br /> &nbsp;</li> <li>Potential windfalls (e.g. commissions, end-of-year bonuses); and<br /> &nbsp;</li> <li>Catch-up contributions starting age 50 (<a href="http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Catch-Up-Contributions">$6,000 per year</a> in 2015).</li> </ul> <h2>4. Higher Chance of Empty Retirement Fund</h2> <p>There's good news and bad news.</p> <p>First, the good news: Americans are living longer. In 1990, the life expectancy for men and women were age 71.8 and 78.8, respectively. Nowadays, those number are <a href="http://www.ssa.gov/planners/lifeexpectancy.html">age 84.3 and 86.6</a>, respectively. Our life expectancy is so good that about 10% of current 65-year old Americans will live past age 95!</p> <p>Now, the bad news: a longer life expectancy means that your nest egg may run out. For many years, $1 million used to be the goal for most retirement plans. If you make withdrawals from your nest egg using the suggested 4% annual rate, you will <a href="http://www.bankrate.com/finance/retirement/retirement-statistics-1.aspx">run out of retirement funds</a> within 25 years. Under this scenario, by retiring early by age 55, you could run out of retirement monies by age 80!</p> <p>Adapting to a very thrifty lifestyle (&quot;What? No summer cruise to the Bahamas!&quot;) may not be possible for some early retirees. Especially those who worked really hard to build up those $1 million nest eggs.</p> <p>The reality is that early retirement requires careful planning and persistent saving. To prevent such a retirement catastrophe, many registered investment advisors are recommending Millennials set a goal of <a href="http://money.usnews.com/money/retirement/articles/2011/09/15/gen-ys-2-million-retirement-price-tag">at least $2 million</a> for their retirement savings. (See also: <a href="http://www.wisebread.com/5-facts-millennials-should-know-about-retirement-planning?ref=seealso">5 Facts Millennials Should Know About Retirement Planning</a>)</p> <p><em>Do you know any stories about people who successfully retired early? Please share them in the comments below</em><strong><em>.</em></strong></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/4-reasons-early-retirement-might-be-financially-risky">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-10"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-face-4-ugly-truths-about-retirement-planning">How to Face 4 Ugly Truths About Retirement Planning</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-biggest-ways-millennials-risk-their-retirements">5 Biggest Ways Millennials Risk Their Retirements</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/we-do-the-math-save-for-retirement-or-pay-off-credit-card-debt">We Do the Math: Save for Retirement or Pay Off Credit Card Debt?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-reasons-every-millennial-needs-a-roth-ira">6 Reasons Every Millennial Needs a Roth IRA</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/half-of-americans-are-wrong-about-their-retirement-savings">Half of Americans Are Wrong About Their Retirement Savings</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) early retirement millennials nest egg social security Mon, 24 Aug 2015 13:00:26 +0000 Damian Davila 1531825 at http://www.wisebread.com How One Woman Retired at 60 and Traveled the World http://www.wisebread.com/how-one-woman-retired-at-60-and-traveled-the-world <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-one-woman-retired-at-60-and-traveled-the-world" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_hiking_000038203432.jpg" alt="Woman retired at 60 and traveled the world" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>More than half of Americans are worried they won't have <a href="http://www.wisebread.com/6-retirement-rules-you-should-be-breaking">enough money to retire</a>, according to a recent Gallup poll. Despite the dismal statistics, there are retirees today who live comfortably on their savings and live lifestyles that many would envy.</p> <p>Take Joe Stewart, for example, who retired early at age 60 and, in the last year alone, has used her newfound freedom to travel to Machu Picchu, the Galapagos Islands, and Puerto Vallarta. (She has a few more trips on her horizon, too!) According to Stewart, she never had a terribly high income. She started working when she was 16 and, at the height of her income earning years, brought in $60,000 per year. To get where she is today, she started saving early, made frugal life choices, and made the most of what she had.</p> <p>How did Stewart get to this sweet spot in life and, more importantly, how can the rest of us emulate her success?</p> <h2>Work Hard, Invest Early</h2> <p>Stewart started working when she was 16 years old and put herself through college with the help of a small scholarship. &quot;I never had a lot of money,&quot; she says, when discussing that she never felt the need to live an extravagant lifestyle. &quot;I don't spend money on expensive shoes. I shop at Ross and TJ Maxx. I always look great but I don't spend a lot of money on junk.&quot;</p> <p>Instead of splurging on high-end goods, Stewart instead focused from an early age on long-term investing and saving strategies. For those looking to build a solid retirement foundation, her footprint may be one worth following. (See also:&nbsp;<a href="http://www.wisebread.com/9-things-people-who-retire-early-do?ref=seealso">9 Things People Who Retire Early Do</a>)</p> <h2>Open an IRA and Buy a House (And Pay it Off)</h2> <p>In the early 1980s, Stewart and her now ex-husband started funding their individual retirement accounts and consistently maxed out their annual contribution limits. (See also:&nbsp;<a href="http://www.wisebread.com/10-easy-ways-to-supercharge-your-retirement?ref=seealso">10 Easy Ways to Supercharge Your Retirement</a>)</p> <p>Stewart and her ex-husband bought their first house in 1983. &quot;We didn't spend a lot of money,&quot; she says. &quot;Instead we put money into our house.&quot; They paid off the original house, bought a bigger home, and gradually increased their monthly payments.</p> <p>&quot;We paid off a $100,000 loan in six years,&quot; she says, &quot;even though we didn't make a lot of money.&quot; Stewart describes their careers as administrative in nature. In their two peak earning years, they reached the six figure mark collectively, but they spent many years below that level. (See also:&nbsp;<a href="http://www.wisebread.com/6-great-reasons-for-paying-off-the-mortgage-on-your-home?ref=seealso">6 Great Reasons for Paying Off the Mortgage on Your Home</a>)</p> <h2>Invest</h2> <p>Stewart was fortunate to receive corporate stock through a former employer, The Limited (L Brands). &quot;I'll admit I didn't have the foresight to buy the stock when I was working there,&quot; she says, explaining that it was offered as a benefit through her corporate retirement plan.</p> <p>&quot;In 1984 I owned $40,000 worth of the stock. That was a lot of money!&quot; she admits. &quot;In 1985, it was the best performing stock on the market. With that money I paid off our first house, paid for two college degrees, bought all our cars, took two trips to Europe, and remodeled our bathroom.&quot;</p> <p>&quot;I still have [some of] the stock,&quot; she says. &quot;That's the power of investing over time.&quot; Although, Stewart admits she was lucky it was such a strong performing stock. &quot;Friends will tell me they're afraid to lose money in the stock market. I say they're losing money by not being in the stock market! I lost $100,000 one year,&quot; she says, but even so, her investment is still going strong. (See also: <a href="http://www.wisebread.com/8-cheap-easy-and-not-so-obvious-ways-to-invest-in-a-companys-stock?ref=seealso">8 Cheap, Easy, and Not-So-Obvious Ways to Invest in a Company's Stock</a>)</p> <p>Although widely popular today, 401(k) plans weren't readily available to many employees until the early 1990s. In 1992, Stewart opened a plan through her employer, contributed 10% of her income, and gradually increased her contribution amount from there. (See also:&nbsp;<a href="http://www.wisebread.com/5-dumb-401k-mistakes-smart-people-make?ref=seealso">5 Dumb 401(k) Mistakes Smart People Make</a>)</p> <h2>Fund a Health Savings Account (HSA)</h2> <p>Stewart opened an HSA about two years ago and has been fully funding it ever since. She can use her HSA funds to help mitigate health care expenses as she ages.</p> <h2>Keep Expenses Low</h2> <p>Before she retired, Stewart earned about $60,000 per year. Of that, she saved about $800 per month plus her 401(k) and HSA contributions. Today her spending is at the same level as it was pre-retirement, but she's no longer saving.</p> <p>Stewart knows there's a certain freedom that comes when you're not beholden to your debts. &quot;My car is paid for, my home is paid for. My only expenses are utilities, living expenses, condo fees, and travel,&quot; she says. (See also:&nbsp;<a href="http://www.wisebread.com/73-easy-ways-to-save-money-today?ref=seealso">73 Easy Ways to Save Money Today</a>)</p> <h2>Don't Sweat Life's Road Blocks</h2> <p>Despite careful planning, life doesn't always unfold as planned. Stewart and her husband divorced in 2004. Conventional wisdom maintains that divorce can cause financial mayhem. Stewart is proof that it doesn't have to. &quot;We split our finances 50/50,&quot; she says. &quot;I took the equity from our paid off house and put it down on a condo and then paid that off within four years. The key for me was to be debt free.&quot;</p> <p>Stewart also didn't ask for alimony, even though her ex-husband's income was higher. &quot;Freedom has always been more important to me than money,&quot; she says.</p> <h2>Finally, Do What You Love</h2> <p>Stewart is so adept at keeping expenses low that her only real budget buster is travel. To compensate for the expense, she launched a small side freelance writing business. She earns about $10,000 per year, which is enough to cover the costs of her trips.</p> <p>&quot;My priority is to travel,&quot; she says. &quot;I pick up writing jobs here and there but I turn down administrative work and long-term projects.&quot; Maintaining flexibility and freedom are more important to Stewart than bringing home a higher income. (See also:&nbsp;<a href="http://www.wisebread.com/11-things-scientists-say-will-boost-your-happiness-today?ref=seealso">11 Things Scientists Say Will Boost Your Happiness Today</a>)</p> <p>As Stewart shows, one doesn't have to be financially wealthy to build a happy retirement. Plan early, make wise choices, and be consistent: those are the keys to her retirement success.</p> <p><em>What are you doing to prepare for retirement?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/alaina-tweddale">Alaina Tweddale</a> of <a href="http://www.wisebread.com/how-one-woman-retired-at-60-and-traveled-the-world">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-11"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-retire-rich">How to Retire Rich</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-is-why-you-cant-postpone-planning-for-your-retirement-and-how-to-start">This Is Why You Can&#039;t Postpone Planning for Your Retirement (And How to Start)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/money-resolutions-6-ways-to-take-control-in-2013">Money Resolutions: 6 Ways to Take Control in 2013</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-money-moves-to-make-the-moment-you-win-the-lotto">4 Money Moves to Make the Moment You Win the Lotto</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-money-moves-to-make-the-moment-you-decide-to-retire">12 Money Moves to Make the Moment You Decide to Retire</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement early retirement investing money savings traveling Mon, 22 Jun 2015 17:00:13 +0000 Alaina Tweddale 1462827 at http://www.wisebread.com Why Taking Social Security Could Cost You Thousands http://www.wisebread.com/why-taking-social-security-could-cost-you-thousands <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-taking-social-security-could-cost-you-thousands" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/social-security-finance-Dollarphotoclub_37675746.jpg" alt="social security" title="social security" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>I recently attended a weekend barbecue with some neighbors, and at one point the conversation shifted from the usual topics &mdash; family updates, local news, sports, and politics &mdash; to retirement. Strangely enough, it was raised by a friend's daughter, Barbara, who is in her early 30s. I was a little surprised (but encouraged) that she was already doing some retirement planning at that age.</p> <p>Barbara is a bright, hard-working human resources manager with a promising future, but after 10 years in a challenging work environment, she said she was beginning to feel a little fatigued. That's certainly understandable. She and another 80 million Millennials have had the misfortune of joining a workforce that's experiencing some major disruptions. For most workers, America's recent economic restructuring has led to less job security, lower wages, fewer benefits, and longer hours. That's not exactly a recipe for long-term optimism if you're a thirty-something.</p> <p>With this in mind, it didn't take long for me to realize that Barbara raised the issue of retirement not because she was interested in long term financial planning, but instead out of sheer frustration. Barbara's question was, &quot;What is the earliest age I can begin receiving my Social Security retirement benefit?&quot; Age 62 was the answer. &quot;Then that's when I'll take it,&quot; she said.</p> <p><a href="http://www.socialsecurity.gov/planners/benefitcalculators.htm"><img width="605" height="340" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/Whelan%20Blog%20Table%20-%20Social%20Security%20Benefit%20Reductions.jpg" alt="" /></a></p> <p>What Barbara didn't realize is that by doing so, she'd forfeit 30% of her full benefit amount. If her full amount was, say, $2,000 per month, then she would be giving up $600. So I said to her, &quot;What if you needed $2,000 a month from Social Security just to break even financially? And what if, by taking your Social Security benefit at age 62 instead of age 67, your benefit amount is reduced by $600 a month, to $1,400?&quot; Barbara's reply: &quot;I'd still take the lower amount.&quot;</p> <p>Of course I couldn't just let the issue end there, so I asked a follow-up question: &quot;But that would put you $7,200 in the hole each year. By your mid 70s your debt would add up to $100,000. How would you pay for it?&quot; &quot;I don't care,&quot; she said. &quot;I just want to stop working the moment I first qualify for a monthly retirement check.&quot;</p> <p>At that point I sensed I was stepping on a nerve, so I let it go. But, I'm glad she raised the topic and I give her credit for starting the conversation. Now that the issue has been framed with real numbers and dates, she is in a better position to make a sound decision when the time comes.</p> <p>For some, the loss of $600 each month for the duration of their retirement would be difficult to absorb. For others, it would be less of an issue. And for others still, there might be health-related concerns or other extenuating circumstances that make early distribution a reasonable choice.</p> <p>The point is, before choosing to give away so much of what you earned and accumulated over many decades, be sure to consider the trade-offs. Let reason, not emotion, drive your decision.</p> <p><em>At what age are you planning on taking Social Security?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/keith-whelan">Keith Whelan</a> of <a href="http://www.wisebread.com/why-taking-social-security-could-cost-you-thousands">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-12"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-much-do-i-need-to-retire-how-much-can-i-spend">How much do I need to retire? How much can I spend?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-questions-to-ask-before-you-start-claiming-your-social-security-benefits">5 Questions to Ask Before You Start Claiming Your Social Security Benefits</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-early-retirement-might-be-financially-risky">4 Reasons Early Retirement Might Be Financially Risky</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/tiny-nestegg-retire-abroad">Tiny Nestegg? Retire abroad!</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement early retirement pension social security Fri, 23 Jan 2015 14:00:06 +0000 Keith Whelan 1282530 at http://www.wisebread.com 14 Ways to Retire Early http://www.wisebread.com/14-ways-to-retire-early <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/14-ways-to-retire-early" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/seniors-beach-3630112-small.jpg" alt="relaxing" title="relaxing" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>It seems like the economy is making it more difficult for people to retire at 65. That's true in some ways, but what if you had more control over your own retirement than you realized?</p> <p>What if there were some practical things that you could do that would enable you to retire closer to 60 instead of 70? While we can't control the economy around us, there are some practical financial things we can do to round down our retirement age. (See also: <a href="http://www.wisebread.com/retirement-planning-if-you-re-under-30?ref=seealso">Retirement Planning if You're Under 30</a>)</p> <h2>1. Know What You'll Need to Live On</h2> <p>Simply knowing what your monthly expenses will be during your retirement years can be helpful when it comes to planning when exactly you'll be able to quit working. This <a href="https://personal.vanguard.com/us/insights/retirement/tool/retirement-expense-worksheet">worksheet from Vanguard</a> covers most expenses and will give you a rough estimate of what you'll need to live on a monthly basis.</p> <p>Let's assume that currently you're 27 years old and earning around $35,000 per year. We'll also assume (generously) that between a 401(k), savings, and other assets, you already have $30,000 saved.</p> <p>According to <a href="http://money.cnn.com/calculator/retirement/retirement-need/">CNN's retirement calculator</a>, if you can save 15% of your income, you can retire at 65. That's $5250 a year or $438 a month at your starting income. (The calculator assumes that your income will grow at an annual rate of 3.8%, so your savings in actual dollar amounts should also increase each year.)</p> <p>Now, if you knock your hopeful retirement age down to 60, 15% of your income suddenly isn't enough, as it falls quite short of what you'll need. It's not until you're saving 21% of your income that you make the cut to retire at 60. That's $7350 a year or $613 a month.</p> <p>So your challenge is to increase your savings by 6%, or $175 a month.</p> <h2>2. Start Early</h2> <p>Starting to plan and save for retirement in any capacity is far easier in your mid-20s than your 40s or 50s. The earlier you start, the more time your money will have to accumulate and grow.</p> <p>In the retirement calculator above, the starting age was set to 27. Knock that number down to 24, and you can get away with saving 19% instead of 21%.</p> <h2>3. Contribute a Weekly Amount to a Long-Term, Low-Risk Investment</h2> <p>If you start early, contributing as little as $20 a week to a money market mutual fund can grow to five figures (six if you start with a five-figure initial balance) by the time you're ready to retire.</p> <p>Depending on your income and what you're saving already, $20 a week is $80 a month (plus two bonus weeks every year!), which gets us almost halfway to $175.</p> <h2>4. Save Your Salary Increases After a Certain Point</h2> <p>Our habit is to increase our income and upgrade, always hovering at the ceiling of what we can afford. If you get to a certain point where you're content with your lifestyle and living situation, stop upgrading when your salary increases, and instead, save that increased amount every year as a lump sum for your retirement accounts.</p> <p>If you've been saving 21% of $35,000 (or even 15%), it's okay to loosen up a little. But keep your eyes on the prize. (See also: <a href="http://www.wisebread.com/lifestyle-inflation-the-ultimate-financial-trap?ref=seealso">Lifestyle Inflation: The Ultimate Money Trap</a>)</p> <h2>5. Keep Your Living Expenses Low</h2> <p>Keeping your living expenses capped will allow you to put more money aside for retirement and contribute more to investment accounts or a 401(k).</p> <p>Stay practical for this one.</p> <p>Start with a <a href="http://www.wisebread.com/build-your-first-budget-in-5-easy-steps">simple budget plan</a> and then carve out unnecessary expenses. You also can work to <a href="http://www.wisebread.com/4-ways-to-win-the-war-against-this-summers-electric-bill">lower your utility bill</a>, which can save anywhere from $30 to $100 per month. (See also: <a href="http://www.wisebread.com/5-things-you-can-do-in-15-minutes-that-could-save-you-1500-this-year?ref=seealso">Save $1,500 a Year in 15 Minutes</a>)</p> <h2>6. Pay Off the Principal on Your House</h2> <p>If you can get your house paid off, you'll free up all the money that would normally go to a mortgage payment every month, which can go to retirement savings. Also, the more principal you've paid, the more you get to keep when and if you sell your house.</p> <h2>7. Take a State- or Federal-Level Government Job</h2> <p>Those who were born after 1970 and work for the state or federal government have a minimum retirement age (MRA) of 57, and often retire before 60 with a pension. These employees are entitled to <a href="http://en.wikipedia.org/wiki/Public_employee_pension_plans_in_the_United_States">public employee pension plans</a>, though they vary by state.</p> <h2>8. Max Your 401(k) Contribution</h2> <p>If you have a 401(k) and can afford to contribute more, try to contribute as much as your employer will match.</p> <p>If you're able to contribute an extra $1,500 a year total (starting when you're 25) that will give you roughly an extra $15,000 a year to live on if you want to retire at age 60.</p> <h2>9. Downsize Your Home When the Market Is Good</h2> <p>This can be a particularly good move if your house is paid off and the kids are all grown and moved out. Assuming the market is good, sell your home at a profit and move into a place that's smaller, cheaper, and better suited for just a couple people. Odds are that you'll have a sizeable amount to put away; perhaps even enough to get you through a year or two. (See also: <a href="http://www.wisebread.com/this-is-how-you-downsize-your-home-and-start-living-a-better-life?ref=seealso">How to Downsize and Live a Better Life</a>)</p> <h2>10. Move to a State With Lower Taxes</h2> <p>Some states are easier to retire in than others. <a href="https://turbotax.intuit.com/tax-tools/tax-tips/Taxes-101/States-with-the-Highest-and-Lowest-Taxes/INF23232.html">Property, income, and sales tax</a> should all be taken into consideration if you plan to move. Reduced taxes mean reduced living expenses which means your retirement dollars go farther.</p> <h2>11. Exercise and Manage Your Health</h2> <p>One way that you can help to prevent increased expenses in your later years is to exercise and take care of your body. If you do, you might be able to qualify for cheaper health insurance plans and be less susceptible to increases in your monthly premiums. (See also: <a href="http://www.wisebread.com/live-long-and-prosper-with-these-15-small-healthy-habits?ref=seealso">Live Longer With These Small Healthy Habits</a>)</p> <h2>12. Start a Roth IRA</h2> <p>A Roth IRA is a retirement account that allows you to contribute after-tax money. The appeal over a traditional IRA is that withdrawals won't be taxed in retirement, and that your contributions can be withdrawn anytime without penalty (with some caveats), for emergencies.</p> <h2>13. Work the Tough Hours While You're Young</h2> <p>Working overtime and weekends, and doing what you can to bring in more cash flow is much easier in your 20s and 30s than when you're older. Work those hours now and put money away so that you can wind down as you get closer to retirement age.</p> <h2>14. Cultivate a Skill That You Can Do Part-Time in Retirement</h2> <p>Many people work part time in their retirement, if for nothing else as a means to kill time. Try to plan for a way to continue to bring home a paycheck even after you've retired. This can mean continuing in your line of work part time or perhaps going from a business owner to a consultant for another company. It also means your retirement funds won't be your sole means of support.</p> <h2>Planning Ahead</h2> <p>The most important thing you can do when it comes to securing your retirement is to do as much advanced planning as you can. While certain things can't be predicted, like exact living expenses or the cost of insurance, you don't have to wait until your 50s to start putting money away.</p> <p>Be prudent when you're still young, and you'll make an early retirement far easier.</p> <p><em>Do you have other ideas on how to retire early? Let me know in the comments below.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/14-ways-to-retire-early">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-13"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-people-dont-retire-early-and-how-you-can">4 Reasons People Don&#039;t Retire Early — and How You Can</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-simple-ways-to-boost-an-underperforming-401k">5 Simple Ways to Boost an Underperforming 401(k)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/50-ways-to-save-money-on-clothing">50 Ways to Update Your Wardrobe for Cheap</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make">7 Retirement Planning Steps Late Starters Must Make</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-are-people-retiring-in-their-30s">How Are People Retiring in Their 30s?!</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> General Tips Retirement early retirement retirement savings saving Mon, 07 Apr 2014 08:36:22 +0000 Mikey Rox 1134347 at http://www.wisebread.com Trading Work for Never-Ending Weekends: How to Retire Early http://www.wisebread.com/trading-work-for-never-ending-weekends-how-to-retire-early <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/trading-work-for-never-ending-weekends-how-to-retire-early" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/4747349294_5cf24ecd73_z.jpg" alt="man on hammock" title="man on hammock" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>I&rsquo;m a long way from retirement, but I&rsquo;ve definitely had those days. You know the ones I mean &mdash; when you&rsquo;re tired and irritable, when it&rsquo;s cold and gray and windy, when everything feels like more of the same old thing, when you haven&rsquo;t had time to do your laundry let alone spend time with your friends, and, on top of it all, the thought of grinding out a few more decades at the office seems utterly insurmountable.</p> <p>If you hear the word &ldquo;retirement&rdquo; on a day like that, it probably sounds a lot more like &ldquo;emancipation&rdquo; (I know it does for me). After all, if you didn&rsquo;t have to work, you could spend more time with your family and your friends, catch up on your golf game, take up new hobbies, travel the world...</p> <p>Hold on a minute. If you&rsquo;re slipping away into sweet reverie, you might need a reality check. Here it goes. Retiring early is no dream &mdash; it&rsquo;s a goal, and an ambitious one at that. That isn&rsquo;t to say you can&rsquo;t or shouldn&rsquo;t go for it. But unless you strike it rich in the lottery, succeeding at retiring early will mean careful planning, hard work, and near-superhuman self discipline. Here&rsquo;s what you&rsquo;ll have to do to make it happen. (See also: <a href="http://www.wisebread.com/deciding-what-you-want-out-of-retirement">Deciding What You&nbsp;Want Out of Retirement</a>)</p> <h2>Save &mdash; a Lot</h2> <p>You probably already know that experts recommend that you save a lot for retirement. Exactly how much is a matter of debate. It&rsquo;s also highly personal, as it depends on your lifestyle, what you want to do during retirement, and (everyone&rsquo;s least-favorite calculation) how long you think you&rsquo;ll live. This is where things get tricky in terms of retiring early. In essence, working for a shorter period of time puts you at a disadvantage on both ends of the saving equation: you&rsquo;ll have fewer earning years, and more years during which you&rsquo;ll have to rely on your savings.</p> <p>So how much might you need to save? Rather than start with someone who makes six figures, let&rsquo;s look at averages. The medium income in the U.S. is $50,000. Average life expectancy is almost 78 years. If you are 35 and would like to retire at 60 with 80% of your pre-retirement income, you will need to save about $1 million &mdash; and that&rsquo;s assuming you get the estimated Social Security payment. You can check out the <a href="http://cgi.money.cnn.com/tools/retirementneed/retirementneed_plain.html">retirement calculator</a> I used to figure this out, but no matter how you fiddle with the numbers, retiring early will add up to a big one.</p> <h2>Live Cheap</h2> <p>Saving enough to retire early will mean living on less than you make, and you&rsquo;d better get used to it; your Spartan lifestyle will become even more crucial when you stop working. When you&rsquo;re working eight (or more) hours a day, a wide-open schedule can seem like a dream come true. But there&rsquo;s another financial benefit to working that you may not have thought of &mdash; being stuck at work all day leaves you with much less time to spend money.</p> <p>So what about when you&rsquo;re retired and have nothing but time? Can you keep yourself occupied and keep your spending in check? This can be a real challenge, especially when expensive hobbies and travel are part of your plans. This is why having a lot of savings and using careful planning are so important. A good financial planner can help you with this, but when you don&rsquo;t have earning power, you need a good cushion to ensure your money lasts. After all, the last thing you need is to run up against the end of your savings when you&rsquo;re too old to go back to work.</p> <h2>Stick to the Plan</h2> <p>Because retiring early is a challenge, it&rsquo;s important to have a clear plan for how you&rsquo;re going to get there. Exactly how early do want to retire? How much will you need to save to make that possible? These are questions you need to answer to ensure you&rsquo;re on the right track to making your goal a reality. A <a href="http://www.wisebread.com/9-signs-you-need-to-fire-your-financial-planner">financial planner</a> can help you run the numbers. Then it&rsquo;s up to you to keep that plan on track. The numbers make it sound easier than it really is, at least for most of us. Living on less can be tough &mdash; especially when everyone around you is spending like there&rsquo;s no tomorrow.</p> <h2>Find a Source of Passive Income</h2> <p>If you&rsquo;re not familiar with the term passive income, you&rsquo;re missing out on one of the sweetest deals in the investing world. In essence, passive income is income that&rsquo;s generated without your labor. In other words, you don&rsquo;t have to work for it &mdash; or at least not as hard as you have to work for most of the other income you&rsquo;ll earn in your life. Investments such as dividend stocks and real estate, or royalties generated from something you&rsquo;ve created such as a website or book, are considered passive income. Once a source of passive income is up and running, all that&rsquo;s left for you to do is accept the check in the mail.</p> <h2>Rethink &ldquo;Retired&rdquo;</h2> <p>A member of my family retired in his 60s, but was soon back to working part-time. Why had he chosen to go back to the grind?</p> <p>&ldquo;You can only play so much golf,&rdquo; he told me. As an energetic, healthy, and active guy, he just wasn&rsquo;t happy without some real <i>work</i> to do. He has flexible, part-time work that he enjoys, and he&rsquo;s still home in time to have lunch with his wife.</p> <p>Retiring at 65 used to mean a handful of years of retirement. Now, it can mean 20 or more. So, while you may relish a lazy Sunday now, those long, uneventful days may not have the same appeal when they become an everyday reality. If you&rsquo;re hoping to retire early, consider including work in the picture. It&rsquo;ll make it easier to afford the things you enjoy. Plus, the time you spend working might even make that extra leisure time more enjoyable.</p> <h2>Understand the Risks</h2> <p>Retiring early isn&rsquo;t easy. It does have its rewards, but it isn&rsquo;t without risk. Medical or other unexpected expenses can dry up your savings too soon; you may not enjoy a life of leisure as much as you&rsquo;d hoped, and, not least of all, the financial and personal sacrifices you have to make to retire early can have a cost, too. If it&rsquo;s really a different kind of life you want, you might want to ask yourself whether you can start living it now, perhaps by pursuing more of the things you love, or <a href="http://www.wisebread.com/25-awesome-websites-to-help-you-get-a-job">finding a job</a> that you can be happy going to for a few more years. No matter what you choose, just be sure to avoid jumping at a dream. Those coveted post-work years can be sweet, but don&rsquo;t kid yourself &mdash; it&rsquo;ll take a lot of hard work to get there.</p> <p><em>Are you working toward punching out early? Or have you successfully made the leap to early retirement? I'd love to hear about how you made it happen!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tara-struyk">Tara Struyk</a> of <a href="http://www.wisebread.com/trading-work-for-never-ending-weekends-how-to-retire-early">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-7"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-are-people-retiring-in-their-30s">How Are People Retiring in Their 30s?!</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-woman-retired-at-60-and-traveled-the-world">How One Woman Retired at 60 and Traveled the World</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-much-do-i-need-to-retire-how-much-can-i-spend">How much do I need to retire? How much can I spend?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-keys-to-an-early-retirement">4 Keys to an Early Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-people-dont-retire-early-and-how-you-can">4 Reasons People Don&#039;t Retire Early — and How You Can</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement early retirement passive income saving for retirement Tue, 20 Mar 2012 10:00:20 +0000 Tara Struyk 912724 at http://www.wisebread.com