10 Ways You Can Prepare for Retirement Early
Are you looking for ways to prepare for your retirement early? Follow these helpful tips to give your retirement plan a head start.
Increase Your Savings
1. Learn to Become a Super Saver
Once you’re done paying your monthly bills, these are the necessary amount you plan to save and place it in your retirement account. Consider these savings as a retirement investment. Send as much cash as you can that come from savings, tax refunds, raises, and bonuses into your account. Instead of purchasing a brand new TV or iPad while your previous one is still working well.
2. Pay Off Mortgage
Eliminate the biggest portion of your monthly bills by paying off your home mortgage. Take the time to do so while you still have insurance and maintenance costs. Paying off your home will ultimately decrease once you own the house. This will also help save you money during retirement as you won’t need to make any more house payments.
3. Pay Off Debt
Do you still have to make payments on your student or car loans? Or perhaps you rely on your high-interest credit card every month. Make this a priority to pay off before you reach retirement. This will reduce the expenses and save you more money in the long run. Pay off any debt you may have grown throughout the years.
4. Consider Downsizing
Consider whether you and your family still need a large home with an even larger yard. Even the tiniest spaces can add up to your monthly bills. Moving to a smaller property will be easier to maintain and upkeep than a large home. While it is most likely difficult to leave your treasured home behind, downsizing to a significantly smaller home can reduce your costs for housing and provide some home equity so you can add towards your retirement.
5. Maximize Tax Breaks
Most people over the age of 50 are often at the peak of their annual income earnings. This could mean that you also have a higher tax bracket than you will once you reach retirement. If you want to minimize your tax bill, take advantage of tax breaks including deductions for savings for health care accounts and retirement that you may be qualified.
6. Take Advantage of Contributions
Once you hit the ripe age of 50, your 401 K contribution limit will increase from $6,000 – $24,000. This means that older will be able to contribute at least $1,000 more to IRA then individuals under 50. Take advantage of tax deductions. They can surely help save you thousands on your tax bill.
7. Avoid Potential Gaps in Health Care Coverage
Health problems tend to increase after the age of 50. This means that most health care coverage plans also increase in payment. Keep in mind that you will not be qualified until the age of 65. Aside from keeping yourself healthy, make sure that you are properly insured for any unexpected and potential health issues. While getting sick is bad, paying for a large medical bill will play a toll on your retirement plan.
8. Prepare Social Security Plan
Although you are not allowed to register for your Social Security plan until you reach the age of 62, it’s a good idea to prepare and start planning how and when you will claim your benefits before the time comes when you need it. When you sign up at age 62, this will result in a reduced benefit. However, delaying your benefit until age 70 will increase your monthly payments. Allow yourself room to strategize how you want to maximize your retirement payments.
9. Set Your Career
Being laid off or losing your job can be truly heartbreaking. This is because many older workers tend to have trouble looking for another job and starting from scratch with the said pay they once received. Take measures to make your position much powerful and become indispensable to your company. Continue to stay up to date with the latest developments and current technology in your expert industry.
10. Prep Your Leave
While not everyone chooses when to leave their job, reaches your early 50s is a great time to start preparing for retirement. This means it’s time to get motivated on how you can save more, how you will spend your time, and what can make your retirement plan go effortlessly.
Follow these ten ways to prepare for retirement early, and you will be on your way to living a comfortable life when you retire.
An infographic by: FrugalVagabond.com
