What to Consider When Planning For An Early Retirement
Early Retirement Plans
It is not uncommon to find people who nurse the idea of having an early retirement. It is however vital that these people put specific factors into consideration as effective retirement planning requires a careful approach. Whether you are starting your plans early enough or a bit later, there are some things to consider if your intention is to increase your retirement funds. There is a prevalent business practice which is commonly referred to as Pearson’s Law.
Pearson’s Law states that what a person measures improve, and what a person measures and tracks improves exponentially. In essence, it is vital that you continually measure the important things when planning for your early retirement,
The considerations for retirement can be broken down into two primary components namely assets and income streams. During those years when people were still entitled to a pension, they had a guarantee of an income stream upon retirement since they had both their Social Security benefits as well as their pension. However, currently in America, only those in the military or teaching profession are entitled to a pension. People are now resolving to save in a sort of definite contribution account, for instance, a 401 (k) plan or an Individual retirement account.
It is your monthly contribution to this retirement plan that assures you of a lifetime income upon retirement. Although you may still be qualified for Social Security, the retirement plan you have such as your 401 (k) will serve as your primary source of income.
A Survey conducted by the Employee Benefit Research Institute revealed that 8 out of 10 employees currently have the expectations that their workplace retirement savings plan would be a source of their income upon retirement, and half of the total participants stated that it would be their primary source of income when they retire.
Further, the Study showed that while workers were taking steps to set up these plans for income upon retirement, just half of the workers expressed confidence that they knew how much income they would need every month when they retire or how to go about the withdrawal of income from their investments and savings. Only 1 out of 8 of them expressed a high level of confidence. Mainly, this shows that several people are still uncertain as to how to strategically plan their savings in such a way that it will last them for a lifetime.
Bigger Retirement Savings
An excellent way to boost your confidence upon retirement will be to have bigger retirement savings because nobody has an issue with having excess money. A good starting point will be to have a simple to understand financial statement. In addition, you should have an account of your net worth that highlights a list of your assets and liabilities to have an accurate estimate of your worth. You should regularly check these lists, perhaps quarterly so you can easily track your progress.
Tracking your Net Worth
You are entirely responsible for the creation of your lifetime income stream as the assets you build now will provide your income upon retirement. Therefore, it is essential to begin with a financial statement and place focus on increasing your net worth. Thus, you can update your net worth on a spreadsheet or write it down on a piece of paper. There are also online tools such as Personal Capital, Mint or those financial institutions that update your bank accounts and investment values automatically. All you need to do is include the assets that need automation.
If you set up your document, you can keep referring to it when making money decisions. When you have to make any financial decision, be sure it is growing your net worth and not eating into it. Having a financial framework in place for your retirement goals will help you make better money decisions. By measuring and keeping track of your net worth, there is a higher guarantee that you will attain financial success with your retirement goals.
More in Retirement
How Much Do Americans Spend on Car Maintenance? The Figure Might Shock You
If you don’t already have one, the truth is that you’ve always wanted to own a car. But are you ready...September 18, 2019
Are You Making These Serious Investment Mistakes? Tony Robbins Will Tell You
Considering the volatility of the stock market, certain money mistakes can affect the wealth strategies of any individual investor. It is...September 18, 2019
How to be Financially Prepared for Life After a Divorce
Divorce Affects Finances Often, a divorce affects not only the emotions of the couple but also other aspects of their lives...September 18, 2019
Common Financial Mistakes Everyone Can Avoid
Financial mistakes lead to substantial financial regrets. These mistakes can come in the form of the actions one takes or the...September 18, 2019
Here’s How to Successfully Boost Your Retirement Savings
A lot of people have been pondering on how much possible it is to boost their retirement savings. As a matter...September 18, 2019
As Technology Changes the Real Estate Market, These are the Tools to Watch
Real estate is one of the few industries that hasn’t been keeping up with the current technology trends. This is a...September 18, 2019
Renault Unveils New Futuristic Car with Luxurious Lounge Interior
Renault just revealed a game-changing concept car that isn’t just fully electric, shared and autonomous. The automaker unveiled its latest masterpiece...September 18, 2019
Reason Why Financial Advisors Need to Adapt to the Tech World
Most people think that money makes the world go round, this may be true in a way especially for those who...September 18, 2019
The Shocking Reason Why Some People Never Retire
Changing Trends In recent times, it has become commonplace for baby boomers to keep working even into their 80s. Different reasons...September 18, 2019