Wise Money Monthly: Your Early Retirement Plan

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3 Steps to Retiring Early

Recently one of our longest tenured clients and his wife, took the big step that we have been working on together for years. They not only retired, but they retired earlier than planned.

This couple was unique. They never made a ton of money or inherited a fortune. What was unique about them was their discipline. We put a plan together for them and they stuck with it.

Here’s a few things that they did . . . and that if you do may improve the probabilities that you can retire earlier than you may think.

1) Save more, spend less. This is the “obvious” step that everyone knows about but few do it. There are several ways to do this including the b-word that everyone hates, budgeting.

One thing that we do with several of our clients that makes this step a little easier is automatic withdrawals. We have it set up with them to take a certain dollar amount each month from their checking or savings account and deposit it into their investment account. This actually leads to the next step . . .

2) Invest the money you save. Once the auto deposit is set up, the money must be invested. The power of compounding is an enormous factor in building wealth.

Consider this, if you currently have $100,000 in your retirement account and save an extra $200 month that money will –

  • If you invest it in the market and make an average of 10% per year, will grow to $810,209.99
  • If you keep it in your savings account (not invested) and make 1% per year, will grow into $174,864.61

No question what you should be doing with the money you save. Put it work for you!

3) Build an investment portfolio that helps you accomplish your goals. I can’t tell you how many people have portfolios that are completely miss-aligned to the goals they want to accomplish.

Every investment and portfolio has two components, risk and reward. What we find talking to people is that they either they have way too much risk, or they don’t have enough. Even more common is that people don’t know what risk they have or should have that will create enough reward to accomplish their goals.

The couple (mentioned above) that is now cruising the country visiting their children had a plan (with our help) for all three steps.  They are doing what they want to do and are in good shape moving forward.

Now it’s your turn, take a few minutes and do a self-analysis. Do you have the proper steps in place to accomplish the financial goals you desire? In 15 – 20 minutes we can discuss where you are and where you want to be. Just fill out the request below and let’s talk.

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Categories: Personal Finance.