A lot of folks dream about hanging it up before the traditional retirement age of 65. That’s a tall order, though. One of the smartest and best financial advisors in the business, AdviceIQ Network member Brenda P. Wenning, president of Wenning Investments in Newton, Mass., tells how to bring off this feat:
How would you like to retire early? Maybe 62 is a good age or maybe you’d like to retire at 60 or even 55.
But unless you’ve won the lottery, have a government pension or are the favorite niece or nephew of a rich uncle, you may find it difficult to achieve your goal. If can still be done, though. You have two options: cut your expenses or increase your retirement savings. Better yet, do both.
More specifically, you should be able to take that job and shove it at an age earlier than 65 if you do the following:
1. Cut back on your expenses. Even people who think they’re living frugally usually aren’t. How often do you dine out? Do you stop for coffee on your way to work? What do you spend on hair stylists, clothing, manicures and pedicures? Do you do your own landscaping and mow your own lawn?
Non-essential expenses add up. Review everything you spend and make a cost-benefit analysis. Determine whether the convenience and pleasure you derive from your expenses are worth the investment. Maybe Two-Buck Chuck is no substitute for your favorite Côtes du Rhône, but would you rather drink good wine or retire early? You may not be able to do both.
When you cut your expenses, consider the opportunity costs. For example, if you are self-employed and can make more money with your work in the time it would take you to do your own landscaping, by all means, hire someone to do the grounds work for you.
If you still have a mortgage, ideally you want it paid off before you retire, which will significantly reduce your expenses. At today’s low interest rates, you can convert a 30-year mortgage to a 15-year mortgage without adding too much to your financial burden.