If you've known since your first day of work that you'd like to retire early, you may be wondering exactly what you'll need to do to make that happen. Although generating a six- or seven-figure nest egg for retirement during your first couple of decades in the working world can seem like a challenge, with some savvy planning and investing, it's certainly an achievable one. Read on to learn more about setting yourself up for a comfortable early retirement.
Getting Healthcare Squared Away
For those accustomed to purchasing health insurance and other healthcare benefits through their employer, transitioning to the retired life before reaching Medicare age can be quite a price shock. Even a catastrophic health insurance policy with fairly high deductibles and coverage limits can take a big chunk out of your monthly retirement budget.
If you currently have access to a health savings account (HSA), which allows you to set aside a certain amount of money tax-free each year without forfeiting it if it goes unspent, you may be able to fund much of your retirement health care costs through your HSA. If your current HSA holder doesn't have many investment options, you may also want to look into transferring your HSA to another bank or brokerage that will allow you to invest these funds to help them grow while you're still in the workforce.
Reining In Your Spending
For many, the secret to early retirement isn't amassing an enormous portfolio, but reining in monthly spending so that the household can be indefinitely sustained through investment interest and dividends (without dipping into principal).
If you don't already have a budget or spending plan, now is the time to start--and if you think your budget could use some tweaking, it may be a good idea to begin practicing living on less so that you'll be able to adjust your retirement projections accordingly. The larger the proportion of your current salary you squirrel away, the more quickly you'll be able to reach your asset goals and retire from the rat race.
Seeking Professional Guidance
Nothing can be more discouraging than thinking you're on track for retirement and discovering you've instead fallen behind. By enlisting the help of a certified financial planner to guide your investments and planning, you'll be able to rest assured that you're on the right path. Periodically engaging in portfolio checkups to rebalance your investments or begin moving into more conservative funds as your retirement draws nearer can prevent your portfolio from falling victim to a poorly-timed market crash.
Talk to a company about your money management in order to prepare for early retirement.