Let’s face it, when you’re young, thinking about growing old is a scary thought. Will I have enough money to retire at an early age? Will I even have enough money to retire at all? Most Americans would love to retire at the standard age of 59 and a half, or 65. But with the rising cost of everyday living, these targets are becoming harder and harder to hit. Increased healthcare costs, rising insurance premiums, housing market fluctuations, energy price increases and growing medical expenses are digging into savings that were once thought of as your nest egg. To retire comfortably, you must start saving at an early age. If you follow a few golden rules, you can possibly retire early and even be a millionaire.
For starters, open an Individual Retirement Account (IRA) at an early age. How early? How about right out of High School! There are two types of IRA’s that you should familiarize yourself with; the Standard IRA and Roth IRA. Both investments have their benefits and drawbacks that your accountant can go over with you. If you do not have an accountant, ask the financial manager of your local bank to guide you in the right direction. You can also do a quick Google search of these IRA’s. The search results will give you an in depth look at how they work.
Once you have setup your IRA, a 401K Retirement Plan is a great way to invest your weekly earnings. Many companies offer a multitude of 401K plans. Some companies even match 401K contributions, up to a certain amount. The maximum amount of money you can contribute to a 401K is 10% of your earnings. In a few years, that 10% will compound itself into a nice nest egg.
Now that you have an IRA and a 401K, Debt Reduction is the next key element. Reducing credit card debit should be your number one priority. Let’s face it. Most Americans live in debt. My advice to you is, don’t be one of them! Credit Card debit can consume a large chunk of the money you set aside each month for savings. With credit card interest rates as high as 21%, carrying a $1,000 balance can cost you hundreds of dollars each year if you just pay the minimum amount due. If you are holding credit card balances on multiple cards that amount to over $5,000, you should consider a Debit Consolidation Loan. Your local bank can offer advice on these types of loans or you can contact one of the Debt Consolidation Companies on the web to assist you. Just remember, when dealing with a Debt Consolidation company, they’re in business to make money.
Buy a house. Renting an apartment is just throwing your money away. When renting, you rent, you’re making someone else rich! Here is a little story for you. When my sister got married six years ago, she asked me for some advice on married life. Well, my advice to her wasn’t about marriage at all. I told her to purchase a house instead of renting an apartment. She looked at me funny and said- “Well, we plan on renting for a little while to save up enough money to buy a house.” I told her that if she chooses that route, I’ll be visiting her in that same apartment five years from now. Sure enough, she chose to rent and is now stuck in that same apartment because she was throwing away $1200 plus a month in rent for the past six years. She could have been making monthly mortgage payments that were building equity. I know it’s not easy to purchase a home these days but do whatever you can to save up enough for that down payment. There are plenty of programs for first time home buyers that can assist you. You can consult your local bank about these programs.
Follow these tips and you will be well on your way to an early retirement. Start early enough and you might even be a millionaire! Good Luck!
“A penny saved might be a penny earned, but a penny multiplied, makes dollars. Dollars multiplied, makes a living. Dollars multiplied effectively, makes you financially independent!” Michael “MJ The Terrible” Johnson – Founder & Owner – Masters of Money, LLC.
6 Steps To Building Financial Security – https://www.mastersofmoney.com/6stepstobuildingfinancialsecurity/