Whether you’re a young professional starting out or a person close to retirement age, making enough and having enough savings to be able to rely on is central to living well in retirement.
Yes, retirement is a possibility at any age if you know how.
The general belief is that retirement is something that is either a long time off or unattainable.
By creating a strategy and being disciplined, anyone can find a way to retire and be able to live comfortably while retired.
Create A Plan
The first thing is to create a plan. Your plan should consider the amount you will need to live on while paying attention to increased living costs over time.
For example, if you need to pay a mortgage payment of $3,000 a month, consider $500 for utilities and another $1,000 for food and other essentials. You’re looking at the cost of living being around $4,500 a month.
However, the cost of food, gas, and utilities will usually increase in time, so you’ll need to factor that into your plan.
Set A Budget
Now that you know you’ll need to make approximately $4,500 a month to get by, you’ll also need to budget accordingly. Your budget should focus on paying down your debts now, eliminating unnecessary purchases, and begin saving at least 15% of your current take-home pay.
Finally, you’ll need to invest as early and as often as possible.
Setting a budget is a guideline. It isn’t set in stone, but it needs to be something you can stay focused on for a few years.
Invest Wisely
Saving money won’t accelerate your timeline to retirement. Instead, you need to invest money so that your money gets a more significant return than a simple savings account.
You should consider a diverse investment strategy that combines safe investments like index and mutual funds, real estate, and more aggressive investments.
Real estate is an excellent way to create wealth that works for you and is a good entry point for people preparing to retire.
Real estate is a good investment option because it allows you to borrow more money than you could otherwise and turn that into a sizable profit. The concept of leveraging is central to making a sizable return.
Real estate investing can include traditional options like buying and holding onto the property while you pay down the debt and the home appreciates in value.
But there are additional investment options that people hardly know about, including;
- Rental Properties
- Fix and Flip
- Wholesaling contracts
- Refinance your existing mortgage
- HELOC – home equity line of credit
- Home Equity Loans
Wholesaling is the process of brokering a deal between a seller and a secondary buyer without taking possession of the property for a small profit. This investment option is newer to the market, and different states have different rules regarding wholesaling contracts.
Before you begin wholesaling, you should research the best states for wholesaling real estate, understand the rules and laws regarding the option, and have a list of potential buyers before you try to find your first seller.
Like all real estate transactions, wholesaling operates with purchase agreements and contracts. However, while most real estate contracts are boilerplate, wholesalers use a real estate wholesale contract that details that the wholesaler is not to take possession but to assign the rights from the seller to a secondary buyer at a slightly higher resale price.
Be Disciplined
It’s one thing to outline a savings goal and investment strategy, but then the kid’s birthdays come around or the holiday’s come. Perhaps you want to take that Hawaiian vacation finally.
In order to set yourself on the right path to retirement, you’ll need to stay disciplined. But, unfortunately, you can’t save and be disciplined for months and then splurge. It defeats the purpose.
That doesn’t mean you can’t enjoy yourself, but to spend more outside your budget, you’ll need to make more.
Create Multiple Income Streams
To retire early, you’ll need to make more money. Or, if you’re behind in accruing enough in retirement savings, you’ll need to make more and save that extra amount. It’s simple math.
Consider a side hustle, starting a small business, or using your investments as earning potential. With real estate, you can turn a property into a passive income opportunity by designating it as a rental.
You can turn the equity of that rental into more real estate, furthering your ability to leverage financing to make you a sizable profit.
The key to retiring is to lower your expenses, raise your income opportunities, and create investments that make you money long after you are working.
It will take a disciplined strategy, and the sooner you can begin, the more you’ll be situated for retirement success.