René Nourse, CFP®
If you are like 35% of all Americans, you probably don’t have more than $10,000 saved for your retirement. “Normal” retirement age is (or used to be) 65, but some people dream of retiring from their jobs in their 50s. With less than $10,000 saved, there is no way early retirement can be an option.
Turns out, there are several major obstacles that stand in the way of early retirement for most Americans:
1. You Didn’t Start Saving Early Enough
Maybe you learned about retirement savings later in life, so your nest egg isn’t as big as someone who started the moment they earn their first paycheck at age 15. Time really is your best friend in terms of compounding interest, especially when we are talking about 40 years. Putting off retirement investing will drastically reduce your chances of early retirement.
2. You Don’t Save Enough
Saving early is great, but are you saving enough? While some experts suggest saving 10% of your salary, the truth is, that’s not nearly enough for retirement. The earlier you want to retire, the more you need to be saving. Reducing expenses will enable you to save more and compounding will only work in your favor as you contribute more to your nest egg.
3. You Don’t Invest Consistently
Investing can be seen as risky in terms of a wealth management solution and turns out, individual investors don’t have a great track record of timing the stock market. The key to successful investing is to do it consistently, regardless of what the market is doing. Overtime, the ebbs and flows will even out, but if you spend too much time chasing the market, you will most likely be sorely disappointed and stressed out!
4. You Spend Too Much of Your Money
The American consumer spends way too much money on goods that depreciate almost immediately after purchase. The cars, clothes, and electronics that we think we need are simply a trap into forcing us to spend money on things that we don’t really need. Most people spend money freely because they work hard for it and assume there will always be another paycheck coming in future weeks. If your desire is to retire early, you must plan for the day that there are no more paychecks coming in. Start a practice of buying only things that you need or add value to your life and get rid of unnecessary spending on goods and services that are sucking up your financial well.
If early retirement is on your radar and one or more of these obstacles is standing in your way, contact us today to see how we can work together to build a retirement plan that fits your needs!
Image Source - freedigitalphotos.net, ambro