Retirement can seem like a long way away.

So far away, in fact, that it’s easy to ignore altogether.

This might explain why the average American has a paltry $96,000 saved for retirement.

That, of course, isn’t going to go far. Unfortunately, at the current rate, the possibility of ever retiring seems unrealistic! It’s a shocking realization. After all, nobody wants to work longer and harder than they have to.

Of course, it’s in everyone’s interest to retire as early as possible. Nicely, it’s absolutely possible.

It just takes the right know-how. With a few lifestyle changes and sensible decision-making, you can bring your retirement date forward by decades. Sound good? Want to learn how to do it?

Keep reading to discover exactly how to retire at 50!

1. Save More Earlier

Nobody retires at 50 by living paycheque to paycheque.

If you’re forever spending everything you earn, then you can never expect to retire at a reasonable time. The only way to do it is by being rigorous and regular with your saving.

The trick? Start as early as possible and invest what you save.

You have to make your money work for you. Sticking it straight into a typical saving account is good for nobody. Having cash is okay, but interest rates are at an all-time low at the moment.

Combine that with rising inflation and your money can end up depreciating in value over time.

Saving larger amounts earlier, and investing it all, helps you leverage the power of compounding. This is when money grows exponentially over time via interest. The earlier you start investing, the better. It gives you more time for compounding to take effect.

2. Live With Frugality

The more you save, the better.

Even relatively minor additions to monthly savings can make a dramatic difference in the long run.

For example, imagine investing an initial $1,000 and adding $100 per month for 30 years. An annual return of 8% interest will provide over $146,000 by the end. You’ve contributed $37,000 in total, but almost quadrupled your money thanks to compounding.

Amazing, right?

However, imagine the same setup, but this time you invested $200 every month. Now, you’d come away with almost $282,000. That’s an enormous jump for an extra hundred bucks a month.

As you can see, it’s in your interest to put more aside every month.

That takes sacrifice. Get into the habit of cutting back elsewhere so you can reach your monthly savings goals. For an extra hundred bucks, that might just mean cutting out your morning Starbucks coffee!

Oh, and want to know how much you’d get for saving $200 every month for 50 years (with an initial $1,000 investment)? A whopping $1.42 million. It’s a clear example of how starting earlier is in your interest.

3. Invest Aggressively, Earlier

The key to attaining these numbers is in investing.

We mentioned that earlier too. However, it’s worth digging into deeper. After all, investing is a total mystery to almost everyone out there. That’s one reason why not many people do it! Investing feels risky; in tricky times, it’s understandable to want to stockpile money instead.

However, investing should be for everyone. There are different ways to do it. Some are riskier than others. The trick is finding your risk tolerance and investing accordingly.

In truth, though, younger people can afford to invest more aggressively. What does that mean? It means investing larger sums in riskier assets (in other words, it means investing in stocks over bonds).

Market fluctuations are normal. They’re going to rise and fall. Over time, any falls will correct themselves and, like a pendulum, swing back into the positive. At a younger age, you’ve got more time to weather market downturns.

Want to retire by 50? Invest in riskier assets when you’re young. Then, as you get older, begin to reallocate your investments into ‘safer’ asset classes, such as bonds.

4. Reduce Your Taxes

Taxes are anathema to early retirement plans.

Of course, they serve a vital societal function. However, there’s no point paying more than is necessary. Many people do this unknowingly. All the while, their retirement date gets pushed ever further backward.

Imagine meeting your savings goals. Years go by and you start feeling great about your retirement account. You congratulate yourself on your achievement. You go to withdraw your money, only to be landed with an unexpected tax bill that slashes the total by 30%.

It’s more than possible; it’s in your absolute interest to take sensible tax-reducing savings decisions.

Two accounts of particular note are your 401(k) and a Roth IRA. Both accounts provide means of sheltering your finances from undue tax obligations. The tax-savings can extend to thousands of dollars.

Be sure to look into them in more detail and leverage them in your bid to retire at 50.

5. Plan Ahead

Is everything about financial planning a mystery to you?

We don’t blame you! Investments, savings, and budgeting can get confusing.

Speaking with a retirement planning advisor may be a good idea. Sure, you’ll pay for the service; it’s always worth having a clear understanding of how much they charge.

That said, finding a reputable and ethical, financial advisor to help you plan for retirement can make a big difference. They can support you in setting goals and reaching them. How? By making solid recommendations based on expertise and knowledge, suggesting sensible investment allocations, and preparing you for market downturns.

For total newbies fixed on retiring at 50, this can be a sensible approach.

Final Thoughts on How to Retire at 50

There you have it: 5 essential steps that help explain how to retire at 50 years old!

People are struggling to save for retirement. As it stands, the majority of Americans will struggle to retire at all! They won’t have enough saved up to cover themselves and provide any quality of life. However, that doesn’t have to be the case.

In reality, anyone can retire on time. Even better, taking early retirement is possible too! It just takes the right approach and know-how.

Hopefully, this post has highlighted the key steps in making it happen.

Want more articles like this one? Head to the Getting Finances Done section of our blog now!

The American people are drowning in debt. Excluding your home, the average American has racked up $38,000 in personal debt.

According to the same source, older millennials have the highest amount of personal debt at $42,000. Common debt drivers include credit cards, student loans, and vehicles.

[Read more…]

A good savings habit is essential for a secure future. You will always have the money to attend to your needs if any arises. This could be health emergencies or unnecessary bills that come up.

A good example is when you start experiencing problems with your teeth. You will have enough money to visit a wonderful dental clinic if you save. You should also teach your kids how to save. Simple things like getting them a piggy bank or opening a junior account for them helps them to learn and develop the culture. You can use different life lessons to teach them about saving. Here are some of the things you can use to educate them on the importance of saving.

Financial Independence

Being financially independent is good for your life. You don’t have to depend on anyone every time you need something. Financial over-dependency on someone may lower your self-esteem and limit you from doing important things in your life. You can teach your kids to start being independent early by introducing them to saving at a tender age.

Emergencies

Different emergencies that require financial help may arise in life. You may be involved in an accident and need money to service your medical bills. Not having enough in your savings account may see you struggle with your bills. You should encourage your kids to save to stay safe in case of such in the future. They can also use the money on preventive treatments like the use of prophy paste to treat oral illnesses that may force them to spend a lot in the future.

Peace of Mind

Financial challenges can deny you the peace of mind you need. You will be in constant depression and anxiety because you lack enough money to buy essential commodities and service your bills. Some people experience mental health issues as a result. The best way to overcome such financial challenges is saving. You will have enough money to service your bills and buy important items. This guarantees you peace of mind essential for your life.

Job Lose

You may lose your job or get laid off in several instances. This is one instance when your savings can be put into good use. You can use that money to start up a profitable venture that will sustain you. It is a life lesson you should use to teach your young one on the importance of saving and how to utilize the little they get from their income if they secure a job in the future. Teaching your kids this habit at an early age will make them develop an interest in saving and have a secure future.

The average retirement age in the United States is 62. Some workers get to 69.

But let’s be honest. Who, especially among millennials and GenZ, wants to work into their 60s? Don’t we all want to call it a day on our careers much earlier and do more meaningful things like traveling the world and, you know, watching Netflix all day?

The only problem? Money!

If you don’t save enough money for retirement, you cannot afford to retire early. Heck, you might not even retire at all.

The good news?

This how to retire early guide will help ensure you’re one of the early birds.

Know How Much Money You to Retire

Doing some research, you’ll quickly learn that experts recommend a nest egg of $1 million to $1.5 million.

Well, on paper, that’s a tidy bundle, but it doesn’t necessarily mean it’ll be enough for your retirements. First, it’s challenging to establish the exact amount of money you’ll need, simply because of life’s uncertainties.

You could have $1 million in your retirement kitty, but then you develop a serious illness a few years into your retirement, which wipes out the money. This being said, there are ways to take care of these uncertainties, such as purchasing adequate health insurance.

So, how can you determine how much money you’ll need?

Let’s crunch the numbers.

Begin by setting your target retirement age, say, 55.

Life expectancy in the U.S. is 78 years.

This means after retiring at 55, you’ll have 23 more years to live. But if you’re a tough cookie, you could get to 90+!

Next, what are your current living costs? If you spend $50,000 a year, you’ll need at least $1.15 million to retire at 55, and assuming you don’t live past 78 years!

Bear in mind living expenses tend to significantly increase as one gets older, so you should factor in that too.

Starting Saving, NOW!

A recent survey established that most Americans in their 40s have saved up a meager $63,000 for retirement. Considering that the ballpark figure is at least $1 million, it’s fair to say this lot is dangerously behind, and, ironically, they are the ones dreaming about early retirements!

A mistake many people make is starting to get serious about saving when they’re very close to the retirement age. Maybe this is when the reality of retirement hits home, or they simply believe they’ll be earning a lot more money in the future, so saving will be easier. Don’t be like these people.

If you want to retire early, you have to start saving right now. The earlier you start, the more time you’ll have to raise the amount of money you need to retire.

Let’s say you just turned 30, want to retire at 55, and you need at least $1.15 million for retirement.

So you have 25 years to save $1.15 million. In this case, you’ll need to put away $46,000 every year till you turn 55. Quite a challenge, but certainly doable.

If you start saving at 40, the amount you will need to save every year climbs to $76,000. For most people, this isn’t possible.

Again, start saving now.

Invest NOW

Let’s face it:

You can hum on about numbers as much as you’d like, but the hard truth is the average American isn’t going to raise a million bucks through savings alone. What will happen if, for instance, you lose your job? Your savings plan will be thrown into disarray.

This is why you need to start investing today.

Investing, as long as it’s done right, is a sure way to build wealth and get rich.

The question is: where should you invest your money?

If you’re anything like most Americans, you’ll want to put your money in the stock market, and for good reason. Folks who invested $1,000 in Amazon 10 years now have over $20,000, assuming they didn’t sell off their shares. If you’d put in $10,000, you’d have over $200K.

Looks all rosy, right? Not so fast! A stock market crash can wipe out your investment!

This means you have to diversify your portfolio. Another ideal investment market is real estate.

Unlike stocks, the value of real property cannot be wiped clean. Sure, the Financial Crisis of 2008 negatively affected the real estate market, but values will drop and start climbing back up after a couple of years.

Also, another selling point about real estate is you don’t have to invest in physical properties. You can put your money into Real Estate Investment Trusts (REITs) and wait for your profits at the end of the financial year.

Get Advice from Retirement Professionals

Planning for retirement might look easy on the surface, but it’s incredibly challenging when you dig deeper. In fact, left to your own devices, you’ll likely make costly mistakes that will only delay your desire to retire early.

It’s advisable to seek retirement plan services. These experts will evaluate your financial status and help you set smart savings goals and develop investment strategies that suit your needs.

Also, a retirement professional will help you develop the right mindset about retirement. You’ll learn that retiring early isn’t necessarily about age, but how well-prepared you are to hang up your spurs when you’re ready.

How to Retire Early Simplified!

It’s one thing to desire an early retirement, and it’s quite another to actually retire early. For most people, this will remain just a desire.

But with this guide on how to retire early, you now have much of the information you need to turn your desires into an actionable, achievable plan.

All the best and keep tabs on our blog for insightful financial advice.

In 2018, the average credit score in the United States was 704, which is considered ‘Very Good,’ and it is. Some lenders may offer people with this score the lowest rates, but there is no guarantee.

If you are one of the many Americans who find themselves in this boat, then you probably want to improve your credit score so you can also be a member of the 800-Plus Club. To do so, you must learn and understand everything there is to know about credit tradelines and how they affect your credit report.

[Read more…]

You’re about to take a big step in your career: taking your former passion project and turning it into a legitimate business. It’s an exciting notion. After all, you’ve probably been hearing people tell you, “if you do what you love for work, then you won’t work a day in your life.” It’s a romantic idea, to be sure, but turning your passion into a stable business can actually be very difficult to do.

Before you quit your day job, you might want to consider these 5 factors before you turn your passion into a business.

1.   Is the Market Viable?

This is arguably the most important thing to consider before you launch your new career. You’re going to have to study the market carefully and ascertain whether or not there’s really money to be made in your line of work.

Be honest with yourself. Just because you love your particular passion, doesn’t mean there are lots of people out there who are willing to pay for your product or service—or maybe not enough to provide you with a comfortable living. It’s not a bad idea to start your passion project as a side business first so that you can better evaluate its financial viability.

It’s great that you’re gunning for your dream career, but it might not be worth quitting your day job if you’re going to go hungry or become house poor. And you might want to be making enough money to adequately prepare for retirement.

Now how exactly can you evaluate the market? Easy: look at local businesses (or online businesses, if you’re going into ecommerce) and see how they’re faring. Take note of how many employees they seem to have and how much they charge for their product/service.

2.   Managing Employees is Hard

When you initially worked on your passion project, before you took to the private sector, you probably didn’t have to worry about managing employees. You were probably just working for yourself. But if your company is going to grow, or if you’re going to produce enough work to be profitable, you might need to hire an employee or two, or ten.

Hiring and managing employees is difficult, and the latter is a day-to-day job in and of itself. Before you hire a new job candidate, be sure you run a background or credit check for employment purposes. A credit check is especially important if you’re going to be hiring an accountant—you don’t want to hire a financial advisor who has bad credit. On that note, be sure you carefully budget your business before you start hiring—there are lots of businesses that hire too many employees too quickly and are forced to lay people off.

There are some great tools you can use to help manage your employees. If you have part-time workers, use a scheduling app like Sling. If you have office-based workers, use a project management program like Asana to assign tasks and due dates for those tasks. And for inter-office communication, use any kind of messaging app, like Slack or GroupMe.

3.   You’ll Have to Worry About Legal Stuff

When you enter the business world, you expose yourself to all kinds of lawsuits. Some of these lawsuits might come from disgruntled employees or angry customers. Other times, you might get pestered by the IRS or by your local tax jurisdiction for late or inaccurate tax filings, or late sales tax remittance. It’s important that you find a reliable lawyer you can regularly consult with. A lawyer may be able to help you out of a legal crisis, or they could help you avoid one in the first place. A lawyer might sound very expensive, but there are several ways you can save money on legal fees.

4.   It Could Kill Your Passion

The worst thing about turning your passion project into a business is that it could possibly kill your passion outright. When you’re exposed to all the stress that comes with running a business—financial management, hiring, scheduling, legal fees, business development, and regulations, you might find that it spoils your pure, youthful love for whatever it is you do.

5.   You Could Live Your Best Life

But there’s also a chance that you make yourself far happier and more fulfilled than you ever were at your day job. Maybe you build a company that’s a massive success, or maybe you create a smaller company that brings you a little extra pocket cash. At the end of the day, the only thing that matters is if you’re happy. And if you’re able to get away from that job that leaves you bored to tears from nine to five and do something that you’re truly passionate about, you’ll be all the better for it.

Do you know how much you’re paying for the actively managed mutual funds in your portfolio?

If you’re being honest, the answer is probably something like “not exactly.” That’s because mutual funds don’t always make their fees easy to understand, despite regulations requiring basic transparency from fund managers and issuers.

“My clients often ask me for plain-English explanations of the mutual fund and money management fees they see on their statements,” says San Francisco-based wealth manager Daniella Rand. “I don’t blame them. For those not steeped in money management, it’s a lot to keep track of.”  “I also find that the transparency of customer statements varies widely from firm to firm,” Rand continues.  “That is why The Rand Group has always spent as many hours as it takes to educate clients on what they are paying while making sure they are comfortable.  We’ve had far less questions since migrating our clients to Merrill Lynch, thanks to their #1 ranked statement industry-wide,” says Rand.  

Rand relies exclusively on “best in class” funds and money-managers to build custom portfolios for her clients, and she makes a point of educating prospective clients about the true cost of their existing investments. She’s not alone; many reputable wealth managers prize transparency and see their roles as, at least in part, educational and explanatory.

Want to know more about how your mutual funds make money? Here’s the skinny on calculating and reducing mutual fund fees.

Load Fees

Load fees come in several forms:

• Front-end loads, taken when investors purchase shares in the fund
• Back-end loads, taken when investors sell shares in the fund
• Constant or level loads, taken at regular intervals during the investor’s hold period

Not all funds charge load fees. Funds that don’t charge loads are known as no-load funds; ask your financial advisor which type is suitable for your needs.

Management Fees

All mutual funds charge management fees, which are the most common (and usually largest) component of the expense ratio. The management fee covers the cost of the fund’s management — literally, its managers’ salaries. A given fund’s exact management fee is a function of how actively managed it is; funds that require constant attention carry higher fees than passively managed funds designed to mirror the performance of a benchmark index.

12b-1 Fees

The 12b-1 fee is the most interesting, and most misunderstood, type of fee in the mutual fund universe. This fee covers the cost of marketing the fund to new investors. Although it’s part of the expense ratio, federal regulation requires its inclusion in the fund prospectus; fund managers can’t conceal it by folding it into the management fee.

It’s worth noting that many mutual fund managers see 12b-1 fees as counterproductive or even harmful to investors’ financial interests, although this is far from a universally shared view and many advisors make compelling cases for the fee’s inclusion in the expense ratio. Still, a significant minority of mutual funds don’t charge 12b-1 fees.

Building a Better Investment Portfolio

Mutual fund managers are no longer free to set whatever price they wish and expect investors to happily pony up. By and large, today’s wealth management clients are far more sophisticated than that. We’re operating in a fee- and expense-conscious environment, and that’s largely a good thing.

By the same token, wealth management clients shouldn’t automatically assume that lower-cost mutual funds or money managers are superior to more expensive alternatives. Yes, it’s true that fees can reduce investment returns over time, but fees aren’t the only determinant of fund performance. In many cases, it makes sense to pay more for higher-quality instruments poised to grow faster than their fees can keep pace.

Of course, these considerations are best discussed with your financial advisory team. Just as no two fund managers are exactly alike, and no two funds contain precisely the same component mix, no two investors are identical. You owe it to yourself to build a better investment portfolio that works for you and no one else.