Early Retirement: Are you Ready to Make the Move?

Retiring at any age requires a great deal of planning and effort, and this is even more true if you plan to start enjoying your retired years more quickly. In retirement, you no longer receive the benefit of a regular paycheck to live on, but you still have some living expenses to pay for. In addition, when you retire early, you may not even have access to your retirement funds or Social Security payments. Clearly, you need to cover all of your bases if you plan to start living the good life of a retiree before you reach retirement age. By considering these important points, you can more easily to determine if you are ready to make the move. 

Are Your Debts Paid Off?

Before you can retire, you need to review your current budget to ensure that you can pay for all of your living expenses without a paycheck. You can drastically reduce the amount of money you need to live on when you eliminate your debt. It is best to pay off all of your outstanding credit card balances, car loans, and other debts if possible. Many individuals often find it best to pay off their home mortgage before retiring early, even if this means that they must work an extra year or two in order to accomplish this goal. After all, think how much more comfortably you will be able to live without having to pay a large mortgage payment every month.

Do You Have a Source of Income?

In addition to eliminating your debts and reducing your monthly expenses as much as possible, it is important to consider how you will pay for your recurring expenses. After all, even after you pay off your debts, you will still have to pay for food, gas, insurance, utilities, and other recurring expenses. When you retire early, you will often not have access to typical sources of retirement income, such as IRA distributions or Social Security checks. Therefore, you need to think about ways that you can generate passive income, and this may include through real estate investments, dividends, annuities, and other sources of income. 

Are Your Accounts Funded?

The fact is you can prepare a great budget, and you can cover all of your expenses with passive income sources. However, you also need to ensure your accounts are fully funded before you retire. You may not be able to save as much money in retirement as you do in your working years, though you may still be counting on having a fully funded retirement account when you reach retirement age. You may also need access to an emergency savings account to draw from in urgent situations. Your financial health is important to consider before you retire. 

Have You Thoroughly Prepared for the Future?

It can be difficult to account for factors like changing health status, inflation, economic crises that impact your portfolio, and other factors. The last thing you may want is to head back to work a few years after you retire because you run out of money. You should consider how you can better prepare for events that likely will occur at some point. For example, inflation will inevitably be a factor, and there are inflation calculators and sites like Creditguard.org you can use to better plan for the future. You can also supplement your health insurance with long term care coverage. Finally, ensuring your income stream will increase over time, rather than remain stagnant can also be beneficial.

Preparing for retirement can be challenging, but you need to take extra steps if you plan to retire early. Consider each of these points carefully to ensure you make the best decision about your finances. 

Could Trading Be a Viable Option to Plan for Retirement?

Retirement is a fact of life for most working people, because there is going to be a time in your life when you will want to, or have to, leave your position of employment. It used to be traditional for companies to provide suitable pension plans for their employees, so that they had an income that paid them enough to live on in their old age. Also, there was a time when a state pension and other social security benefits were there as a safety net for those people who did not have their own private or company pension provision. However, with cutbacks in social security becoming more severe, coupled with the ever rising cost of living, social security benefits are no longer enough to cover the cost of living, for a lot of people. 

Making Personal Arrangements

The only other option is for people to make their own arrangements to ensure that they have enough money to give them a certain level of financial support, when they do retire. The range of options that are open to those people who are looking to make their own retirement plans can seem a little daunting at first glance, that is why it is important that you speak to a financial advisor who can help you find a financial plan that suits your situation.

Of course, you could simply keep working, and this could help, however, there is going to be a time when, depending on your job, you are going to reach an age where you are no longer able to perform your tasks with the necessary speed and competence. 

Investing In Your Future

When it comes to investing for your retirement, any financial advisor worth his salt is going to advise you to spread your investment across more than one scheme. This is good advice, because if you have all your money in just one scheme, and that scheme tanks, then you are going to lose most, if not all of your investment.

The one financial scheme that most financial advisors will tell you to invest in is stocks, as you can divide your portfolio across a number of different stock options. Stocks have the potential to offer big returns, however, they are also considered to be high risk, so it is important to get options trading education, from your financial advisor. Bonds are also an option; however, although these are very low risk, the payouts are going to be less than you would expect to receive from stocks.

Different financial advisors will give you different advice about how much of a percentage you should invest in stocks and bonds. However, most will advise you to keep your stock investment close to your age, so if you are 35 years old, you should be looking at using 35 percent of your portfolio, so when the time comes to retire, 65 to 70 percent of your portfolio should be invested.

So to summarise, investing in options trading to provide you with an income in your retirement is a risky option, but it is the option that is going to give you the best financial return on your investment. So long as you invest in stocks across a number of companies, then you should avoid losing all of your investment should a financial crisis take place. If you are thinking about investing in stocks in order to provide an income in your retirement, then you need to speak to a financial advisor at the earliest opportunity.


Liam Ball is a finance expert who enjoys blogging about financial topics. He is a regular contributor to a number of finance blogs all over the world.

Managing a Mortgage: Tips for the Big Payments in Life

A mortgage is a large commitment for any family. It is important to manage a mortgage and the money in the household responsibly. This will help when attempting to finance other large purchases in future. Several tips will help families to manage a mortgage, and prepare for other big payments in the future. 

Create a Detailed Budget

The most important part of managing a mortgage and preparing for other large purchases is to create a detailed budget. The budget should include everyday expenses like groceries, and gas and utility payments. It should also include taxes, financing fees, and savings for an emergency fund. A detailed budget allows the family to see the exact state of finances at any given point, and it can indicate when it is necessary to cut back on spending before debt grows out of control. One household budget also helps to save for future purchases.

Pay Down Principal If Possible

The principal on a mortgage or any loan is the amount borrowed without interest. The amortization of many mortgages sees homeowners paying large amounts of interest for years before the principal starts to drop significantly. Homeowners should attempt to make additional payments each month to reduce the principal only. This actually lowers the total amount of interest that has to be paid over time. It also shortens the term of the loan.

Avoid Late or Missed Payments

It is important to avoid late or missed payments on a mortgage or any loan. Late payments can negatively affect credit, making it harder to finance other large purchases like a car. They can even incur fees from lenders that increase the amount of money owed each month. One way to avoid this is through a short-term loan. Dallas short term loans provide a fast way to make mortgage payments if there is an emergency, or if a paycheck is late. The short-term loan can prevent a bank from ruining personal credit, and can also help to avoid costly fees from mortgage lenders.

Refinancing

Families who are consistently having trouble making mortgage or other loan payments will want to look at refinancing. Refinancing has the potential to lower monthly costs for the remainder of the mortgage. The drawback is that the overall amount of money paid to the bank increases and could come with extra fees. Refinancing can help if the mortgage seems unsustainable.

Anyone managing a mortgage or other expense should make every effort to stay in communication with the lender. Communicating regularly and staying informed about the state of the mortgage is an essential part of management. A good relationship with the lender could help if problems occur in the future.

How to Plan a Financially Secure Retirement

saving and spending (Photo credit: 401(K) 2013)

You may think that you should only think about planning your retirement once you have plenty of funds saved and then and only then, seek financial advice. However, the most sensible way to approach it is to begin that planning process from your very first job. Don’t leave it until it is too late to save the money that you will need for retirement. 

Start Early

You don’t need the help of anyone in order to get started. You should start by saving a small amount of money a week and keep it in a savings account. Leave it to build up to a few thousand pounds. At this point, you can begin to invest the funds into the stock market. Ideally, you would invest in multiple diversified mutual funds, in addition to ETFs. Continue to save and invest until you have a nice little nest egg. Then you can begin to diversify further. 

Diversify Investments

To help in diversifying your savings, start to look at your portfolio as a whole and ensure that there is no single region, sector, industry or investment that is dominating your holdings. Essentially, ensure that you have investments in technology stocks, mature stocks, foreign companies, value stocks, growth stocks etc. To achieve this, begin to look through your mutual funds and note which company types and sectors are in each mutual fund. You should be reasonably diversified but this is nothing too much to worry about at this point. 

Focus on and take control of your retirement (Photo credit: SalFalko)

When you have reached a significant amount of savings, you can diversify even more. You can then look to purchasing property. If you have the time on your hands, that is. Alternatively, you can buy real estate trusts or real estate fund in either residential or commercial properties. They can act as an effective diversification strategy from conventional assets, such as stocks or bonds. 

Build on Your Plan

Once your investment portfolio has grown, you need to be increasing your awareness of investing as well as the level at which you are planning for your retirement. Estimate how much you will need in order to retire and begin to work toward that goal.

One option you do have and should consider when planning your retirement is a payday loan from a company such as DollarsDirect.ca. It may be that a member of your family is forced to have an operation or a loved one passes away. Such a measure should not be used for frivolous purposes but it can alleviate some of the stress that comes with retirement, just knowing that it exists as an option. 

As the time draws closer to your retirement, you will either feel secure or find that you are worried. If you are feeling nervous, it may be worth visiting a personal financial planner to assess your plan as it stands. They will be able to use sophisticated software in order to estimate the demands you are likely to be met with and calculate the odds of you running out of money. If you do feel secure then, by all means, enjoy your retirement!

7 Habits of Highly Successful Retirees

retirement (Photo credit: 401(K) 2013)

Planning for your retirement is something that all of us know we must do, but many of us put this kind of planning off, we avoid it as we think we've got stacks of time to worry about it. However, if you wish to have a successful retirement, you must take the time to make plans to ensure that it is everything you desire.

There are seven things that every successful retiree did prior to retiring that has made their retirement happy and secure. Surprisingly, they are not all financially related. Most of these retirees stated the following seven habits as the key to their happy retirement.

1. Savings Accounts

You want to have a bank account set aside just for your retirement. While you are still working, only make deposits in this account. When you retire, use this account to manage your finances. By changing your accounts when you retire, you have mentally created a new way to approach your money. 

2. Have Investments

Take advantage of every investment opportunity you can afford while you are working to guarantee an income when you retire. Make sure that your investments are diverse, and if at all possible, make sure that they have low maintenance fees. You want to make sure that your investments are funding your retirement and not paying high commissions to the brokers. 

3. Pay off Bills

Try to eliminate as many bills as possible before your retirement date. Review your current bills to determine if there are ways you can reduce them, such as downsizing cable options, getting rid of a land line phone and only opting for cell service, and moving credit card debt to low interest cards. Debt free living helps reduce retirement stress.

4. Downsize Your Life

You have spent your entire life working, now it is time for enjoyment. Look for ways to reduce your obligations so that you can only concentrate on your passions. If you have club memberships that you are no longer interest in, get rid of them. If you want a smaller home with less yard work, look for a new home before retiring. Have a pro-active approach to making your life your own and not filled with chores and duties. 

5. Take Advantage of Senior Discounts

There are so many different senior discount programs available, including those for necessities such as insurance policies and utilities, that it is foolish not to use them to your advantage. So many people avoid the “stigma” of senior citizen. The truth is, you need to embrace this title and take advantage of everything that it offers. 

6. Make Plans for Fun

One of the hardest things that retirees must face is waking up in the morning with nothing planned. After a lifetime of getting up and going to work, adapting to not having to be somewhere each morning can be difficult. Successful retirees always make sure they have at least one thing planned each day so that they are never sitting around with nothing to do. 

7. Volunteer

Retirees that offer their services to local charities, even for a few hours a week, seem to be the most successful. There are so many opportunities, from mentoring children to advising business owners, to accepting tickets at the gate of a state park, that any retiree can find a volunteer position that makes them happy.

The tricks to a successful and happy retirement are not as hard as you may have thought. As you can see, it just takes a little planning and a desire to be happy that will make your retirement the best time of your life.

This article was written by Perth Financial Adviser, Medhat Takla from Chambers Investment Planners. You can catch Medhat on Google+ and LinkedIn as well.