If 2020 has shown us anything, it’s that we need to enjoy the time we have with our loved ones. If you have grandchildren you want to be able to see more often or you want to be able to travel more, you may be looking to retire early in 2021. While retiring early is a goal for many people, it can be difficult to achieve. Your early retirement ability is based on your retirement portfolio standing and your current savings level. If you are looking to retire early this year, keep reading for three tips to help you settle down and enjoy what life has to offer.
Pay Down Your Debts
Debt is the main expense taking away from your income, whether it’s a mortgage payment, car payment, or credit card debt. To allow yourself to have more money to save and invest for retirement, prioritize paying off your debts and high-interest credit cards. In addition, reduce your spending to ensure you are not adding to your debt.
Get Rid Of Unnecessary Expenses
Cutting back on subscriptions you do not use often and services you do not need can free up more money to pay down debts and set aside for retirement savings. Reducing your expenses also begins to prepare you to live on a smaller amount of money as you will in retirement. Other expenses to aim to cut out include dining out, expensive entertainment, and banking fees. All of these small expenses can add up and take away from the money you are able to save for your retirement.
Understand Your Options for Retirement Income
You can start withdrawing from your 401(k) without penalties at the age of 59 and a half. You can begin collecting Social Security benefits at the age of 62. If you are not ready to take distributions, you can wait until the age of 72 when you have to start taking required minimum distributions. Look into your pensions to identify when you are able to withdraw penalty-free. Identify all the possible revenue streams you will have in retirement and see how long each account will be able to provide income.
While these three tips are helpful in preparing for early retirement in 2021, there are many other steps to take to ensure your retirement portfolio is ready. Starting out 2021, you want to get on top of your spending to have your savings ready for retirement. Mooney Lyons wants to help you reach your early retirement goals. To learn more about how you can retire early in 2021, reach out to us at (847) 382-2600 or email email@example.com