Many of the baby boomers are getting closer to the time of retirement, but not nearly as many have made the preparations needed to be able to do so comfortably. This has put a lot of people of that age into a position to try and rush to prepare for retirement. With the right steps, however, there are ways that you can save enough money so that you can retire in your 50′s, and not have to wait until you are 65 or older.
One thing that you cannot afford to do, if you are going to retire in your 50′s, is to make a mistake with your finances. This means that you should get financial advisors to help ensure that you are able to arrive at your destination on time. You may also want more than one to provide you with possible alternatives. Be sure that he or she is an expert in the financial areas that you are involved with in order to get the best advice, says Investopedia. You may need to have a tax consultant, an estate planner, and others, but choose people that have some different expertise so that they can provide some checks on each other.
If you have an IRA or 401k, you can put more money into the account each year once you turn 50. Once you reach that age, you can put an additional $1,000 more each year into an IRA. A 401K is even better, and some of them will let you put in an additional $5,500 annually that can be used to accumulate more interest.
The younger you retire, the more money you are going to need. Don’t forget that many people are now living to be much older than before, and many are even reaching into their 90′s and beyond. While making your preparations, you want to be sure to use a retirement calculator in order to ensure that you have enough money to last the remainder of your lifetime. Several retirement calculators are available at Money.CNN.
Be careful not to tie up all your money in accounts that cannot be touched until you reach retirement. Some accounts have 10 percent penalties if the money is withdrawn early.
Realize that there may be health concerns that could come up and require that you use some of your money. Add in the costs of health insurance, too. Money.CNN reports of a study by Hewitt that warns that if you cannot extend your health care benefits from an employer when you retire, that you may have to use your own money until you can get Medicare. The report says that up to 40 percent of your retirement money can be used to cover those costs during that time.
Withdrawing your money carefully is also important so that you do not run out too fast. It is a good idea to draw money out of accounts where the interest may fluctuate, such as mutual fund accounts. Traditional IRA’s and 401k’s have set ages by which you must start making withdrawals. A Roth IRA does not have a similar requirement, so draw out of it last.
Ideally, before you enter retirement you should seek to have all your major debts paid off. This will enable you to live on less. Keep your money drawing a good amount of low risk interest as long as possible.
If getting enough money to retire in your 50’s is going to be a problem, you may want to plan on working part time until you reach a certain age. This would require far less money.